Intellectual Property (IP) is one of the greatest sources of value creation in the corporate world, but it’s also one of the most underutilized. While research shows that up to 90% of company value is linked to intellectual capital, most businesses still treat the IP function as an administrative cost centre. At best, it’s seen as a resource for supporting R&D, but more often it’s simply treated as a necessary expense rather than a strategic enabler for growth. This often comes down to the fact that IP is an intangible asset whose value can be hard to assess in concrete terms.
As such, in order to take full advantage of their assets, companies must find a way to make the impact of their IPs visible, quantifying the risks of ineffective management of intangible assets and the value potential that an effective IP strategy and management could have for their customer intimacy and market success. By placing IP Strategy and management at the top of the C-Suite agenda and raising the company-wide awareness of their strategic implications, companies can rethink and redesign company-wide processes to better deliver on their potential. To accomplish this, companies must establish three pillars of IP innovation: a strategic mindset for IP assets, a market-driven business/product development approach, and an effective deployment and steering approach.
1 . Strategic Mindset For IP Assets
The most important thing to recognize is that if you want to drive value from your Intellectual Property, you need to utilize the rights that come with them. Patents and trademarks aren’t worth much to a company if they end up as a pile of paper in the repository. For some businesses, their patents just serve as vague proof that they are innovating and coming up with new ideas, without actually taking the next step to bring those ideas into fruition.
There are multiple ways to handle this: companies can get value from it by granting licenses and collecting licensing fees for their intellectual property rights. Alternatively, they can take steps to prevent competitors from using their inventions, monitoring the market to identify potential infringers. This also requires to not shy away from enforcing the rights through litigation. Many companies both large and small are doing this, though not systematically. To be effective in this approach, you need awareness across all departments as to the purpose of these assets and how the company uses them.
Yet in order for a company to strategically utilize its IP assets, they need to have them in the first place. This leads to the second pillar: how to steer and drive inventions and product development.
2 . Market-Driven Business & Product Development Approach
One of the biggest reasons that companies struggle to develop valuable IPs is that they approach innovation inside-out rather than outside-in. This means that they are very excited about their engineering capabilities and creativity, so they just keep on developing and patenting in the name of showing off how inventive they are or what new technological innovations they can come up with. While such an approach can be successful, it can also lead to a lot of wasted potential.
Something that every company should remember is that no matter how “innovative” something is, if it doesn’t address real customer needs, it likely won’t be profitable. When developing new inventions, inspiration must come from the market and the customers, with new products being developed to meet their specific needs. This can be difficult sometimes, as it might require an organization to not follow through on a great idea that the R&D function has developed, but that lacks a clear market need.
In cases like this, a company’s IP function can provide valuable insights for R&D to complement their development processes and steer them in a direction that is most beneficial to the company. This leads to the third and final pillar.
3 . Effective Deployment & Steering Approach
Something that’s vital to understand when aiming to create valuable IPs is that by its very nature, intellectual property development is a cross-functional process. Though a company will naturally have an internal IP function, many of the best ideas and insights can only be generated if multiple functions in a company work together. Functions such as business, legal, marketing, sales, product development, R&D, and CRM all have something to contribute to the joint success of IP development. This can lead to problems, however, as not all of these functions are managed by the same people. To compensate for this, companies should develop IP committees and establish solid governance processes, ensuring that all key stakeholders have a voice and can coordinate their efforts.
Once you have everyone on the same page in terms of IP development, it is equally important to make sure that the organization is transparent about defining and communicating relevant KPIs. After all, only what gets measured gets managed, so internal leadership needs to be clued in on the company’s larger IP goals. For instance, if there is a business area that the company wants to grow into, members of the IP committee should have easy access to information such as the number of relevant disclosures, filings, and/or grants in the area, along with the R&D spend per granted patent as a measure for success. The selection and granularity of KPIs and information should also be adequate for the respective stakeholder groups and hierarchy levels in the organization.
Unlocking the Business Value of IP
Given the right support, IP can be a core enabler for the innovative power and financial success of the economy of the future. To get there, company leaders, particularly Heads of IP, must develop the right communication strategy and training practices to instil a strategic mindset for thinking about IP. Additionally, they must push to engrain IP processes in a market-driven product development approach to lead new innovations in the most meaningful and profitable direction. Lastly, they must establish effective governance and reporting systems to coordinate the various functions and stakeholder groups of a company, placing IP at the top of the management agenda. When all of these factors come together, companies position themselves for tremendous future success.
About the blogpost author:
Dr. Dominique Christ is an IP practitioner and partner for companies on topics such as IP strategy, innovation and overall business transformation. He is Board Member and Managing Director Consulting for Dennemeyer Group’s business relationships with the world’s largest companies. He is an expert in the further development of IP strategies with the involvement of top management. Dominique
worked previously for a leading global top management consulting firm, advising clients on strategic business development and digital transformation. He is a business lawyer, has completed his MBA in the USA and holds a Spanish lawyer’s title.