Download Integrated

Integrating Business and
Intellectual Property Strategy
Dr. Guriqbal Singh Jaiya
Director
Small and Medium-Sized Enterprises Division
World Intellectual Property Organization
www.wipo.int/sme
Spotlight is on knowledge
in today’s economy
• Knowledge, Weightless, Information, Digital
or Service Economy
• Factors of production: Land, Labor, Capital,
Intangibles (Knowledge)
• Knowledge as useful Information (or
Service)
• Information as a “Public Good”
• Information as Property
Market-oriented Economy
• Playing Field: Unfair competition; free riding
• National Legal Systems: Diversity
(bilateral/regional/ international treaties or
agreements)
• Adding Value : Meeting or exceeding market
needs or expectations
• Market research: Consumers’ needs, competing
products or substitutes, gaps
• Technological innovation as an element of
marketing
The challenge of adding value in
today’s economy
• Raw materials/Inputs: Processing (Value addition) = Value
added output/component; product; sale; Profit
• Value addition: Cheaper, Faster, Better:
Functional/technological or aesthetic/non-technological;
Rational/Emotional (More for Less)
• Price; access/availability; consistency
• Individual, Enterprise (legal person), Chains, Networks;
consortia; Open Innovation (Industry-GovernmentAcademia)
• Ownership vs. access to knowledge
• Value Addition, Value Delivery and Value Extraction
Performance Gap
Time
Customer Expectation Dilemma
Tangible and Intangible Assets
• Intangibles differ from tangibles in two
ways that “change the rules of the game”,
(if not the game itself):
– Value in context
– Multiple simultaneous value streams
Levels of Product
Augmented
Product
Installation
Packaging
Brand
Name
Delivery
& Credit
Quality
Level
Core
Benefit
or
Service
Features
AfterSale
Service
Design
Warranty
Actual
Product
Core
Product
Tangibility Spectrum
Salt
 Soft Drinks
 Detergents
 Automobiles
 CosmeticsFast-food
 Outlets

Tangible
Dominant

Intangible
Dominant

Fast-food
Outlets
Advertising
Agencies
Airlines
Investment
Management
Consulting
Teaching




Selling Products
• Customers who
care about products
“on their own
terms”: is this the
right product for
me?
• Build the “best”
product
– Best designed
– Lowest cost
– Most reliable
Selling Interconnected
Systems
• Customers who care
about the total system
experience: will this
connect with the rest of
my world?
• Control the architecture
Or
• Influence the architecture
and build the best
products within it
The challenge
Performance
Selling
products
Selling (parts of)
interconnected
systems
Time
Strategic Entrepreneurship
and Innovation
• Entrepreneurship is concerned with:
– The discovery of profitable opportunities
– The exploitation of profitable opportunities
• Firms that encourage entrepreneurship are:
– Risk takers
– Committed to innovation
– Proactive in creating opportunities rather than
waiting to respond to opportunities created by
others
Understanding the Process of
Innovation
The Process/Steps of Innovation
Pre-IPO
$
Expansion
• Legal Entity
• Viable
• Market acceptance
• Heading to IPO or M&A
• High Growth
• Founders = Mgt Team
• Bright Idea
• Head Count
• Minimal Revenue
• Experimental
Start-Up
• Multiple Cycles
• Slow Growth
• Research
• Support Functions
• Business Plan
• Administration
Seed
• Proof of Concept
• Marketing
• Revenue Growth
Idea / Concept
Time
The Needs of Each Stage
$
•Recruitment
•Business
•Corporate and
Development
Secretarial
•A & P
•Financial
•Market Access
•Training
•PR and Marketing
•Networking
Expansion
•Business
•Business Plan
Development
•International support and
•Prototype/ POC
Mkt. Access
•Project Management
Start-Up
•Diversification strategies
•Business Premises
and support
•Project Management
•Recruitment
•Management Training
•Training and Incentives
Seed
Idea / Concept
Time
IP Management Needed in all stages
Understanding the business/role of IP
Patent
Manufacturing
Distribution
Sales
Brand
• Understand the value chain of the business and industry
• Understand how profits are generated
– primary product
– spare parts and related products
– service and maintenance
• What are the important features of the IP? How does it add value to
the business?
• What are the important features of the industry other than IP?
–
–
–
–
other important intangible and tangible assets in the value chain
competitive structure of the industry
customer characteristics and purchasing criteria
substitute products or services
IP Environment
Other Competitors
Established Leader
Disruptive
Technologies
Suppliers
You
Customers
Converging
Technologies
Complimentors
IP Deployment Continuum
Concerns
|
• IP risk balance
favors target
• Goal: Design
Freedom
|
MAD
|
|
|
|
Opportunity
|
• Balanced IP risk
• Goal: Confirm
MAD
|
|
|
|
• IP risk balance
favors You
• Goal: Identify
value generation
opportunities
Sources and Conversions of Value
Sources of Value
• Innovations
• Complementary
Business Assets
– Purchasing
– Manufacturing
– Distribution
– Sales
Conversion
Mechanisms
• Sale
• Out-license
• Joint Venture
• Strategic Alliance
• Integrate with
Current Business
• Create New Business
• Donate
• Barter/Trade
$
Aligning Capabilities
Vision
Strategic Framework
IP Objectives/Roles:
Strategies
Innovation
Strategies
Value
Creation
Cash Value
Value
Extraction
Positioning
Value
Where does Intellectual Property fit into this?
