Intellectual Property is the key to success in the knowledge economy. An integrated intellectual asset management system will result in better products and services together with a superior protection against infringement. IAI will assess your organization’s needs and guide you through the process of creating a world class IAM system that exactly fits your needs.
|1. Articulate Business Needs|
|2. Match to IP Competency|
|3. Plan for IP Threats|
|4. Determine When to Act|
In today’s technology-driven markets, product offerings multiply at an increasingly accelerated rate, the global competitive landscape keeps changing, and IP barriers and new business opportunities can evolve suddenly. Corporate technical communities are constantly challenged to manage intellectual assets for maximum return and to be mindful of every cash-generating opportunity.
IntellectualASSETS, Inc. provides cutting edge solutions to the technical community to address the increasing demand on shorter cycle times and ever more market-aligned IP and R&D investment decisions. Our Integrated Intellectual Assets Management process encompasses not only technical considerations but also market, business and strategic planning elements to improve business alignment and successful commercialization.
Markets are becoming increasingly more complex and fragmented. Intellectual Asset, Inc. customers are looking for higher customization yet at lower cost. Satisfying such divergent needs requires multi-dimensional product lines and shorter product development cycles. The technical community requires Intellectual Asset, Inc.’s effective and efficient IAM processes to address:
With increases in both governmental fees and the number of active patents to maintain, effective portfolio assessment is critical to cost containment. As part of their core strategy, our clients’ business, marketing, and technical communities come to us to help guide them in the careful selection of what IP to keep, license in, license out, sell, donate or outright abandon. Key considerations involved in this decision process include:
The Principals at Intellectual Assets, Inc.? help the R&D investment community conduct their business with an eye to ensuring that certain financial conditions are met, including:
To ensure the successful implementation of technology development, our clients? technical, business and marketing communities, ask Intellectual Assets, Inc.? for our help in conducting analyses and communicate relevant information to facilitate:
How important is intellectual property to a company’s balance sheet? Just ask Samsung. The company’s shares plummeted nearly 7.5% after it lost a patent infringement case to Apple in late August 2012. The ruling erased more than $12 billion dollars from Samsung’s market value overnight.
The global economy is shifting from the manufacturing-based economy of the last century to the knowledge-based, innovation driven economy of the 21st century. Whereas access to raw materials and factory output helped define success in this last era, access to ideas and the ability to create tangible business value from them will define success in the knowledge economy.
It is clear this new marketplace has emerged and executives worldwide must take a leadership position in driving an effective IP strategy agenda throughout their organization. Executives need to look at IP not as the by-product of other activities, but as an integral part of their business. Not as an expense to be managed, but as capital to be invested and deployed. But how does that actually happen—how does managing innovation and IP lead to sustainable profits? By understanding the three key IP management concepts outlined below, executives can lead their teams to achieve profound business results.
The first concept that executives must understand is the business use of intellectual property. To frame this concept an analogy is helpful. A classic example of how a hierarchical model works is Maslow’s Hierarchy of Needs. As students we were taught that the most fundamental human need is air to breathe. Once that need is satisfied a search for food sets in. Following these two primary needs, a human looks for shelter and then a community relationship with other individuals.
This analogy holds true for the management of a business. In order to fully develop and deploy a successful business strategy within your organization, one needs to first think of business needs dictated by the environment surrounding a company in a hierarchical manner.
Thus, executives are expected to lead companies to produce sustained business growth in a similar way. The order of priority for an executive is to (1) not surprise shareholders with unexpected results, (2) derive full value from existing products, services and assets, and (3) launch new products and services to sustain competitive advantage, using an efficient mix of both in-house and external resources. Not only are these the expectations of board members and shareholders, they are requirements.
What Maslow discovered, we now know, also applies to intellectual property. A company must first be competent (able to breathe) before it can successfully move on to higher levels of activity.
The first requirement is to avoid any surprises. Surprising your boss, or a corporation’s board, is a fast track to the unemployment line. When a business leader puts in place systems that allow the company to operate in a stable, consistent manner, the first level of business success sets in. Intellectual property contributes at this base level by helping to ensure that a company is free to offer its new and profitable products and services.
