IP STRATEGY: TIME FOR YOUNG ENTREPRENEURS TO BE SAVVY — SERIES TWO
Extracting value from intellectual property has both tactical and strategic implications. The strategic impact comes from the ability to manage the intellectual asset generated by an enterprise, and the tactical implications are more about how the organisation can utilise (operate) those intellectual assets that are protectable by IP legal frameworks.
Why does it matter that young entrepreneurs become versed in intellectual property strategies now? Intangible intellectual assets are already the driving currency of our economy, and that will not change in the foreseeable future. People have always looked up to someone, they have always had heroes — and this is particularly true in business. Everybody wants a mentor, a coach — including myself. As I write this, I am still looking for that special person who would have as much belief in the upside of my career as I would have in their legacy. However, we sometimes forget it is better to model principles rather than methods. Most young entrepreneurs look at what their business heroes are doing, or did, and want to copy what they did every step of the way.
Young entrepreneur? Yes? Then listen up! The truth is that most of your business heroes did not build their personal wealth in the ways you thought they did. When you hear them say, “Don’t put all your eggs in one basket,” what do you think they are talking about?
During every economic era — there is always that crème-de-la-creme class of asset that drives growth. You probably know what they have been in the past. Moreover, if you don’t, ask some successful business mentors where they made the most money from their investments in last ten years, and where they made the most money in the years before that. If a good number of them are sophisticated investors, the answer will be somewhere in their responses. Remember, the quality of the answers you get will always be about the quality of your question.
If you are a young, innovative entrepreneur with a new and novel technical approach to a known field, you are probably being told by your mentor to constantly say, “Patent pending,” when you are asked about the patent status of your invention during a pitch. The likelihood is that you have not even done a technology landscape search, let alone file for a patent. Listen to the mentor. You will be learning the right method (by trying to get your invention noticed by the right people), and you will avoid applying the wrong principles by trying to blag your way through the patent talk.
When it comes to developing an overall IP strategy, most senior entrepreneurs fail to see IP as a significant business asset, and the ones that do seldom have an IP management strategy that is fit for purpose. Moreover, rightly so, if only because IP is not how they built their wealth in the past. At most, what some have done in their businesses, is to seek an ad-hoc intellectual property solution which is costly — and utterly inefficient.
Intellectual property is the source of the current value of a company. Therefore, a proactive and comprehensive approach should be considered. Waiting until you have raised funds before considering IP management is like hailing a speeding train as it approaches its final destination.
The core of your future multi-million-dollar company (perhaps billions in some cases) depends on the efficiency and the practicality of the IP strategy you deploy today. IP strategy is all about the market. Your implementations should be parallel to current and future market entries, and the type of product or service taken into that market.
Here are some key points to remember!
- IP strategy is a living document. You cannot completely crystal ball your moves
- The direction must come from you, the CEO. Internal management and business alignment must flow from your example
- Having a protected intellectual entrepreneur asset (IEA) is not a strategy. You need to create channels that directly connect to monetization (revenue streams)
- Selecting a capitalization opportunity? The most important thing is not a patent — it is whatever offers an economic moat
- “Co-opetition” = working together to facilitate reaching own goals
- IP strategy must be geared towards providing a solution to the market demands. Otherwise, your IPR is no use, and economic obsolescence is inevitable
- If you already have a substantial IP portfolio, don’t be afraid to enforce your rights as litigation is a way to take risk off balance sheets
- Your IP portfolio must not exist in vacuum; consider current and future markets and competitor presence
- Understanding the IP landscape is essential to the development of an IP strategy for innovation-led businesses
- Innovation is about generating new things, but also about renewing old things and disrupting old ways
The future that is so near!
The essence of formulating an IP strategy is to be able to align business with its source of value, and the delivery methods of these values. Why is this important? Your current and future clients are millennials who are known to be an “experiential generation.” In other words they, perhaps, value experience over ownership. How does that apply to you in the context of your business? More often than not, the fundamental reason why you will get repeat business is the source of your IP combined with your unique model of business delivery.
Competitive Tool Box
“Don’t compete if you have nothing to compete with” — Jack Walch
A company can successfully use its IP portfolio to alter the behaviour of its current competitors, as long as the company is successful in the working of its intellectual property strategy quarter after quarter. It will not be long before the competition folds its tents and the race becomes a one-horse affair.
Another aspect of a proactive IP strategy is that it does not limit a company in the market in which it operates, unlike a company without an IP strategy. Intellectual property rights allow an enterprise to have a presence in many markets through systematic IP licensing.
Forces outside the industry, and indeed those within the sector, will have some effect on a company’s IP strategy and how it executes it. If the company is “late to a party,” that company will be forced to adopt a reactive IP strategy rather than a proactive one; sort of like turning up late to a Christmas party; you may end up with the crumbs as opposed to the pie. Success driven businesses should focus on R&D as early as possible so they can build a wall against outside forces, or at least claim a significant portion of the whole “pie.”
The industry landscape has a significant influence on determining the way a company thinks about its IP strategy and the available IP tools to use. The position of many businesses in a given market is neither a coincidence nor luck.
The major strategic thinking that must precede the design of any IP strategy is: Where is the value being created and, which activities are not adding to the overall enterprise value? And, in turn, identify the element of your value creation channels — the products, the processes and the subsystems.
Good luck with your business!