An Aspect of Good Management
• People Management –
used by
because IP is generated by people and
people
• Knowledge Management – because a lot of knowledge is informal
and
may or may not crystallise as
recognisable category of IP
• IT Strategic Planning –
because a lot of IP is IT-related; some
of the more complex IP issues arise in
IT context
• Contract Management – because IP is often created (or improved)
in
context of a contract (eg,
supply
contract or
joint venture relationship)
• Asset Management –
it has
because IP is an asset, albeit intangible;
a value
• Risk Management –
organisation
in
because there are risks to an
flowing from its actions, or failure to act,
relation to IP (including risk of lost
opportunity)
Introduction to IP Management 1
•
•
•
•
•
•
Legal
Technical
Business
Export
Financial
Relationships
•
•
•
•
•
•
Accounting
Tax
Insurance
Security
Automation
Personnel
Introduction to IP Management 2
•
•
•
•
•
•
•
•
Trademarks (Brands)
Geographical Indications
Industrial Designs
Patents and Utility Models
Copyright and Related Rights
Trade Secrets
New Varieties of Plants
Unfair Competition
Bringing it All Together
Example No. 1
• Decades ago, Coca-Cola decided to
keep its soft drink formula a secret
• The formula is only know to a few
people within the company
• Kept in the vault of a bank in Atlanta
• Those who know the secret formula
have signed non-disclosure agreements
• It is rumored that they are not allowed to
travel together
• If it had patented its formula, the whole
world would be making Coca-Cola
Bringing it All Together
Example No. 2
• Patent for stud and tube
coupling system (the way
bricks hold together)
• But: Today the patents have
long expired and the company
tries hard to keep out
competitors by using designs,
trademarks and copyright
Bringing it All Together
Example No. 3
• Patent for the fountain pen
that could store ink
• Utility Model for the grip and
pipette for injection of ink
• Industrial Design: smart
design with the grip in the
shape of an arrow
• Trademark: provided on the
product and the packaging to
distinguish it from other pens
Source: Japanese Patent Office
Bringing it All Together
Example No. 4
® Registered Trade Mark
‘TM’ Unregistered
Registered Design
Copyright: Labels & Artwork
Patents: Several dozen!
Basic Message 1
IP adds value at every stage of the value
chain from creative/innovative idea to putting a
new, better, and cheaper, product/service on
the market:
Trademarks/ GIs
Ind. Designs/Patents/Copyright
Patents /
Utility Models/Trade secrets
Patents /
Utility models
Invention
Commercialization
Marketing
Financing
Literary / artistic
creation
Copyright/Related Rights
All IP Rights
Industrial Designs/
Trademarks/GIs
Product Design
Licensing
All IP Rights
Exporting
Basic Message 2
• IP Strategy should be an integral part of the
overall business strategy of an Enterprise
• The IP strategy of an Enterprise is influenced
by its creative/innovative capacity, financial
resources, field of technology, competitive
environment, etc.
• BUT: Ignoring the IP system altogether is in
itself an IP strategy, which may eventually
prove very costly or even fatal
A Key Framework:
The industry life cycle
Era of Ferment/
Discontinuity
“Dominant design”
emerges
Maturity
Incremental
Innovation
New Ideas to Activity
Stage Gated Development Process (SGDP)
• Idea, Feasibility, Proof of Concept, Prototyping, Scaleup, Market Launch.
• Milestones, Hurdles, Probabilities of Success.
• How do the new ideas develop?
• How are they moulded into the required solution?
• How do you bring them to market?
• Do you do it alone or do you need help?
• Just about every development on the face of the earth
today results from a team effort!!
Developing New Technology?
The path from new ideas through validation to a new technology:
Intellectual Capital
Value Creation
Human
Capital
Value Extraction
Intellectual
Assets
Intellectual
Property
SGDP
New
.
Technologies
The Industry Life Cycle as an S curve
Performance
Maturity
Discontinuity
Takeoff
Ferment
Time
Uniqueness and Appropriability
are very important:
If a particular innovation, or the
knowledge on which it rests, can
be completely “appropriated”
then the innovating firm may be
able to maintain a unique
position. This is a tremendous
source of bargaining power.