Once a business is stable and running smoothly with no surprises, the next challenge for an executive is to ensure that the company’s IP is being used to generate sustained advantaged market positions. This means introduction of new products and services that are superior in cost, performance, or both, compared to the competition. The trick is to accomplish this feat in a manner that will allow that advantaged position to be sustained over time. Intellectual property’s contribution to sustaining a market-leading position comes in the strategic acquisition and use of patents, trade secrets, copyrights and trademarks. These, each in their own way, can prohibit a competitor from offering the same product or service. To accomplish this sustained advantage an executive must ask the right questions and generate the right competencies within the business.
The next level up the business hierarchy, once a company is competent at the first two levels, is to engage in full exploitation of its technology globally. However, there are very few companies in the world that can conduct their business in every country. The company’s core competence or sweet spot usually lies in the first or second tier of the hierarchy. When a company is expanding geographically, it builds its regional business into countries in which it knows how to operate. For those countries where it’s unfamiliar with doing business, licensing its technology to others who understand the country’s nuances, via geographic licensing programs, builds corporate revenues faster than any other method.
Near the top of the pyramid, and only after the other three competencies are mastered, can a company look to put in place business systems that will consistently speed R&D and product development. The role of intellectual property at this level is to integrate business, regulatory, standards, marketing, R&D, and IP activities. Many companies attempt to integrate planning, creation and management strategies and tactics before they’ve mastered the other levels of the pyramid. But, as Maslow vividly showed us, it’s hard to find shelter if you can’t breathe.
Finally, at the top of the pyramid, influencing industry adoption is all about maximizing value in the various stages of the company’s innovation cycle. As Marc Ehrlich, head of IBM’s IP Enforcement and Commercialization business, observed: “In order to control industry adoption of new technologies an executive must find the proper balance between proprietary protection and open licensing of a technology. To do this requires a deep understanding of the innovation lifecycle for technologies in the company’s industry. For example, aggressive IP protection may make sense for early stage technologies whereas a more open licensing model, implemented after market acceptance of a technology, may facilitate industry adoption, thus setting the stage for a next wave of technological innovations for the company.”
In summary, we see the activities associated with business success, and the corresponding intellectual property competency, are prioritized in a hierarchical manner. Without a strong foundation to build upon, IP will just remain a “cost” on the balance sheet and unpleasant litigation “surprises” will occur.
When the executive understands the hierarchical nature of intellectual property management and how it fulfills the business needs of the company, his or her next task is to understand the lay of the land in terms of the company’s IP portfolio and its ability to use that IP. Understanding the business and IP landscape is critical for assessing threats and opportunities for the business, which enables the development of an effective strategy and action plan.
A critical component of this action plan should be the creation of an IP dashboard. IP dashboards are used by CEOs, R&D teams, legal counsels and key decision makers to monitor the competitive landscape and to find new opportunities for innovation. They are also used to reEnlarge quantities of patent, scientific and product literature.
Having an effective means to display and interpret critical information for decision makers is essential to driving the growth of a Fortune 100 company. It is essential to have effective procedures, collaborative tools and dashboards to quickly define the context of the problem to be solved, the available options for resolution, and the comparative risk and benefit associated with each option. In the business world, it’s jobs and real shareholder revenue that is at stake.
An IP dashboard does two things for the executive. First, it provides guidance for the management team on the right way to think about using intellectual property. Second, it is a fast, high-quality, visual way to provide the executive with feedback on the strengths and weaknesses of various aspects of the integrated business and intellectual property management systems.
A component business model organizes complex business systems as a set of interrelated components. This organization in turn creates an excellent source of inputs for a dashboard through which an executive may audit the progress of the modeled business. Building on this proven management approach, components of intellectual asset management can be placed into an executive dashboard and arranged visually to line up with the pyramid’s hierarchy of business needs and IP competencies. Armed with this intelligence the executive can focus on building organizational competencies needed to successfully beat competitors in the marketplace, maximize competitive advantages of the company’s portfolio, and build strong and intelligently protected technologies that support profitable business positions for years to come.
The third concept an executive needs to understand is that an intellectual property strategy also has a time dependency. This can best be understood via the S-curve most executives became familiar with in business school. This S-curve was a useful tool for simply conveying the best time during a business cycle to invest in the creation of new businesses, grow those businesses, and extract value from mature businesses.
