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Are You a Problem Solver or a Problem Finder?

In his book “Know What you Don’t Know”, the author Michael Roberto quotes the noted psychiatrist Theodore Rubin who stated, “The problem is not that there are problems. The problem is expecting otherwise and thinking that having problems is a problem”. So what does he mean by this statement? The answer is that successful business leaders don’t wait for the big problems to materialize – they actively seek out problems that others do not see or want to see. They realize that if you wait for problems to find you then you have not managed your risk properly because you should have found the problem first. So here are 5 questions you need to ask yourself to get started.

“How” do you become a problem-finder? The answer is simply that successful business leaders first recognize that what they do not know is the greatest area of risk that they need to focus on – so they spend a great deal of time learning what that is in their particular industry.

“Where” do you find these unknown problems? Andy Grove of Intel, quoted by the author, uses the following metaphor to describe his model when he states: “Think of it this way: when spring rain comes, snow melts at the periphery, because that is where it is most exposed”. Simply put, problem finding is about looking at the periphery of your company, where you will find the first signs of change, either positive or negative.

“Why” is it important to find problems first? Solving problems is like being the first responder to an emergency situation. As the old adage goes, “a firemen has basically two tools, an axe and a water hose”. So what do you think your house will look like AFTER a big fire? Easier and better to avoid the fire BEFORE it starts, and deploy many more tools to do so. Business leaders need to be constantly searching at the periphery for problems that are not yet problems.

“When” do you start? RIGHT NOW! The answer, as many of us were taught in school, is often found right in the question. Great questions beget great answers. So start asking great questions. Don’t be the person who says “if I had only seen it coming I could have avoided it”. If you are, then YOU may be the biggest problem.

This entry was posted in Contracts, Corporate Governance on March 21, 2013 by mjgpc.


SHOP TALK is TRADEMARK SPEAK

Whether you like it or not, shopping is a national pastime. Even consumers like me, who try to keep it to a minimum, there still is no way you can avoid what I call “shop talk” or “trademark speak”. For retailers, depending on how well you executed on your marketing plan, Q4 shopping is all about whether your brand for quality gets rewarded by a sale of goods. Then, in Q1 of the new year your pricing strategy gets rewarded by a follow up sale perhaps. Either way, what the average consumers thinks of your brand [retail or otherwise] is essentially how your trademark translates into a metaphor. For example, if I say STARBUCKS®, what image comes to your mind? When I go to buy some TYLENOL® surely I do not confuse that with EXCEDRIN®? You may recall that in 1973 Paul Simon used the phrase “So Mama, don’t take my Kodachrome® away” in his song KODACHROME® (but only after some serious trademark rights negotiations with Eastman Kodak Company).

So how does trademark imagery become “trademark speak”? Simple. People like to abridge their sentences. For example, texting is part information and part Haiku. If I were to send a text that said “going to buy a pair of NIKES”, you would probably know what I am talking about. Likewise, if I texted you that I am “going to buy a pair of MICHELINS”, you would also know what I meant. You understand my text despite the fact that the products are not listed and are completely different. If so, marketeers feel the brand they created is working. Trademark attorneys, on the other hand, will fret about how their clients’ trademark is being used as a noun and not an adjective. So why the big rift between the two camps of advisors – when both have as their ultimate goal the success of the client? The answer lies in how we characterize a trademark or service mark.

Simply put, the question is whether a trademark is a proper adjective or a proper noun. If marks are considered as adjectives, as current trademark law so states, then we all know that an adjective needs to modify a noun so the noun MUST be inserted after the trademark adjective. So, to use the example above, when I was texting I should have written that I was “going to buy a pair of NIKE® sneakers, and also “going to buy a pair of MICHELIN® tires. But, in the fast paced world we live in, such usage requires more words. But many folks think that is unnecessary – everyone knows what we are talking about. The purpose of trademark law is essentially to identify the source of the goods or services. The purpose of language is to communicate with each other. Both texts above accomplish these dual goals. So if the purpose of trademark law is as a source identifier, and if the average consumer is using the marks as such in noun form, then as the famous WENDYS® advertisement stated “WHERE’S THE BEEF™”?

So can the world of trademark law co-exist with shop talk and who cares? Without getting into the complexity of trademark law nuances, and linquistical analysis of descriptive versus prescriptive language, [see “The Grammar of Trademarks” by Laura A. Heymann, 2010 for further information] a quick review of trademark history goes back to at least 3,000 B.C. when stone seals were used to indicate who made certain items. Contrast that with today, according to the Brand Names Education Foundation, the average supermarket carries thousands of separate items most of which have brand names. So if shoppers can identify the source of their purchase, and if trademark enforcers can ensure that the product is not a “knock-off”, then linguistic usage can and should live harmoniously with legal rights. This would reduce the current conundrum of overly policing commercial speech. Or to quote a famous Beatles song [ironical in that one of the more acrimonious multi-million dollar disputes in music trademark history was over the mark APPLE®] we should all just “LET IT BE”. Communication and risk management are in a WIN-WIN situation.