Sources of Appropriability
Intellectual property protection
– Patents
• Finite length
•
–
The right to prohibit “producing”
Copyrights
• The right to prohibit “copying”
Secrecy
– Trade secrets & non compete clauses
– “Tacit” vs. codified knowledge
Speed
– lead time
– learning-curve advantages
Intellectual Property – An Untapped Asset
• IP is the most underutilized asset in business
– Unrecognized on most balance sheets
– Typically, an “afterthought” in business
• IP is one of the single largest opportunities for companies to
increase strategic business value
– Create new business opportunities
– Create barrier to entry for competitors
• IP represents a significant, untapped opportunity for
revenue generation
– Patent Royalties in 2002 estimated at $100 Billion
– Qualcomm – 27% of revenues from patent licensing in FY 2004
Intellectual Property – An Unrealized Threat
• IP represents a significant business risk
– Over 2 Million effective patents today
– Patents filed increased from 175K in 1992 to 366K in 2004
• The rush to monetize IP is on
– Royalties increased from $500M to $100B in the 90’s
– Number of lawsuits doubled, cost tripled from 1992 to 2002
• Many businesses are starting to act
– Boeing, IBM, Lucent, Adobe, Microsoft, P&G, TI
– Infrastructure companies are forming
Typical Responses
1. Integrated, Active IP Strategy
– Active patent filing strategy
– Use IP to achieve business objectives
– Active effort to identify and mitigate IP Risks
2. Have An Active Patent Filing Strategy
– Do actively capture ideas
– Still don’t coordinate filing objectives with business objectives
3. Have A Strategy, But Passive Versus Active
– View IP as event driven rather than business process
– Wait for submissions vs. engineering development of IP
4. No Defined IP Strategy
– Do not have an IP Strategy
– Do not link their IP Strategy to their business strategy
Definitions
• Intellectual Capital: Knowledge that
can be used to create value.
• Intellectual Assets: Codified
knowledge that can be used to create
value.
• Intellectual Property: Legally protected
intellectual capital.
Definitions
• Knowledge Management/ Intellectual Capital
Management: the process by which an
organisation or society generates wealth
from its knowledge or intellectual capital.
• Intellectual Asset Management: the above
process for codified assets.
• Intellectual Property Management: the above
process for legally protected assets.
A View of Intellectual Capital
Knowledge &
Know-How
Intellectual Assets
Intellectual
Property
INTELLECTUAL
CAPITAL
The Components of Intellectual Capital: A Spectrum of
Knowledge Assets
When legally protected these are Intellectual Property
When codified these are Intellectual Assets
Trademarks
Patents
Publishing
Rights
Brand logos
designs
Copyrights
Trade
Secrets
Information
Databases
Confidential
Information
Industrial
Design
Software
Platforms
Technology
Structural
Capital
Most
Customer
Capital
Unpatented
Research
Knowledge
Providing
Value
Human
Capital
Culture
Least
Tangible
Source: PricewaterhouseCoopers
Know-How
What are They Buying?
Whole Product Offering
Pre-Sales
Support
The
Product
Transactional
Support
Source: IDC, High Performance Partnering Workshops
© Frank Lynn & Associates, IDC
PostSales
Support
Elements of the whole product
•
•
•
•
•
•
Consulting services
System hardware
System software
Development tools
Server applications
Application development/
modification services
• PC/client hardware
• Desktop applications
Source: IDC, High Performance Partnering Workshops
© IDC
• LAN products
• WAN connectivity
products
• Systems integration
services
• Training services
• Maintenance/support
services
–
–
–
–
Server hardware
Client hardware
Software
Network
Focus on Policy Formulation:
Enterprise
Governance
Business
Management
Operations
Management
Policy
Strategy
Board / CEO
General Managers
Functional Managers
Performance
Vision-directed and Values-driven:
How will technology advances drive your business?
Market Research
Technology Assessment
Competitive Analysis
Strategic Benchmarking
Customer Analysis
Business Performance
Enterprise
World of
Facts
Scenario
Options
World of
Possibilities
Critical Assumption Evaluation
Discontinuity Analysis
Values
Business
Case
Vision
Politics
Regulations
Economics
Technology
Environment
In search of
potential strategic
inflection points
Strength-Weakness-Opportunity-Threat Analysis
The management of a business enterprise requires the strategic
navigation of the macro-economic environment of the business. It
demands that all executives understand the performance levels,
trends, risks, opportunities, and threats that define the external
context of business operations. It also demands that executives
know how external change will influence the direction of their past
business choices and what flexibility they have in decision-making
to make choices that drive the business toward its agreed-upon
vision and exercises the desired values for cultural behavior.
“Strategy doesn’t come from a
calendar-driven process; it isn’t the
product of a systematic search for ways
of earning above average profits;
strategy comes from viewing the world
in new ways. Strategy starts with an
ability to think in new and
unconventional ways.”
Gary Hamel
consultant, academic and author
Why have a strategy?
1. To make choices
Reasons to have a strategy:
2. To be able to change it
What is a “strategy” anyway?
Corporate Strategy:
What is it?
• A defining statement containing the intent and direction of the
corporation, & delineating the strategic plans to achieve its
objective.
• A living guideline, that focuses and directs efforts of the
corporation.
• Constantly tested and modified as required.
• Not to be circumvented without deliberate modification.
