Don't undervalue your ‘peripheral’ IP
12 September 2008
Ged Powell examines the issue of IP not being used to its full potential, particularly if it is not core to a company’s products or activities
Intellectual Property (IP) is the underlying basis for success in today’s technology companies. This is obvious of course; communications companies develop new communications techniques and commercialise them, semiconductor companies develop semicon ideas and so on. Companies focus their activities on using their core IP to define and amplify their unique selling point, driving their business into pre-identified markets. This determined drive towards a well understood, clearly defined business objective is a characteristic of most successful companies and is practiced universally. Most, if not all companies dedicate their resources to this objective.
It is frequently the case that intellectual property is developed en route to the final goal of developing the core IP that a company needs to engage in its intended business area. This non-core IP could be regarded as “peripheral intellectual property” as its application often resides somewhere in the fringes of a company’s target market sector. Often this IP is not even recognised as such and even if it is, the value of the IP is not fully appreciated by the company. Performing the work necessary to exploit a company’s expanding IP portfolio is difficult and often impossible. In most cases, the resource required to do the development work is simply not available as most companies work on a model which provides sufficient resource to accomplish the work needed to address the established market and no more.
This issue is well recognised in some parts of industry. Some industry giants such as IBM have explicitly acknowledged this by developing outreach programs to encourage third parties to bid for their peripheral IP on a commercial basis. Other companies are not able to mount such initiatives and as a result, often fail to exploit their full IP portfolio. The result is that valuable intellectual property is left dormant, on the shelf. Either way, significant opportunities are often either passed up or delayed and miss their window.
Exploitation of these potentially valuable assets requires companies to open their IP portfolios to some degree of outside examination. An obvious example of this is the case of the outreach programs mentioned above. However, if it not possible for a company to engage in such a formal program of outreach (as is usually the case), an alternative way for a company to identify both the IP and an exploitation route is through partnership. This will be with companies involved in adjacent sectors or with consultancy companies who specialise in identifying and developing IP. These companies typically engage in collaborative, paid contract work and are flourishing throughout most industry sectors and in particular the high technology and communications sectors. Often an informal approach followed by a confidential meeting is all that is required to initiate valuable proposals although trust (usually backed up by non disclosure / confidentiality agreements) is a key component in the relationship.
A second IP related issue for companies to consider is related to industry convergence, which after years of hype in some sectors (most notably the computer / communications / CE sectors), is actually happening. Keeping pace with the development of the technology landscape has always been a major overhead for all high technology companies. The increasing impact of growing, ever changing convergence is compounding this complexity. Technology and business enablers are being developed by companies in sectors which are often in a very different market area to a company’s established operating space, resulting in new business opportunities and threats which must be responded to. A major example is the furious activity surrounding the media driven industries of PayTV, IPTV, mobile TV and media home networks and their convergence with the established cable, satellite, broadband and cellular networks. This multi-dimensional and extremely dynamic situation demonstrates the technical and commercial complexity of the opportunities and threats that technology companies must manage. Charting a course through this type of landscape is a major business challenge and anticipating the important events is a vitally important business intelligence imperative.
Anticipating these threats and opportunities is not simple. Convergence is by definition driven from sectors other than the sector a company is operating in. In most cases, companies simply don’t have the necessary resources to monitor all relevant activity. As a result, companies can be blindsided by unexpected events and find themselves dealing reactively with sudden business threats. This inevitably results in a fire-fighting response which distracts companies from their core plans and is very expensive both in time and resource. Understanding the converging world and relating it to a company’s position, (which in a technology business is defined by its IP), is key to the early detection of industry movements and turns potential threats into business opportunities.
Again, the solution to this issue is collaboration. This provides access to additional resource which allows companies to develop core technology and to ensure that peripheral IP is identified and as a minimum, brought to the attention of decision makers in the company. Involving a collaborative partner with a broad industry scope in core development projects is vital in broadening a company’s activity. A collaborative partner with a broad cross industry remit can provide a company with the “eyes and ears” needed to understand the potential impact of convergence allowing companies to plan to proactively engage with emerging opportunities and to turn potential threats into businesses.
At the Advanced Digital Institute (ADI), engagement with companies and agencies of all sizes and types has evolved a working model of collaborative intelligence gathering, followed by practical solution identification which addresses both of the IP issues mentioned above. A good example of this is in the convergence currently occurring in the media / pay TV / communications / internet industries which is enabled by technology but driven by business model development.
Complete knowledge, be it technical, business, or otherwise, of a sector is insufficient to guarantee that emerging threats and opportunities enabled by emerging technologies are being identified and addressed. This is having a dramatic effect on most technology/electronics companies involved in this sector and is a rich source of interesting and productive collaborations.
In this climate an astute CTO of a successful technology company is just as likely to be keen to keep abreast of the latest developments in an adjacent market sector, reading market forecasts and the latest technical paper, as he/she will be of their own market sector. In addition, he/she will recognise the lack of native skills and expertise when a new direction or opportunity is identified, also recognising the importance of searching out collaborative opportunities to maximise them.
At ADI we have worked with several companies in this position and we understand that it is at this very crucial point in time that a partner or outsourced strategic support should be sought. Delaying or avoiding taking this important step or waiting until the product definition cycle or internal proposal / work schedule starts, can lead to unnecessary and costly reconsideration of a company’s strategy and future direction.
Ged Powell is CEO of The Advanced Digital Institute (ADI), an independent research and development company.
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