1. Intellectual Property Management for Enhancing the Competitiveness of SMEs and Other Creative Communities
G S Jaiya, Director, SMEs Division
World Intellectual Property Organization

3. Easy to read, practical, business friendly guides

5. Distribution of IP PANORAMA CD
To member states of WIPO
To the partner of SMEs division

6. Spotlight is on knowledge in today’s economy
Knowledge, Weightless, Information, Digital or Service Economy
Factors of production: Land, Labor, Capital, Intangibles (Knowledge)
Knowledge as useful Information (or Service)
Information as a “Public Good”
Information as Property

7. Market-oriented Economy
Playing Field: Unfair competition; free riding
National Legal Systems: Diversity (bilateral/regional/ international treaties or agreements)
Adding Value : Meeting or exceeding market needs or expectations
Market research: Consumers’ needs, competing products or substitutes, gaps
Technological innovation as an element of marketing

8. The challenge of adding value in today’s economy
Raw materials/Inputs: Processing (Value addition) = Value added output/component; product; sale; Profit
Value addition: Cheaper, Faster, Better: Functional/technological or aesthetic/non-technological; Rational/Emotional (More for Less)
Price; access/availability; consistency
Individual, Enterprise (legal person), Chains, Networks; consortia; Open Innovation (Industry-Government-Academia)
Ownership vs. access to knowledge
Value Addition, Value Delivery and Value Extraction

9. Competition and Cooperation in the Knowledge Economy
Property: Right to Exclude/use/enjoy
Share/leverage
Physical vs. Intellectual Property
One to one vs. one to many
Physical manifestation/link to carrier/medium or fixation
Nature of competing/substitute products: Functional, equivalent, class, set, related goods

10. Levels of Product Core Benefit or Service Augmented Product
Installation
Packaging
Brand
Name
Features
Delivery
& Credit
After-
Sale
Service
Core
Benefit or
Service
Quality
Level
Design
Warranty
Actual
Product
Core
Product

11. Selling Products Selling Interconnected Systems
Customers who care about products “on their own terms”: is this the right product for me?
Build the “best” product
Best designed
Lowest cost
Most reliable
Selling Interconnected Systems
Customers who care about the total system experience: will this connect with the rest of my world?
Control the architecture Or
Influence the architecture and build the best products within it

12. What’s the Difference?
A product
A commodity
A brand

13. Would you Buy?
A Libyan watch?
Japanese coffee?
A Kenyan car?

14. Your answer in all these cases is very probably “NO”
Reason?
NO REPUTATION
Reputation is
the Soul of a Brand

15. How Important is Branding?
The NUMMI plant in California produces two nearly identical models called the Toyota Corolla and the Chevrolet Prizm.
Toyota sold 230,000 Corollas compared to sales of 52,000 Prizms.
And Toyota’s net price is $650 higher!

16. A Brand is More Than a Product
Organizational associations
Symbols
Brand
Personality
Country of origin
Scope
Attributes
Uses
Quality/value
Functional benefits
Product
Brand/customer relationships
User Imagery
Self-expressive benefits
Emotional benefits 16

17. The physical goods/service continuum
Note: Insert figure 7.2 – The physical goods/service continuum 17

18. Continuum of Evaluation for Different Types of Products
Clothing
Jewelry
Furniture
Houses
Automobiles
Restaurant meals
Vacations
Haircuts
Child care
Television repair
Legal services
Root canals
Auto repair
Medical diagnosis
Most
Goods
Most
Services
Easy to evaluate
Difficult to evaluate
High in search
High in experience
High in credence

19. Modern Value is in Brands
74% of the value of the New York Stock Exchange and 72% of that of the London Stock Exchange is in brands, management know-how and patents
True value is no longer in bricks and mortar

20. Brand Equity as a Percent of Firm Tangible Assets
Industry Brand Equity
Apparel 61
Tobacco 46
Food Products 37
Chemicals
Electric machinery 22
Transportation 20
Primary metals 01 20

21. Global Brand Scoreboard
The Value of Brands
Global Brand Scoreboard
1. Coca-cola 67.52$ billion
2. Microsoft 59.95$ billion
3. IBM $ billion
4. GE $ billion
5. Intel $ billion
(German survey January 17, 2006)
This gives an idea of how trademarks can become valuable business assets and why it is important to protect them. 21