Balances and integrates the following elements:
• Vision of strategic direction for long-term strength
• Market direction and needs
• Competitive effects
Articulates the ways in which the
• Technology strategy
opportunities created by the firm’s
• Product strategy
capabilities can be exploited.
• Core competency
• Resource alignment
Basic Strategic Considerations:
Key Inputs to Strategy:
• Customer inputs – what is working and not working.
• Market place analysis – growing needs, emerging applications
and significant trends.
• Competitive influences and barriers to entry.
• Internal competency assessment regarding skills and ability.
• Corporate business process benchmarking.
• Business strategic inflection point analysis.
• Resources available for commitment.
Key Outputs of Strategic Dialog:
• Business strategy – goals and objectives of the organization.
• Technology strategy – technologies to acquire or develop.
• Marketing strategy – Why, where and how to focus on
customers?
• Product strategy – features and functions to be developed.
• Intellectual property strategy – How will IPR contribute to
strategy?
Effective Business Strategies
address three key challenges:
Markets
How will we create value?
Technologies
How will we build
the organizational
capabilities
necessary to
deliver it?
How will we capture
value in the face of
Competition?
Effective strategies answer three
key questions:
How will we
Create value?
How will we
How will we
Deliver value? Capture value?
•
And answer seven critical
How will we create
value?
questions:
– How will the technology evolve?
– How will the market change?
• How will we capture value?
– How should we design the business model?
– Where should we compete in the value chain?
– How should we compete if standards are important?
• How will we deliver value?
– How do we manage the core business and growth
simultaneously?
– How do we use our strategy to drive real resource
allocation?
Creating Value:
• Understand how technologies will
evolve
– (Both your own and those on which
you rely)
• Understand how customer needs will
evolve
• Develop world class products and
services that meet customer needs
Factors Driving IP Value
• Time Savings (know how)
• Cost Savings (formula)
• Risk
• Profits Advantage (patent)
Intellectual Property
Profit Sources
Premium Sales Price
Cost Savings
Volume Synergy
New Revenue Streams
IP Requires Old
Economy Assets
IP commercialization and
the realization of value is
not possible without
complementary assets.
The Interaction of Intangible and
Tangible Assets to Create Earnings
Intellectual
Assets
Intellectual
Property
Structural Capital (generic)
Sales Force
Human
Capital
Value Extraction
Distribution Capabilities
Value Creation
Complementary Business
Assets (differentiated)
Manufacturing Facilities
Intellectual Capital (unique)
$
Intellectual Property Tuned To A Company’s Business
Complementary Business Assets
Intellectual Capital
(Unique Assets)
Know-How
Trade Secrets
Copyrights
Intellectual Property
Distribution Capabilities
Intellectual Assets
Patents
Human
Capital
(Lead Time)
Value Extraction
Trademarks
Value Creation
(Differentiated Assets)
?%
$
Structural Capital
(Generic Assets)
1.
2.
IP Value Is Created When Leveraged Through Complementary Assets
When Companies Have Different Complementary Asset Strengths They Will
Need Different Intellectual Property (Materials, Process, Use)
Intellectual Property Tuned To A Company’s Business
Beverage Companies
Complementary Business Assets
Intellectual Capital
(Unique Assets)
Know-How
Trade Secrets
Copyrights
Intellectual Property
Distribution Capabilities
Intellectual Assets
Patents
Human
Capital
(Lead Time)
Value Extraction
Trademarks
Value Creation
(Differentiated Assets)
$
Structural Capital
(Generic Assets)
•Line Shows the Percentage of Company Value (Market Capitalization) That is
Protected By This Asset
•Most value is in Trademark, Trade Secret, Distribution and Sales
Intellectual Property Tuned To A Company’s Business
Paper Companies
Complementary Business Assets
Intellectual Capital
(Unique Assets)
Know-How
Trade Secrets
Copyrights
Intellectual Property
Distribution Capabilities
Intellectual Assets
Patents
Human
Capital
(Lead Time)
Value Extraction
Trademarks
Value Creation
(Differentiated Assets)
Structural Capital
(Generic Assets)
•Most value is in Trademark, Know-How, Manufacturing and Sales
•Some value in Patents
$
Intellectual Property Tuned To A Company’s Business
Software Companies
Complementary Business Assets
Intellectual Capital
(Unique Assets)
Know-How
Trade Secrets
Copyrights
Intellectual Property
Distribution Capabilities
Intellectual Assets
Patents
Human
Capital
(Lead Time)
Value Extraction
Trademarks
Value Creation
(Differentiated Assets)
Structural Capital
(Generic Assets)
•Most value is in Human Creativity, Trademark, Copyright, and Distribution
$
Intellectual Property Tuned To A Company’s Business
Pharmaceutical Companies
Complementary Business Assets
Intellectual Capital
(Unique Assets)
Know-How
Trade Secrets
Copyrights
Intellectual Property
Distribution Capabilities
Intellectual Assets
Patents
Human
Capital
(Lead Time)
Value Extraction
Trademarks
Value Creation
(Differentiated Assets)
Structural Capital
(Generic Assets)
•Most value is in Human Creativity, Patents, and Trademarks
•Some value in Know-How, and Sales
$
How shall we capture value?