The management techniques appropriate for each portion of the S-curve varied in conjunction with these different objectives. Creation, management, and exploitation of intellectual property also vary along the same curve. However, when it comes to intellectual property management, it is best to extrapolate from the traditional business curve and add two key concepts: The “chasm” made popular by Geoffrey Moore and the “hype cycle” developed by Gartner.
By combining the three different curves, executives are provided with the best guidance on when to create, buy, license and litigate intellectual property. As an executive looks at the business environment and starts to understand which technologies a competitor may choose to bring forward, the hype cycle helps to reveal the right time to invest in a developing technology.
Early in the cycle, patenting activity rises as adoption builds. At this point, the price of intellectual property goes above market expectations. As the market begins to grow the technology usually runs into a few hurdles, including Geoffrey Moore’s chasm. It’s at the trough of the hype cycle that advantageous licensing can be accomplished by a corporation. If the company was not deploying its own technology (developed either internally or via partnership) early in the cycle, licensing technology in the trough is a good business decision for a company with a solid fast-follower strategy.
Needless to say, it’s important not to wait too long to engage in licensing transactions because, as the technology starts to emerge on the far side of the chasm, market size builds, as does the market capitalization of participating startup companies. It is at this point a company may be locked out or required to pay dearly for access to a key technology needed to secure an advantaged market position. It’s also noteworthy that, as companies start to pull out of the hype cycle, litigation of intellectual property also occurs. A smart CEO will make sure that the intellectual property that was acquired early on has appropriate patent fences built around a strong core position.
To best illustrate how the hype cycle allows an executive to understand when to create, buy, license and litigate intellectual property, the technologies in a digital entertainment technology leader’s pipeline can be shown in a composite Gartner hype cycle below on top of key technology trends in the entertainment/consumer electronics/television industries in general. In this case study, the example company shows up with 12 specific technologies indicated by a red dot outlined with a blue circle in the figure.
Starting at the far right there’s a number of technologies that fall into the Gartner “slope of enlightenment”. These are technologies headed into commercialization and for which consumer acceptance has been obtained. These markets are predicted to grow rapidly and as such may give the company licensing revenues in the process.
Some of these licensing revenues are being reinvested in the early stage (left side) of this cycle at the “peak of inflated expectations”. Here the company is again well-positioned with a variety of technologies. The company is investing early in a technology to make sure that the intellectual property portfolios are in place and are solid and robust enough to generate good revenues when the technologies emerge and move into the “slope of enlightenment”. The core competency for the company’s management at this point in the hype cycle is to invest in emerging technologies at a realistic price point.
Looking at the center of the graph, at what Gartner calls a “trough of disillusionment”, we see that the company is positioning itself to invest in technologies that are about to come out of this area and experience growth upon entering the next phase. It is important for a company to invest in technologies and continue their investment in both R&D and IP as these technologies move towards commercialization. The company is exhibiting the management perseverance to see such technologies through, and to obtain a return on investment.
The mix of early and late technologies as illustrated on this composite hype cycle shows that the company is investing for both current and future revenue streams. Management has the planning skills to know which technologies to invest in early, as well as the discipline to continue to invest in them when others are disillusioned, so that a strong patent portfolio is present when commercialization takes place and increasing revenues are available.
Because the digital entertainment technology company invests along the entire lifecycle, it is expected that the company will obtain a better return on its investment than companies who wait until the last minute to invest, and end up paying above market for the technology they acquire. The 2012-2013 patent wars between such players as Google, Facebook, Yahoo, Microsoft, Apple, Samsung, Motorola and others illustrates the point that if one waits until the end to acquire patents, one pays a very high price indeed for acquisition of those assets.
IP that is effectively utilized can provide a powerful competitive advantage in the marketplace. It can also help organizations better understand emerging threats and identify new opportunities. In today’s global economy, IP belongs not just in the board room, but in the toolkit of every executive. As the lynchpin of innovation and a gateway to vital new revenue sources, IP is simply too valuable to be left to chance. By understanding and implementing the three key IP management concepts outlined above, executives and their teams can outpace the competition and achieve ground-breaking business results.
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