22. What is a Brand?
A brand is a “name, term, sign, symbol, or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition.”
Source: American Marketing Association
A product is something that is made in a factory; a brand is something that is bought by a customer. A product can be copied by a competitor, a brand is unique. A product can be quickly outdated; a successful brand is timeless.
Source: Stephen King, WPP Group, London
A brand is something that resides in the minds of consumer. 22

23. differentiates it from
What is a Brand?
Symbol
Term
Identifies
product/service
of seller and
differentiates it from
competitors
Design
Name
Combination
Sign
Keller, Kevin Lane. Strategic Brand Management: Building, Measuring, and Managing Brand Equity 23

24. KEY CHARACTERISTICS OF A BRAND
To be effective, a brand needs the following:
consistency
to reduce buyers’ level of perceived risk
to offer a range of functional and emotional attributes which are of value to buyers

25. Names are Important in Branding
Donald Trump’s family name is Drumpf. But he can’t call it Drumpf Towers.
Alan Alda’s name was Alphonso D’Abruzzo.
Chinese gooseberry was renamed kiwifruit.
Paradise Island in the Bahamas used to be Hog Island.

26. A Brand Must be More Than a Name
A brand must trigger words or associations (features and benefits).
A brand should depict a process (McDonald’s, Amazon).
A great brand triggers emotions (Harley-Davidson).
A great brand represents a promise of value (Sony).
The ultimate brand builders are your employees and operations, i.e., your performance, not your marketing communications.

27. Brand/Trademark Trademark: Legal concept Brand: Marketing concept
Registration of a brand adds value as it protects its other inherent assets
Brand profile and positioning may vary over time, but trademark protection remains the same

28. Trust is to Business What Trademark is to Brand
Brand Equity built on the foundation of a protected Trademark
Brand/Trademark can:
(a) be disposed off separately from other company assets (Free-standing Institutions); and
(b) give rights that can be legally protected

29. Centrality of Knowledge
KNOWLEDGE underpins PERFORMANCE

30. But... Wolfgang Stofer, Director of BMW’s Treasury Department:
“Whenever the technology becomes commoditized, we buy it from third parties”.

31. Role of Brands: For the Company
In a highly competitive world where manufacturers are losing their pricing power, branding is seen as a way of clawing back some of the lost influence.

32. Role of Brands: For the Company
Real and marketable asset
Higher profit margin (Price Premium)
Incremental cash flow
Reduces cash flow sustainability risk

33. Role of Brands: For the Company
Accelerates speed of cash flow
Increases bonding and customer loyalty
Increased market share
Entry barrier
Limits growth of competitors

34. Role of Brands: For the Company
Requires lower investment levels
Better negotiating position with trade and other suppliers
Facilitates higher product availability (better distribution coverage)
Dealers order what customers explicitly request

35. Role of Brands: For the Company
Extends products’ life cycle
Allows lower cost brand extensions
Can be the basis for international expansion
Provides legal protection;
Licensing; Franchising; Merchandising
Buffer to survive market or product problems

36. Role of Brands: For the Company
Value of Brands is a key determinant of enterprise value and stock market capitalization
Financial markets reward consistently focussed brand strategies
Brand management a vital ingredient for success in corporate strategy

37. 1961 Coca Cola original vintage advertisement.
Features a Valentine's Day 37

38. Innovative branding - with a sense of humour
Mouse characters started to have themes
Bio 2002 in Toronto

39. Innovative branding - with a sense of humour
Bio 2003 Washington DC

40. Innovative branding - with a sense of humour
Bio 2004 San Francisco

41. SME Competitiveness (I)
In a knowledge-based economy, competitiveness of enterprises, including SMEs, is increasingly based on ability to provide high-value-added products at a competitive price
Globalization and trade liberalization has made it crucial for most enterprises, including SMEs, to become internationally competitive even when operating wholly in the domestic market

42. SMEs Competitiveness (II)
To become and remain competitive, SMEs need a coherent business strategy to constantly improve their efficiency, reduce production costs and enhance the reputation of their products by:
Investing in research and development
Acquiring new technology
Improving management practices
Developing creative and appealing designs
Effectively marketing their products

43. Everything Depends on 5 Key Choices:
Choosing the right business to be in
Creating the right strategy
Building the right systems
Designing the right organization
Getting the right people

44. A business is a combination of ...
Technology in the product or service,
Technology used to make the product or provide the service,
Features of the product or service, and
Customer needs met by the product or service,
… that creates a potential or real economic relationship between a buyer and a seller.