•Uniqueness
•Complementary Assets
•Structure of the Value Chain
Three key ideas:
• Uniqueness
– Controlling the knowledge generated by an
innovation
• Complementary assets
– Controlling the assets that maximize the profits
from innovating
• Understanding the dynamics of the value
chain
– Should we buy our suppliers? Distributors?
– Should we outsource our manufacturing…
distribution… sales… capability?
What are Complementary Assets?
• Those assets that allow a firm to
make money, even if the innovation
is not unique:
• The answer to the question:
– If our innovations were instantly
available to our competitors, would
we still make money? Why?
In the best case, complementary
assets should be tightly held
Complementary assets that are
tightly held are not easily
available to entrants or to most
competitors
Types of Complementary
Assets
Things you can do
Competitive
manufacturing
COMPETENCIES
Other
Distribution
channels
Core
technological
know-how in
innovation
Other
Customer
relationships
Things you own
RESOURCES
Complementary
technologies
Brand
name
Types of Complementary Assets
Complementary assets can
be:
Generic
there is adequate and competitive supply
Specialized
sourcing will create unilateral dependence
Co-specialized
Types of Complementary Assets
• Things you can do
–
–
Manufacturing capabilities
Sales and service expertise
• Things you own
– Brand name
–
–
Distribution channels
Customer relationships
COMPETENCIES
RESOURCES
Complementary Assets
Manufacturing Distribution
Finance
Core
technological
know-how
Service
Complementary
technologies
Marketing
Other
Other
Bargaining power of owners of complementary
resources depends upon whether complementary
resources are generic or specialized.
Uniqueness & Complementary Assets
over the Life Cycle
Uniqueness
Maturity
Takeoff
Ferment
Complementary
Assets
Uniqueness & Complementary
Assets over the Life Cycle:
Uniqueness
Maturity
Takeoff
Ferment
Complementary
Assets
Managing discontinuities means
managing complementary assets:
Maturity
Performance
Discontinuity
Takeoff
Which of my complementary
assets are useful?
Ferment
Time
Key Questions:
• When should an entrepreneurial firm develop it’s
own:
–
–
–
–
Manufacturing
Distribution
Sales
…..
capabilities?
• When should a mature firm outsource it’s:
–
–
–
–
Manufacturing
Distribution
Sales
…..
capabilities?
The eleven modes of cooperation
agreements: illustration of their anchor points
Common
Research
Research
contract
Ways
of...
Engineering
contract
Common
purchase Subcontracting
supplying
designing
Trademark
licence
Patent
Consortium Distribution
licence
(common agreements
marketing)
Common
production
producing
Source: S. Urban, S. Vendemini, CESAG, Strasbourg
marketing delivering
Know-how transfer
contract
Cooperations modes and value chain
Link of
the
chain
R&D
• Exchanges of
existing
knowledge
Cooperation
modes
• Organisation
of a common
research
• Setting up of
a common
project
(design,
engineering)
Logistic
supply
• Common
purchases
Production
Marketing
Distribution
• Subcontracting
agreements
• Trademark
licence
• Reciprocal
distribution
agreements
(access to
existing
distribution
networks)
• Access to the • Common
specific
manufacturing
resources of
agreements
the country
(raw
• Implementatio
materials,
n of
subventions,
engineering
capital cost,
contracts
compared
advantages) • Patent license
• Production
consortium
Source: S. Urban, S. Vendemini, CESAG, Strasbourg
• Consortium
(common
marketing)
• Joint
advertising
Services
• After sale
• Lobbying
• Relations
New Business Models Emerge
Then…
Now…
CRO’s
Product
Development
Product
Development
Cycle
Tool
Companies
One Integrated
Company
CRM’s
Testing
Services
Many Distributed
Companies
New Regional Model Emerge
Then…
Now…
Region D
Region A
Region B
Manufacturing
Region C
Research
Trials/Testing
Services
Development
Self-contained
regional clusters
Region G
Region E
Region F
Specialized,
networked regions
Build, Buy, Partner: Benefits and Tradeoffs
Cost & Risk
Pros
Build
Buy
Partner
Cons
Most product control
Own the IP
Most profit opportunity
Longest time to market
Risk in market shifts
High development costs
Highest switching costs
Shorten time to market
Own the IP
Acquisition costs
Integration costs
Shortest Time to Market
Conserves Resources
Try before you Buy
Lowest Switching Costs
Credibility and access
Least Control
Integration Costs
Shared gross margins Least Profit Opportunity
Time to Market & Control & Profit
Why Build: Technology Leadership
• Pioneer in the field
• Patentable technology
• Need to own the
intellectual property
• Core business
• Have time or can build
in increments
• Have in-house
expertise
Why Buy: Core to business
• Core to business
• Need intellectual
property
• Time critical
• Shortage of inhouse expertise
• Acquire market
leadership
Why Partner: Speed
• Fastest Time to Market
• Reduce Risk
• Leap Frog Competition
• Customize for Specific
Markets
• Customers buy best of
breed
Which horse to pick?
