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The Green Sheet Online Edition

March 26, 2012 • Issue 12:03:02

Mining the digital gold rush

By Dale S. Laszig
Castles Technology Co. Ltd.

The digital age has spawned a new kind of gold rush. Winners still stake claims and losers perish in the wilderness. However, instead of mules and pick axes, today's tools are software development and digital technology. Yet an age-old question persists: why do some companies make it big, while others file for bankruptcy?

Although case studies may differ, corporate leadership guru and former Stanford Graduate Business School faculty member Jim Collins attributes success to a few timeless principles, beginning with finding the right people and facing some harsh realities.

Principles for company building

Collins advises readers of his book Good to Great to do the following:

  • Face facts. "You must maintain unwavering faith that you can and will prevail in the end, regardless of the difficulties, and at the same time have the discipline to confront the most brutal facts of your current reality, whatever they might be," Collins wrote.

  • Simplify your business model. Complacency is the enemy of innovation, especially when companies can't see beyond outdated business models. Collins recommends focusing on core strengths by identifying how to be the best in the world in one strategic area.

  • Understand the role of technology. Great companies think of technology as a means, rather than an end. "They never use technology as the primary means of igniting a transformation," Collins wrote. "Yet, paradoxically, they are pioneers in the application of carefully selected technologies. We learned that technology by itself is never a primary, root cause of either greatness or decline."

  • Build organically. Collins noted that successful companies don't succumb to a gold rush mentality. "Those who launch ... wrenching restructurings will almost certainly fail to make the leap from good to great.

    "No matter how dramatic the end result, the good-to-great transformations never happened in one fell swoop. ... Rather, the process resembled relentlessly pushing a giant heavy flywheel in one direction, turn upon turn, building momentum until a point of breakthrough, and beyond."

Intellectual property rights

With these timeless principles in mind, individuals and companies also need to protect intellectual property. The original ideas that form the basis for a company's identity, products and services are considered intellectual property and need to be protected from theft by competitors.

While copyrighting a concept is not always possible, the way in which a concept is expressed is subject to protection and can't be duplicated without an author's permission.

To understand the nuances of software copyright laws, let's isolate the individual components of a software program. They include the architectural framework, code and program applications. The architecture of the program itself consists of its overall structure and how the program assigns precise functions to its various components.

Code comprises strings of data functioning interdependently within an integrated piece of software. Object code is a lower form of code, usually represented by strings of binary digits, while source code is the conceptual vision created by a software developer. It contains a more sophisticated sense of logic.

Inevitably, progress in software development leads to productized modules of object-oriented programs that are readily available in software developer kits and on the Internet. This makes it more challenging for legal analysts to determine which parts of a software program belong to the public domain and which modules, when grouped in a unique and novel way, could be considered original and creative work.

Finally, the holistic combination of object and source code, program structures and program notes represents completed pieces of software known as program applications.

Made in the USA

In a perfect world, when a software developer employed by a company designs and creates a program, the finished program belongs to the employer, not the individual developer. During the design process, if the developer made use of specific items of object code that were openly available on the Internet, the object code would be considered public domain.

The unique way in which the developer incorporated the public elements of the object code into a conceptual framework is the part of the design that would be considered the source code, and that source code would be subject to copyright protection. If the resulting product created by the software developer answers a very broad need in the market, other software developers should not be prohibited from finding other, similar methods to address the same circumstance and problem. However, if the software developer works for a U.S.-based enterprise, that company may seek patent protection for the software and concept. To meet requirements for a patent, a product must be:

  1. Patent-eligible subject matter
  2. Useful
  3. Novel
  4. Nonobvious

Other countries, such as the United Kingdom, do not allow the patenting of a piece of software.

Protecting trade secrets globally

Intellectual property rights are challenging to enforce globally because laws differ from one country to another. Additionally, a growing concern is the import and export of counterfeit merchandise, which causes billions in lost revenue for the original brand companies. Moreover, undetected counterfeiting of branded products aids and abets international organized crime. If patent protection for intellectual property is not available in a particular country, an alternative is to keep details a trade secret, focusing on your ability to prove in a court of law that you took the necessary steps to keep the information secret.

Ways to safeguard intellectual property are keeping employees on a "need to know" basis, obtaining confidentiality agreements, and registering software products with the U.S. Patent and Trademark Office.

The flywheel versus the doom loop

Collins and his researchers were impressed by the volume of companies that have succumbed to the gold-rush mentality by replacing their business models with new, revolutionary programs. "After years of lurching back and forth, [they] failed to build sustained momentum and fell instead into what we came to call the doom loop" of reactively changing course and jumping on short-lived trends, he wrote.

In contrast, companies that understand their markets and systematically grow their businesses keep the flywheel moving forward and deliver the gold standard of true innovation. end of article

Dale S. Laszig is Senior Vice President of Sales in the United States for Castles Technology Co. Ltd., a manufacturer and global provider of smart card, contactless and POS solutions. She can be reached at 973-930-0331 or dale_laszig@castech.com.tw.

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