Increasing Return on Investment from Innovation: Let Your Business Strategy Drive Your IP Portfolio

Sept. 5, 2008
The business landscape depicting the technical and market space in which the company operates will act as a map on which to plot both the company's intellectual assets and competitive patents.

By implementing simple, low-cost business processes, companies can ensure IP portfolios are aligned and supportive of business goals, thereby maximizing return on investment from innovation.

Successful companies must learn how to create, manage, and leverage intellectual assets strategically, throughout the business, and across the value-chain. The strategy that guides this effort must be data-driven; largely based on competitive intelligence and focused on achieving a return on investment from the IP.

Maximizing ROI from IP requires companies to consider every avenue where IP can be used to support the business:

  1. Define your boundaries -- Ensure freedom to operate, establish barriers to entry, and enforce the company's intellectual property rights
  2. Expand & protect brand -- Defend and grow the market
  3. Generate licensing revenue -- Allow others access to your IP in exchange for royalties
  4. Gain transaction leverage -- Achieve more favorable contractual terms with suppliers, customers, partners, etc.
  5. Increase shareholder value -- Communicate to investors the value embodied by the portfolio
  6. Improve competitive advantage -- Force others to pursue less efficient routes

Being able to do this successfully requires that companies have the "right" IP when they need it. A data-driven strategy that guides the development of IP based on input from business, marketing, technical and legal executives will result in such a portfolio.

However, many companies employ ad-hoc means for directing and identifying valuable inventions, and determining what to do with the inventions they have. This is an inefficient process that does not result in strategic IP that can be leveraged throughout the business.

An important step a company can take to ensure it builds a valuable IP portfolio that supports its business objectives is to start with the end in mind. What are the goals of the company and what are the current and potential business issues it faces? Having answers to these questions can help to define what IP the business will require by better understanding what the IP needs to do to support the business.

Another important process involves the development of a business landscape -- which is a picture of the technical and market space in which the company operates. This helps to create a framework in which to visualize and analyze both the internal intellectual assets of the company, as well as the competitive patent environment. A creative and thoughtful landscape will help to address the critical business issues and develop an effective and tailored IP strategy. For example, by identifying and understanding the 'choke points' in your value-chain, a company may be able to develop a strategy for either locking up a critical path or preventing others from developing an IP portfolio in such a critical area.

The business landscape depicting the technical and market space in which the company operates will act as a map on which to plot both the company's intellectual assets and competitive patents. This information and the insights derived from its analysis act to inform the development and execution of a company's IP strategy.

Using the landscape as a guide, a company may look internally and "scan" for invention in each area of the landscape. In other words, extract and inventory each idea and invention already existing in the heads of your employees in a systematic fashion across the entire landscape. What you may find is that some areas of the landscape do not have any inventions, but maybe they should! This may necessitate the facilitation of a directed invention session to create the inventions needed by the company.

Again, using the landscape as a guide, a company may look externally and search for the patents and pending patent applications of others in each area of the landscape. This information will act as a rich source of competitive intelligence and can be used to answer many critical business questions. The analysis of this data can help to identify the IP position and activities of competitors, partners, suppliers, and customers, any of which may be a potential acquirer of the company. It can also help to assess important trends in key areas of the business landscape.

Now, with a robust and clear understanding of the company's own IP position, vis-a-vis the competitive environment, a thoughtful strategy can be developed to ensure the company builds and manages an IP portfolio, such that it has the right assets when it needs them to support its business objectives. Early-stage companies that are resource constrained are still able to install simple, low-cost business processes to better create, manage, and leverage their intellectual assets. The strategic use of IP throughout the business and across the value-chain will allow companies to maximize ROI from their innovation efforts. This will result in improving the overall protection of the business and increasing the value of the company.

John Cronin and Douglas Roth are from ipCapital Group. ipCapital Group has delivered over 450 successful IP engagements to companies in a wide range of industries. ipCG has an interdisciplinary team trained in business, law, marketing, and product development that provides a systematic and comprehensive view of the full lifecycle of IP, from creation to monetization to retirement. For more see

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