Build
Leadership
Buy
Core
Business
Partner
Time to
Market
Reduce
Risk
Decreasing knowledge of the market
Familiarity Matrix: Optimum Strategies for
Technological Innovation: Finding others who
know more about the markets or the technology
Venture
Capital or
Educational
Acquisition
Venture capital,
or Educational
Acquisition, or
University
Relationship
Internal
Development,
Acquisition,
or Joint
Venture
Internal
Venture or
Acquisition
or License
Venture
Capital or
Educational
Acquisition
Internal
Development
Internal
project, or
Acquisition,
or License
Joint Venture,
Strategic
Alliance or
University
Relationship
Joint
Venture
Decreasing knowledge of the technology
New developments in innovation
raises new issues and problems
• Greater emphasis on commercializing scientific
discoveries, particularly in IT and the bio-sciences
• Speed and potential value of scientific progress leads
to emphasis on solid and well-designed portfolios
of research projects
• Universites as active drivers of innovation: Academic
entrepreneurship and the entrepreneurial university
• University-industry partnerships
• Increased search for radical innovation and top-line
growth.
Commercialization Model
• Strategic Investment is the Foundation of a
Successful Commercialization Model
‘Opening up’ of industrial research process
Worldwide search and
Value creation:
evaluation of technology
products,
and knowledge
processes etc
‘Open innovation’
Research Campus, with
•Venturing
•‘Incubator’
•Technology transfer and support, …
Public-private
partnership
“Exploring wider range of
knowledge areas”
Developing
technological core
competences
within the
company X
“More focus and resources for
firm’s own competences”
R&D Lab of company X
Joint ventures
Creating more value faster
Gilead
Sciences
Hepsera
out-license
GlaxoSmith
Kline
Institute for Medical
Research
Gateway Fund
Vistide outlicense
(joint venture)
Pfizer
Founders
came out
macrolide of Pfizer
templates
Biotica
Cambridge
Biotechnology
(funding)
Northern Venture
Managers
(funding)
Daniolabs
Cambridge
University
Challenge Fund
Babraham Bioscience Inst
Technologies Ltd
Babraham Bioincubator
Addenbrooke’s
Hospital
Neurodegeneration
Consortium
Wellcome Trust
Lorantis
(funding)
Genzyme
Domantis
partnership
Babraham Technix
Cambridge
Crytallographic Data
Centre
(Cambridge University)
Astex
antibodies
license
Cambridge Antibody
Technology
Eli Lilly
virtual screening
collaboration
validation
Wyeth
Abbott
arthritis
collaboration
licensing
Amgen
licensing
(Cambridge
University
administered)
AstraZeneca
The New Paradigm for Innovation
“Open innovation…assumes that firms
can and should use external ideas as
well as internal ideas, and internal and
external paths to market, as they look
to advance their technology.”
Henry Chesbrough, Open Innovation:
Researching a New Paradigm
The Key is Collaboration
“Few if any companies today can hold all the pieces
of their own product technology…they simply must
collaborate with others if they want to survive and
prosper…IP has become much more of a bridge
to collaboration”
Marshall Phelps, Microsoft
Open Innovation – buying in ideas or
products to add to your model
Revenues
Sell Divest
Market
Revenues
New Revenue
Sources
Shorter Product
Life Cycle
License
Market
Revenues
Market
Revenues
Internal
Development
Golden Past
Internal &
External
Shared
Development
Internal
Development
Increasing
costs
Costs
Spin off
Decreasing
costs
Past Present
Present Future
‘Closed innovation single track’
1
2
“Ideas &
3
“Current Market Place”
Investigations”
4
5
Research
Development
Commercialisation
Based upon ‘Open Innovation: Researching a New Paradigm’
(2006) Henry Chesbrough, Wim Vanhaverbeke & Joel West
‘Open innovation three lane highway’
“External Ideas &
Investigations”
“External Technologies
1
Insourcing gate
2
“Ideas & 3
Investigations”
“Current Market Place”
Technology
spin-offs
4
licensing
“New Market Place”
“Other firm’s Market Place”
5
Research
Development
Commercialisation
Based upon ‘Open Innovation: Researching a New Paradigm’
(2006) Henry Chesbrough, Wim Vanhaverbeke & Joel West
IP model enabling “Open Innovation”
• R&D on generic technologies
• Industry value chains brought together
• Partners collaborate and contribute ideas
A Network View of Innovation
Depending on a firm’s strengths, different
firms play different roles in open
innovation value chain
• Some firms generate innovations
• Some integrate the innovations of others
• Some have a fully integrated model
An open innovation system is a networked
system
From a network IN an organization ….
To the network IS the organization
Hierarchy
Matrix
Network
TYPES OF NETWORKS
•
•
Task Networks: involve the exchange of specific job-related resources
including information, expertise, professional advice, political access,
and material resources.