45. Business Strategy is ...
the group of dynamic, integrated decisions that position the business in its competitive environment
R&D Strategy
Basic and applied research
Product/process innovation
Lead or follow
Marketing Strategy
Product/market definition
Pricing
Distribution
Promotion
Customer support
Objectives
Growth
Profitability
Diversification
Innovation
Market share
Working environment
Corporate citizenship
Production Strategy
Facilities
Integration
Capacity
Quality
Production technology
Operations control
People management
Financial Strategy
Capital structure
Cash flow
Legal Strategy
Intellectual property protection
Corporate

46. Strategy Sets a Dynamic Loop in Motion
R&D Strategy
Execution
People
Systems
Organizational structures
Marketing Strategy
Production Strategy
Results
Legal Strategy
Financial Strategy

47. SMEs Competitiveness (III)
For this, SMEs must make significant investments of time and resources
Without intellectual property protection there is a strong risk that investments in R&D, product differentiation and marketing may be stolen/copied
Intellectual property rights enable SMEs to have exclusivity over the exploitation of their innovative new or original products, their creative designs and their brands. The exclusivity creates an appropriate incentive for investing in improving their competitiveness

48. “Technology-Push Linear Model of Innovation”
Basic Research
Applied Research
Invention
Development
Production
Marketing

49. The Innovation Process
An innovation starts as an idea/concept that is evaluated, refined and developed before it is applied or acted upon.
Innovations may be inspired by reality (known problem). The innovation (new or improved product development) process, which leads to useful technology, requires:
Research
Development (up-scaling, testing)
Production
Marketing
Sale
Use/Consume
Experience with a product results in feedback and leads to incrementally or radically improved innovations.

50. New/Improved Product Development
Stages in a New/Improved Product Development process:
Ideas Generation
Ideas Screening
Concept Development and Testing
Business Analysis
Beta Testing and Market Testing
Technical Implementation
Commercialization

51. Ideas, Creativity and Innovation
Creativity The ability to make or otherwise bring into existence something new, whether a new solution to a problem, a new method or device, or a new artistic object or form.
Innovation 1 : The introduction of something new 2 : A new idea, method, or device
Creativity = Idea + Action (Individual)
Innovation = Creativity + Productivity (Groups/teams)
Innovation = Idea + Action + Productivity

52. Corporate Strategy: What is it?
A defining statement containing the intent and direction of the corporation, & delineating the strategic plans to achieve its objective.
A living guideline, that focuses and directs efforts of the corporation.
Constantly tested and modified as required.
Not to be circumvented without deliberate modification.
Balances and integrates the following elements:
Vision of strategic direction for long-term strength
Market direction and needs
Competitive effects
Technology strategy
Product strategy
Core competency
Resource alignment
Articulates the ways in which the opportunities created by the firm’s capabilities can be exploited.

53. Basic Strategic Considerations:
Key Inputs to Strategy:
Customer inputs – what is working and not working.
Market place analysis – growing needs, emerging applications and significant trends.
Competitive influences and barriers to entry.
Internal competency assessment regarding skills and ability.
Corporate business process benchmarking.
Business strategic inflection point analysis.
Resources available for commitment.
Key Outputs of Strategic Dialog:
Business strategy – goals and objectives of the organization.
Technology strategy – technologies to acquire or develop.
Marketing strategy – Why, where and how to focus on customers?
Product strategy – features and functions to be developed.
Intellectual property strategy – How will IPR contribute to strategy?

54. Effective Business Strategies address three key challenges:
Markets
How will we create value?
Technologies
How will we capture
value in the face of
Competition?
How will we build
the organizational
capabilities
necessary to
deliver it? 9 3 3

55. Effective Strategies answer three key questions:
How will we
Create value?
How will we
Deliver value?
How will we
Capture value? 8

56. From Three to Seven Critical Questions
How will we create value?
How will the technology evolve?
How will the market change?
How will we capture value?
How should we design the business model?
Where should we compete in the value chain?
How should we compete if standards are important?
How will we deliver value?
How do we manage the core business and growth simultaneously?
How do we use our strategy to drive real resource allocation?