For more information on trademark protection, check out our free e-book on the subject. Please note that the marks above are the registered trademarks of their respective companies.

This entry was posted in Trademarks and tagged trademark law, trademark strategy on February 27, 2013 by mjgpc.


Corporate Governance vs. Management – Who is Keeping Score?

Annual board of directors meeting season is just beginning for companies on a calendar year basis. Some companies took the opportunity to look at how they do business. Many small companies have what is referred to as their OPERATIONAL PLANS. As it definition states, this is how they “operate” their daily business working IN their company as a W-2 employee. Congratulations, that is a good start but it is not a good finish unless you just wanted to create a job for yourself and others? If not then you need to work ON your company. In fact, working ON your business is just as important because you want more than income, you also want profit and equity [“ROE”] which are the results of ownership work – not just employee work.

The biggest mistake you will make this year is equating working IN your company with working ON your company, according to the well-known author Michael Gerber of the book The E-Myth Revisited. He states that P&Ls and tax data are static because they look backwards – not forward. Ownership work gets beyond Income only and into Profit and Equity [ROE] strategy. And isn’t that why you went into business in the first place – to go beyond income? You simply can’t be effective long-term until you integrate what you do IN with what you do ON your company. So stepping back and doing some critical decision-making is the key. But that raises the question of who does it and how to do it?

So let’s answer the first question of who is responsible for governance? In a corporation the board of directors sole job is to “govern” the company. So HOW does a board “govern”? The answer lies first in defining the difference between management and governance. Most people have a good idea of what management is so I will restrict my remarks to governance issues. Some top 10 good governance director practices are the following:

  1. Strategic Planning addressing sustainability, competitive advantage, etc.
  2. Corporate performance and valuation planning
  3. Risk and Crisis Oversight [e.g. data security]
  4. Oversight of company core principles, ethics and culture
  5. Oversight of human resources [e.g. management] and recruitment of directors
  6. Financial Oversight [e.g. review of P&L, Balance Sheet and Budgets]
  7. Oversight of sustainability matters and stakeholder relations
  8. Create/approve company-wide policies and procedures.
  9. Manage Board of Directors education, meeting processes, committees, etc.
  10. Oversight of corporate social responsibility

I recommend that these key governance issues be addressed by your directors. (See also NACD Directorship Board Intelligence, survey report dtd 1/2011, p. 40). Managers manage the company. Directors govern [direct] managers. They are both important but very different. The Massachusetts Business Corporation Act [“MBCA”], Section 8.30(a) defines the standard a director must comply with. It states, in pertinent part, that a director must, generally speaking, act (i) in good faith, (ii) with the care that a person in a like position would reasonably believe appropriate under similar circumstances; and (iii) in a manner the director reasonably believes to be in the best interest of the corporation.

So how does a director comply with this legal standard? The comment section to Section 8.3 provides advice by stating: “The process by which a director informs himself will vary but the duty of care requires every director to take steps to become informed about the background facts and circumstances before taking action on the matter at hand. [However], a director may rely on information, opinions, reports, and statements prepared or presented by others as set forth in Section 8.30(b).”

So who are these “others” referred to? Section 8.30(b) lists the individuals and groups (the “others”) that a director may rely on. Generally speaking, they are as follows: (i) corporate officers or employees whom the director reasonably believes to be reliable and competent with respect to the information, opinions, reports or statements presented, (ii) professional advisors as to matters within their professional competence, and (iii) a committee of the board, where the director is not a member, if the director reasonably believes the committee merits confidence.

But there are two major caveats. The first is that “a director so relying must be without knowledge concerning the matter in question that would cause his reliance to be unwarranted”. The second is that “. . . in order to rely on a report, statement, opinion, or other matter, the director must have read the report or statement in question, or have taken other steps to become familiar with its contents.”

In summation, directors must become actively engaged in the governance of the company or else they should resign. So take a look at the recommendations above and ask yourself “is your board living up to the legal standards of the laws in your state”? If not, your company is at increased risk. Haven’t started yet to address the governance issues of your company? I suggest you do so before a third-party discovers you are running a high risk business – and that high risk is your decision-making – or lack thereof!

This entry was posted in Corporate Governance, Strategic Planning and tagged business, leadership, risk management, strategic solutions on January 25, 2013 by mjgpc.


Do you know HOW your managers are doing?