Social Networks: involve relationships characterized by higher levels of
closeness and trust than those that are exclusively task-related. They
usually consist of people who share a common background or interest.
Since people have more leeway in choosing their friends than their coworkers, these networks tend to be less closely determined by formal
organizational arrangements and work assignments. Social networks,
however, often play a critical role in mobilizing resources, transmitting
information, and providing peer coaching.
Innovation Networks must combine both!
Thanks to H. Ibarra
TYPES OF RELATIONSHIPS
•
•
•
•
It is important to cultivate a broad range of network relationships!
Long-term, high reciprocity (Strong) ties: Close bonds and reciprocal
relationships ensure reliability under conditions of uncertainty. These
include peer alliances that function by exchange of favors, ties of trust
and loyalty between superiors and subordinates, and career development
ties between mentors and proteges.
Short-term, instrumental ties: Many important ties such as highly
circumscribed job-related connections, are often dissolved when the
relationship has served its purpose. Some are with individuals the
manager may not even like, but must interact with to get things done.
Distant Acquaintances (Weak ties): These types of relationships are
important because they function as bridges between the manager and
distant social or organizational groups. As a result, they are often
sources of unique or novel pieces of information. A networking strategy
that does not take these into account leaves a manager open to the risk of
developing an inbred network that will not provide information on
external opportunities or threats.
Raufoss – Light Metal Industry
• From an integrated and closed corporation to
dynamic cluster
– RA (Raufoss Ammunition Company) 1897
– Gradual growth of civil production in light metal
– Gradual growth of global customers (automotive)
• From national customers to global customer
• From closed innovation to open innovation
• Challenges for relations and
communications
From RA via Industrial Park to a
Dynamic Cluster ?
Phase 1
Phase 2
Phase 3
1896-1997
1997-2003
2004-
Raufoss
RA
HARA
HARA
Nammo
Nammo
Fission
Integrated company
Reintegration ?
Fragmentation
Dynamic cluster?
Technology - Aircraft
• Boeing Co - The first mass
jetliner - the 707.
• 98% made in the US 1950’s 60’s. 20th c.
• The 787 - Dreamliner - 21st c.
• 70% outsourced to 900
contractors
• Half made by contractors outside
the US - primarily Japan and
Italy but also China (rudder).
• Boeing does the final assembly.
• Boeing maintains the overall IP –
it’s their innovation.
– Without Open Innovation and
strong IP the above process
could not happen.
 Boeing Co.
Boeing - the platform Co.
Some cross-sector ‘platform’ candidate innovation
biographies in firms & regions arising from WP3
Revitalise FoodRiver Tourism
(e.g. Douro)
Bioengineering
Functional
Foods
Vehicle Processing
Systems
Biofuels
Food Biocluster
Knowledge
Intermediaries
Bio-imaging
Food
Biotechnology
ICT
New Media
KIBS
Automotive
Tourism
Wine
Tourism
Culinary
Tourism
DANFORS
Guidance Systems
Oenotechnology
Branding
Firm Level Innovation Biographies
EURODITE, Toulouse Targets for Innovation Investigation
 Research in Aquitaine, France integrates the wine industry and biotechnology
to develop the new field of Oenotechnology
 In Emilia-Romagna, Italy meat industry the Food and ICT industries have
collaborated to produce Biosensors for testing the maturity of Parma ham
 The German automotive industry is actively engaged in innovative activity
with a number of farms and agricultural research institutes in Brandenburg to
develop Biofuels
 In Bavaria, bioscientific knowledge on milk-based Lactobacteria are the
subject of research collaborations with the brewing and fermentation industries
 In Bornholm and North Jutland, Denmark the Agro-Food and Tourism
industries are collaborating on innovatory Culinary Tourism activities also
involving the delineation of Food Cultures involving anthropological research
 Innovation research in Midi-Pyrénées, France focuses on specialised tourismbased vehicle guidance systems integrating knowledge from Aerospace,
Automotives and ICT with that from Tourism, Agro-food and Bioscience
 In Hordaland (Bergen), Norway Tourism demand to experience Aquaculture
processes in organic fish farms has led to interactions between the Agro-Food
industry, New Media, ICT and Knowledge-Intensive Services to realise a
network facility
 In Jura, Switzerland the traditional Watch-making industry is being
transformed into a Tourism asset by formation of Agro-Food, Tourism, ICT,
New Media and traditional fine-mechanics ‘experience economy’ networks
Hierarchy of IP Value
Biz Strategy
Driver
Build Markets and Relationships
Design Freedom
Manage Competition
Protecting Inventions
Potential Return
Deliver Revenue
Building an IP Strategy
Build Your Portfolio
Biz
Strategy
– Strategic Patenting
– Purchase Patents
Deliver Revenue
Markets Development
Design Freedom
Manage Competition
Protecting Inventions/Recognition
Deploy Your Portfolio
–
–
–
–
Design Freedom
Manage Competition
Enter new Markets
Deliver Revenue
A Hierarchy of IP/IC Management
Visionary
(Drive Growth)
Integrated
(Manage for Growth)
Profit Center
(Manage for Profitability)
Cost Control
(Control Costs, Improve Productivity)
Defensive
(Build Portfolio, Protect Markets and Technology)
IP Culture - Levels of companies
Penthouse
Integration
Penthouse
Total
Integration
Third floor
Profit
Third Floor
Profit
Generation
Second floor
Savings
Second Floor
Ground floor
Defensive
Ground Floor
Basement
Unprotected
Basement
Cost Savings
Defensive
Unprotected
0 - Unprotected level
How businesses behave at the various levels ?
