What's Your Intellectual Property Story? Managing Intangibles for Company Growth
23rd March 2015 | Adam Jolly
This is an edited extract by Mike Barlow from The Growing Business Handbook, published in association with the Institute of Directors and edited by Adam Jolly. If you enter the code GBMB25 when prompted at checkout, you will be able to claim a 25% discount (£10) off the recommended retail price.
It seems that everywhere you go these days, intellectual property (IP) business issues are making news, from the pirating of global brands by counterfeiters, through patent wars for control of the smartphone market to the corporation tax benefits of developing IP in the UK.
We should perhaps not be surprised by this. Over the past 25 years, markets have been transformed so that, today, the goods and services on offer are not only more innovative and distinctive but of a higher technological content than ever before. Now, it is often these very attributes that determine a company’s success or failure.
You might therefore imagine that managing IP for growth would be on the radar screen of every board. Yet, while most business leaders understand philosophically the need to innovate and the innovation process, it remains the case that, unlike their US counterparts, UK firms often lack line of sight between their IP and company revenues.
Of course, it is important not to overstate the problem, because tangible and intangible assets nearly always work together harmoniously to generate business value. However, the latent nature of intangibles means that they frequently end up being managed passively. The proposition is therefore that, by clearly identifying and understanding such assets, their true contribution can be recognized so that they can be optimized for growth.
Know your IP story
I am often asked how companies should go about tackling these issues to make the most of their IP. For me, it starts with developing what I call a company’s ‘IP story’: the unique narrative which reveals how its intangibles and IP relate on the one hand to its current business endeavours and competitive circumstances and on the other to its long-term aspirations. Examples of such narratives include:
- Multinational manufacturing company W is refreshing a successful product range but needs to source IP from outside inventors to cover competency gaps in its workforce.
- Start-up X needs to use its IP to partner effectively with a range of more powerful players to bring a new technology to market while preserving its distinctive offer and future exit opportunities.
- Fashion house Y wants to use IP to transform a distinctive brand by sourcing cutting-edge ideas from innovative young designers in a fast-moving market subject to parasitic competition.
- Social enterprise Z, while being equivocal about the idea of proprietary IP rights, nevertheless wishes to explore how it might use them for wider societal benefit.
Obviously, real life is always more multifaceted than these examples. Even political and other stakeholder considerations can, for some firms, be to the fore. Nevertheless, in my experience, once a company’s core imperatives are recognized, it is always possible to develop a narrative which can inform strategic direction.
Knowing your IP story is valuable for a number of reasons:
- First, it makes IP visible to the leadership, enabling high-level endorsement and providing a jargon-free tool for engagement with stakeholders and investors.
- Secondly, it provides a mechanism for reaching consensus around right-sizing the activity for growth. Too often I come across IP managers who complain that they are underresourced and that their budgets are being cut without thought as to the broader consequences.
- Thirdly, it not only gives IP staff a wider sense of where they fit in organizationally, but also helps grow a company-wide culture of continuous innovation.
IP strategies are unique
The most important advantage of the IP story is that it can be mapped onto the company’s growth aspirations, not only to reveal intangible assets which are underperforming or being underutilized but also as a starting point for developing a business-led IP strategy for filling any gaps. In the process, valuable tacit knowledge in employees’ heads can often be converted into valuable shared information, which can grow the intangible asset base further for efficient dissemination.
The important thing is to recognize is that there is no one guaranteed road to success. A company’s IP story is in many ways its DNA and thus its IP strategy too will always be a unique reflection of where it has been, where it finds itself today and where it wants to go.