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IP and its place in business models and strategy
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DUNCAN HART
CONSULTING
IP=
Where and how is IP value created?
Focus on wider context – internal/external
Importance of organisational models
processes/structures/culture
www.duncanhartconsulting.com
IP+IC = $2
www.duncanhartconsulting.com
Human capital
Customer capital
Organisational capital
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Intellectual Capital
Human capital
CustomerOrganisational
IP
IP
IP
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Legally Enforceable Intellectual Property
Know-How
Human capital
Structural
Customer
www.duncanhartconsulting.com
+ ‘Business Models’
iTunes
Linux
Amazon
EBay
Henry Ford
Toyota
Wal-Mart
McDonalds
Apple OS
Microsoft OS
Innovation in business models...
Nintendo
Printers/ink
Low cost
airlines
McKinsey
...where does the value come from?
Visionary
Integrated
Profit Centre
Cost Control
Defensive
Strategy requires
Organisational Capital
Are competitors better
placed to better exploit
opportunity?
Are critical assets available In-
House?
Does commercialisation
require specific
complimentary assets?
Is protection a competitive
issue??
InnovationMeets/Creates Market
need?
Opportunity to catch up?
Are resources availbale to
build them?
Can need for specific assets
be created?
Is adequate IP Protection
available?
© 1998 Patrick H. Sullivan
STORE
STORE
Yes
No
No
No
No
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
COMMERCIALISATION DECISION PROCESS
No
No
No
Yes
INTEGRATE
JV/ALLIANCE
OUT-LICENCE
CONTRACT
www.duncanhartconsulting.com
Complexity of issues....
Sophisticated processes....
critical to strategy execution....
Market Definition; an important determination of market value is the determination of primary and alternative markets where the IP may bring benefits. The larger the defined markets become, the more robust the value examination will be, and consequently, the total value expected to be extracted from that IP.Product or Product-Line Attributes: one layer below the market analysis is the identification of specific product lines and/or products impacted by the IP. In addition to the definition of potential markets and sub markets, this information allows the refinement of market research so that actual quantities and values per unit can be assembled.Customer/Licensee Identifiers: purchases and sales lend themselves at the edification of potential users of the IP. This information can provide significant data that further support the determination of the IP's value.Previous Estimates of Revenues: as part of the justification provided by innovators and product commercialisation decisions, innovation life cycle will often generate preliminary estimates of value. Although the studies may not be current, the methodologies and the data sources used by R&D, patent committees and licensing personnel will provide meaningful assistance to the CFO staff as they prepare their IP value analysis.
Terms
and data collection/management....INTERNAL IP MANAGEMENT CFO’s IP Accounting and Valuation Data
IP Life Cycle
Source
Documents
Generated
Market
Definition
Analysis
Product/Product-
Line
Customer/Licensee
Identified
Revenue/Offered
Projections
R&D director
assigns
research
project
Research work
program and
budget
Yes Likely Possible Possible
Researchers
status reports
Actual versus
planned resultsYes Likely Possible Possible
Inventor
submits request
to patent
committee
Technical
disclosures;
competitive
research; budgets
and ROI estimate
Yes Yes Yes Likely
Patent
committee
ranks and
approves/denie
s funding
Meeting minutes,
committee
member notes
Yes Yes Yes Likely
Inventor meets
with IP
Counsel
Validity research,
prior analysis,
inventor/assignee
report
Likely Likely Yes Possible
Inventor meets
with
development
team
Manufacturing
type, cost
projections,
market/product
analysis
Yes Yes Yes Yes
IP licensing
team meets
with R&D and
marketing staff
Licensing
strategies,
triage/rank
targets, revenue
forecasts
Yes Yes Yes Yes
General Counsel
Project/portfolio
Manager
CFO
CEO
New capabilities required of General Counsel - Interaction with Executive Team
HR
Helps integrate IP into Corporate
strategies, coaches Board and CEO in IP
value creation
Brand/TM strategy and enforcementSupports valuation and compliance functions - settlement -
licensing/sale structure, risk profile
IP protection,development
CTO/Engineering/R&D
Advises on deals, structure,JV assists set up and
management of IP projects
Marketing
Confidentiality,trade secrets,restraint,'inventor' management/incentives
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Organisational forms - integration
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Limited liability company
Stock exchange
Insurance
Contract law and enforceability
Modern management techniques
New business models
Marketing techniques
Information technologies
HR management
External ‘cultural’ infrastructure....
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China – innovation is not enough
Needham – 1930s
Moveable type
Stirrup
Grafting
Paper
Canal technologies
Compass
Gunpowder etc
.....BUT NO INDUSTRIAL REVOLUTION.
IP+IC = $2
www.duncanhartconsulting.com
DUNCAN HART
CONSULTING
IP=