Penthouse
Integration
Third
Profit
Second
Savings
Ground
Defensive
Basement
Unprotected
They rely on confidentiality,
access to complementary
assets and lead time
advantages
1 - Defensive level
Activities of the company focus on:
Penthouse
Integration
Third
Profit
Second
Savings
Ground
Defensive
Basement
Unprotected
- Creating awareness of the role of
intellectual property
- Obtaining intellectual property
- Maintaining IP rights
- Respecting IP rights (esp. Patents)
of others (Freedom to Operate)
- Willingness to enforce patents, when
necessary
2 - Cost Savings Level
Penthouse
Integration
Third
Profit
Second
Savings
Ground
Defensive
Basement
Unprotected
The activities of the company :
Focus on how to reduce costs of
filing/maintaining intellectual
property portfolio
3 - Profit Generation Level
The activities of the company focus on:
Penthouse
Integration
Third
Profit
Second
Savings
Ground
Defensive
Basement
Unprotected
- Making intellectual property a profit center
- Utilizing the intellectual property portfolio
as a corporate asset
- Extracting value directly from intellectual
property portfolio
- Non-core, non-strategic IP having tactical
value
3 - IP for Profit Level
Company activities:
Penthouse
Integration
Third
Profit
Second
Savings
- Considers intellectual property at all levels of
organization
- Organises high profile campaign against
infringers
Ground
Defensive
- Develops active patent/trademark
licensing program
Basement
Unprotected
- Makes more good sense oriented R&D efforts
- begins/improves active screening/watches
for patent infringement
3 - IP for Profit Level
Penthouse
Integration
Third
Profit
Second
Savings
Ground
Defensive
Basement
Unprotected
- Establishes an enforcement program, it
ensures that no one infringes your patents
- Requires constant policing and monitoring
of the market in order to challenge infringing
products
- Enforcement function includes method of
negotiation so company can suppress
infringement without having to engage in
litigation
- In tough cases, is prepared to litigate against
infringers
3 - IP for Profit Level
Licensing
Penthouse
Integration
Third
Profit
Second
Savings
Ground
Defensive
Basement
Unprotected
- Starts/increases proactive licensing
program
- Finds opportunities to generate revenue
without sacrificing competitive advantage
- Begins by licensing non-core
technologies or technologies outside
current field of products
- Finds appropriate licensees (potential
infringers)
4 - IP Integration level
The company:
Penthouse
Integration
- Sets long term patent strategy
Third
Profit
- Aligns IP strategy with itscorporate
strategy
Second
Savings
- Makes competitive assessment
Ground
Defensive
Basement
Unprotected
- Focuses on strategic value extraction
- Develops a performance measurement
and reporting system
- Ensures that patent strategy drives
research
Organization of IP Department
Other factors that affect the decision:
• Objectives set for the IP Department
• Importance of the IP Dept in the company
• Strategic placement inside the organigram
• Competitive Strategy of the Company
• Type of Technology (Mature or Radical)
• Type of Market served by the Company
Organization of an IP Department
TOP MANAGEMENT
CEO
technical
dpt
marketing
dpt
commercial
dpt
Intellectual property
legal
dpt
Organization of an IP Department
It is a company having a defensive stance
IP department takes
•No autonomous decisions
•No autonomous strategy
It receives guidelines from the department
to which it is attached
Organization of an IP Department
TOP MANAGEMENT
CEO
Technical
technical
dpt
dpt
marketing
dpt
commercial
Dpt
legal
Intellectual
dpt
Property
Dept
Other Departments
Organization of IP Department
It is a company of the multinational type,
•leading on the market
•having large dimensions
The IP department has autonomous
decisional power and defines strategies
There exists a Director for IP , sometimes at
Vice- President level
Organization of IP Department
Directorate IP
strategies
Licensing +
litigation
Secretariat
patents
trade marks
professional
professional
administrative
administrative
documentation
Internal structure of IP dept
Organization of IP Department
Use of patents
Offensive attitude
Is it core
Business?
yes
compulsory
licences at
favorable conditions
no
Obligation to licence?
Coop. agreements
yes
no
Licence at market
conditions
Licence at
disadvantageous
conditions
below
conditions
market
Decision process in large companies
Organization of IP Department
Use of patents
Offensive attitude
compulsory
licences at
favorable conditions
Coop. agreements
Obligation to licence?
yes
Licence at
conditions below
market
Decision process in a small company