We all know innovation is the lifeblood of fast-growing companies. But too many businesses fail to fully capitalise on their ‘lightbulb’ moments. They have the right ideas but fall into familiar traps: taking too long to get to market, choosing the wrong projects to pursue, or overpaying to protect relatively worthless assets.
The result: plenty of wasted time and money.
A delivery-driven approach starts with establishing comprehensive commercial intellectual property (IP) or intangible asset (IA) strategies. These strategies help businesses identify, capture, value, manage and monetise their IP and IA. They have many other benefits. To name just three …
- They can give you room to differentiate your offer
- They can stimulate new revenue streams such as licensing
- They can provide a realistic valuation for a company sale
Creating a commercial IP strategy requires self-reflection. Businesses need to know ‘where they are now’. Here are 10 questions we’d encourage businesses that want more value from innovation to consider:
- What is our company trying to achieve?
Effective innovation underpins company strategy. This includes the creation and protection of intangible assets. A strong IP strategy – linked to business strategy – will help you keep a laser focus on the activities guaranteed to deliver value.
- Why are we innovating?
Do you want to win new customers? Raise brand awareness? Solve a customer problem? Or develop assets ahead of a company sale? You may know the over-riding purpose of your innovation efforts – but does every member of your team? And is everything you’re doing currently, from paying for annual patent subscription fees to fast-tracking certain ideas, support that one goal? Identify the fundamental reason ‘why’ and you’ll be less likely to deviate from the desired output.
- What assets do we have already?
Intangible assets are the core strength of most companies, and typically provide up to 80% of a company’s market value. But IA is more than just patents and trademarks. If you want to know your true IA strength, make sure you examine these three categories:
- IP – patents, trademarks, designs, databases, trade secrets, copyright
- Intellectual assets – un-recorded inventions, key skills, know-how, processes, market data
- Intellectual capital – positioning, reputation, brand, relationships, contracts
- What isn’t working?
Maybe you take too long to get to market, your go/no go decision-making is flawed or ROI never arrives as swiftly as you expect. Perhaps you have a large annual bill for retaining patents but can’t pinpoint how you can monetise them. Identify the issues that hurt the most, and your commercial IP strategy will take the pain away.
- What are our competitors doing?
Patent engineers can easily examine the publicly filed portfolios of your competitors. News websites and trade publications are also invaluable, as companies tend to shout about any significant innovation breakthrough. The key questions here: where are your competitors strong? Where are they weak? And crucially – where are the gaps you can move into?
- Do we really need to be spending so much money?
The temptation to file a patent is almost overwhelming when your team has invented something. But with filing and lawyer fees, annual renewals and territorial protection, single patents can cost anywhere between £20 – £50k to file and maintain. Will you really recoup that money? In the right circumstances trade secrets can be an effective and significantly less costly alternative – see the Coca-Cola recipe. And don’t forget the potential of R&D tax credits.
- What life-stage is our company at?
Commercial IP strategies need to evolve as your company grows and matures. Those searching for an initial funding boost may choose to use trade secrets, NDAs and other confidential internal processes rather than patents. Part of an effective strategy will be to make sure you always document your IA – both what you have and the processes you use. Investors and buyers will demand to see you’re following best practice. Don’t let them down.
- How are we valuing our IA?
Even the most-forward thinking companies might not know the value of what they know and hold. The situation isn’t helped by the fact valuation is a ‘black art’, with different models used. These include cost-based valuations (how much have we spent already?), comparable valuations (what did a similar-sized IA catalogue sell for?) and future income (what could we make from selling / licensing this year?). Which valuation are you using? And how do you justify that model?
- Are the right people involved?
Who makes up your innovation community, and how do you communicate? The likelihood is you’ll have a mixture of CEO, general counsel, product marketing and the innovators themselves, often based in different regions. Do you have clear owner of your IA? Would a Chief IP or Innovation Officer provide some clarity and the necessary leadership?
- Are our reward and recognition programs appropriate?
It’s a fine balance to ensure invention incentives match expectations. Do you have a staged payment process for financial rewards? For example the second payment is made when a patent is granted? Our research shows that for seasoned inventors, recognition from their peers can be a more effective driver than monetary gain. Some companies including Tesla use a ‘patent wall’ in a prominent office location, while others such as Qualcomm do this online. Have a think about what would work best for you.