The business and financial news media are full of articles about the importance of innovation to business success, especially to small and start-up companies. Governments everywhere are seeking to provide advice and assistance to firms wishing to establish themselves and expand. The value of so called intangible assets is widely seen as more significant than the tangible assets owned by a business (buildings, tools etc.). Many, but not all define these all important intangible assets in terms of traditional formal intellectual property (IP), namely copyright, designs, patents, trademarks and specific systems such as geographic origins and semiconductor topologies.
Intellectual Property Offices (including those named simply as Patent Offices), not surprisingly, focus on these when working with businesses. After all, that is what such offices exist to do; also many of the offices have little knowledge of the needs, challenges and experiences of modern business. Rather their expertise lies in the processing and administration of formal intellectual property. As a result, they see their job to be to make business aware of formal intellectual property and to apply for such intellectual property rights.
The results have been disappointing. Many – if not most – small businesses that apply for or obtain intellectual property rights have been disappointed by the outcomes. They hoped for financial returns, that simply do not materialise, but experience unexpected costs. In consequence, there is widespread disillusion about intellectual property amongst small businesses. For many years now, governments have studied the problem and identified what they see as the causes. However, we still seem to be asking the same questions, and proposing the same solutions as we were in the past. This should cause us to pause and think and indeed be more innovative in our thinking.
There is a growing recognition that focussing on intellectual property is missing the point and alienating small businesses from the intellectual property system. That is not to say that intellectual property is unimportant; it can be very important, indeed central to the success of a business. Unfortunately, the consequence of our current approach can be to deny to small businesses the potential benefits of intellectual property.
The rest of this short article is based on the following beliefs:
- To gain market share and be successful a business needs a competitive advantage over its competitors
- Such an advantage is ultimately based on consumer choice
- The advantage arises in providing goods and services in a different and novel way. They offer the consumer a new experience. In other words, they are provided with an innovative approach.
- Intellectual property can provide a critical tool for not only protecting an innovation but also for creating a business strategy built on the core innovation (s).
- Businesses need advice and support in properly identifying and managing the sore innovation(s). This is their prime need.
In addition to advice on finance, employment, and government regulations, advice for a potentially innovative company looks at staff skills and know how; core business processes; critical business processes; critical customer relations; any existing IP portfolio; Research and Development programmes, and current company strategy. The key components that give competitive advantage are identified and, if appropriate, IP protection is secured or strengthened. A new strategic approach to the exploitation of the IP and other competitive assets then form the core of the future business plan. This requires close contact and collaboration between the business and the advisor, easy access to one another, and growing mutual trust and confidence. Therefore, the closer the access the better.
Of course, this isn’t a one-off event. Business plans must be revised in the light of changing circumstances, both internal and external. With growing confidence and experience the business is less reliant on close support and advice, though continued less intense relationships offer benefits of ready access when advice is needed.
Equally, the IP position is not static. The IP must be managed; licenses considered; market coverage reviewed; and new IP identified, rights acquired, and the business plan amended accordingly.
It is not a simple or straightforward process. Business success requires hard work, it does not simply follow from a bright idea and IP coverage. Much must be done to turn the idea into the reality of a successful business.
From the above it follows that advice and assistance must be given by people who understand the business process and the challenges faced by businessmen, and with some understanding of how to identify the core business driver, the thing that gives the competitive advantage, and how to make best use of that. Some knowledge of intellectual property is also required. It is not common to find expertise across both business matters and intellectual property, though intellectual property experts can acquire some business skills, and some business advisors can acquire intellectual property knowledge. It is also possible for advisory companies to employ experts from both fields, who will work together to give clients the best overall advice. In addition, IP Offices can change their business model to evolve into business advisory organisations, though this is difficult within the constraints of public body regulations and the traditional mindset of IP Offices. The compromise solution lies in partnerships between business advisors and IP experts.
There is a successful national model is that operating in Denmark, government funded advice is delivered at regional level, making it accessible to small businesses. The initial work of the advisor is to analyse the business and identify potential competitive advantage and helping the business draw up an appropriate business plan. The advisor has some knowledge of IP but, more importantly, has a named contact with the Danish IP Office, which means that the client can access expert advice quickly and directly. The advisors and the Danish IP Office build close relationships between themselves and the effectiveness of the networks is constantly monitored. This allows the IP Office to create a strong customer focus without diluting its own IP expertise. Advantageously, the arrangement provides a friendly interface with the customer, far more than government/business relationships usually develop.
To sum up. Having IP is not enough to be successful. However, a strong business plan built on the exploitation of strong IP enhances the chances of success. Nothing can guarantee success, the choices of the consumer will decide who succeeds, moreover those choices are influenced by skilful exploitation of innovation and IP.
For innovators and entrepreneurs. Assume nothing. Think about your core selling point. Build your business plan and IP acquisition on it. Use advice critically with your eyes open.
Ron Marchant- he joined the UK Patent Office in 1969 as a Patent Examiner after graduating from London University with BSc (hons) Chemistry. In 1992 he became Director of Patents, and was appointed as Chief Executive and Comptroller General from 2003 until 2007, during which time he took steps to modernise and change the business model of the Office. In recognition of his achievements he was made a Companion of the Order of the Bath (CB) in the New Years Honours of 2007. Since retiring as CEO Ron chaired an EU Expert Group on IP and SMEs, been a non-Executive Director of the Scottish Intellectual Assets Centre, and has presented at many meetings, seminars, and workshops.