The Commission on Corporate Governance [CCG] of the New York Stock Exchange just issued their Report on good corporate governance in response to the financial crisis in 2008 and 2009. It lists 10 key principles. Principle #2 is very interesting. It states that, although there has been an emphasis on the board – shareholder relationship in the recent years, the CCG finds that “the critical role of management in establishing proper corporate governance has not been sufficiently recognized”. The CCG states that management must create a “culture of performance with integrity” and accountability systems. Healthy debate, which the CCG refers to as “constructive tension” is also needed between the board and management. In the wake of many major corporate tragedies lately, the CCG is now shining the spotlight on execution and not just strategy. So how is your board working with your managers?

This entry was posted in Contracts, Corporate Governance on March 16, 2011 by mjgpc.


The 2011 Metaphor: Sputnik or Confucius?

The Unites States and China have always rallied their respective countries with a good metaphor. In the late 50’s, when the Soviet Union launched their first satellite in orbit the United States responded to the challenge by calling it a “sputnik moment”. Today, China’s attempt to reconcile its controversial past and promote a global image of cooperation, just erected a statue of Confucius on Tiananmen Square. One metaphor focuses on energizing, the other on harmonizing. Both are important in following strategy at a global level. Why? Take for example the Executive Order signed by President Obama on January 18th. It states as its premise that, to reform government regulations to ensure maximum benefit, each agency “may consider [and discuss qualitatively] values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts”. Regulatory integration and innovation are not a zero sum game. The key competitive advantage of great companies is their ability to synthesize historical core values with groundbreaking products and services. So in 2011 lets energize AND harmonize and use the combined metaphor to SHOW the world HOW to make positive change.

This entry was posted in Corporate Governance, Strategic Planning on February 1, 2011 by mjgpc.


The Great Debate: Data versus Decisions

The Economist Magazine recent article addressed the seminal problem of what risk will hurt you the most – either what you don’t know or what you know but don’t interpret properly and implement remedial action. The article focus was on the shadow banking system [non-bank financial systems] and the recent recession. But the lesson learned [or not] was that the key economic risks were not buried in data but rather in “plain view” – inflated housing prices and some banks low capital level. But “plain view” facts are not literally in plain view if you do not see them. Some refer to this as black swan risk management. Whatever you refer to it as, the circumstances of these past few years is a reminder that if you change the way you look at things, the things you look at change. If so, how are you changing the way you look at 2011?

This entry was posted in Contracts, Corporate Governance, Strategic Planning, Uncategorized on January 25, 2011 by mjgpc.


Values and Traditions

Values and traditions are two words that come to mind when we think of the upcoming holidays in December. But these are also the two words that the Economist magazine [October 30th] cited as the most important “intangible things” for good corporate governance [versus “ideal constitutions”]. Why? Because recent studies show that corporate culture trumps corporate checklists when it comes to predicting the success of a company. Unlike check the box rules, a good corporate culture fosters good habits. So what values and traditions do you want to carry forward into 2011- and which ones do you want to leave behind in 2010? December is a good time to “mull it over”.

This entry was posted in Corporate Governance, Strategic Planning, Uncategorized on November 30, 2010 by mjgpc.


A Scary Question!

How do you know that the answer to your current problem may just be very simple but, because you assumed it was too complex or expensive to resolve, you were afraid to ask for help? Conversely, how do you know that an issue you have that seems simple may, in fact, be a whole lot more complicated – so you can’t afford not to solve it or it will get even worse? How do you know unless you ask? Here is one example. The saying goes that great companies are bought – not sold. If so, ask yourself why anyone would want to buy your company? If so, why? If not, why not? How do you know unless you ask?

This entry was posted in Contracts, Corporate Governance, Strategic Planning, Trademarks, Uncategorized on October 14, 2010 by mjgpc.


The “Find and Fix” Syndrome

The Story of the Rug Merchant

The simple story of the rug merchant is about a man who stepped on a bump in the rug in order to flatten it out only to see the bump reappear in another part of the rug. He repeated his actions again and again yet the bump reappeared again and again. Finally, in frustration he lifted the rug, and as he looked underneath, an angry snake slithered out.

This story is shared by the famous business consultant Peter Senge in his books as an example of a “find and fix” mentality in which companies try to solve dynamic problems with static or incorrect solutions. Frustration sets in, or worse, the company is lost before it knows what happened. It’s another example of your biggest risk which is “what you don’t know that you think you know.” Solution: learn about the problem first! Next, play what I call business BINGO which is the confluence of your Goals and Tasks and the people performing same. Of course in order to play you need to know your Vision and Mission. If you are unsuccessful in “find and fix” mode, over and over again, maybe it’s time to start learning another way to play the game of business?

This entry was posted in Contracts, Corporate Governance, Strategic Planning on October 4, 2010 by mjgpc.


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