57. Three key ideas: Uniqueness
Controlling the knowledge generated by an innovation
Complementary assets
Controlling the assets that maximize the profits from innovating
Understanding the dynamics of the value chain
Should we buy our suppliers? Distributors?
Should we outsource our manufacturing… distribution… sales… capability? 55 39

58. What are Complementary Assets?
Those assets that allow a firm to make money, even if the innovation is not unique:
The answer to the question:
If our innovations were instantly available to our competitors, would we still make money? Why? 61

59. Types of Complementary Assets
COMPETENCIES
Things you can do
Competitive manufacturing
Sales and service expertise
Other
Core technological know-how in innovation
Complementary technologies
Distribution channels
Customer relationships
Other
Things you own
RESOURCES
Brand name

60. Types of Complementary Assets
Things you can do
Manufacturing capabilities
Sales and service expertise
Things you own
Brand
Distribution channels
Customer relationships
COMPETENCIES
RESOURCES 63

61. Uniqueness & Complementary Assets over the Life Cycle:
Maturity
Takeoff
Ferment 80 52

62. The ‘Commercialisation Pipeline’
Do it yourself
Assign IP
Commercialization Decision
Idea
Invention IP
Out-license IP
Partner
Etc

63. How are commercialisation strategies actually chosen?
Ability to exclude incumbants1
Complementary asset environment1
Others
Go where the easy money is
Past Experience
Internal constraints & politics
Business network of the entrepreneur
Risk adversity
Market forces
etc

64. Build, Buy, Partner: Benefits and Tradeoffs
Pros
Cons
Build
Most product control
Own the IP
Most profit opportunity
Longest time to market
Risk in market shifts
High development costs
Highest switching costs
Cost & Risk
Buy
Shorten time to market
Own the IP
Acquisition costs
Integration costs
Partner
Shortest Time to Market
Conserves Resources
Try before you Buy
Lowest Switching Costs
Credibility and access
Build: In house development
Buy: Acquisition of technology
Partnering: Resale of existing technology In part a buy decision; but you don’t own the Intellectual Property.
Alliance partnering where you engage in light integration and joint go-to-market and selling strategies
Buy or Partner only relevant if the technology exists.
BEA example as why building can be risky—bet on CORBA, did not win in market.
If industry standards are in flux and you are not a standard setter: partnering or buying may be a better strategy
Informix/Illustra example of why Buying can be problem—market shifted-need for object database not as planned.
HP/Canon –OEM partnering for laser jets
In house development: offers the highest level architecture control and go-to-market strategy control but also highest exposure to competitive risks or changes in customer preferences due to the time to market issues.
Buy model: technology acquisition. Initial time to market can be shortened with either resale or acquire. Costs of acquisition are of course higher than resale but may not be higher than product development. Product risks are less if you are diligent about acquiring proven technology. Once acquired, must make sure it works seamlessly with current product, spend time to develop into current product. Afterwards the risks and level of control are the same as the build model for continued investment in the product.
Resale model inherits aspects of technology acquisition and in partnering.
In a resale model the costs and technolgoy risks are much less and switching costs are moderate., but the trade off is in level of control of the product. Also, in resale mode, have to ensure sales knows how to sell, develop contracts, sales support plan, coordinate with other vendor.
Alliance partnering is the low cost, low risk, and shortest time to market model. It also has the least control factor. Try before you buy. Fast speed to market, take advantage of partner’s development efforts, partner keeps the selling, sell as add-on, sales doesn’t have to learn product, can refer to current vendor who sells and supports.
However, must do due diligence on company/product, since have least control over product/business.
How to overcome “ religious” objections to partnering as company grows—Time is $$$$$, position in terms of revenue growth, revenues sooner, catching market as it emerges and grows. (Leaders get premium pricing, lower costs of sales, analyst attention, market awareness).
Least Control
Integration Costs
Shared gross margins -
Least Profit Opportunity
Time to Market & Control & Profit

65. Which horse to pick? Build Buy Partner Leadership Core Business
Time to Market
Reduce
Risk

66. The Key is Collaboration
“Few if any companies today can hold all the pieces of their own product technology…they simply must collaborate with others if they want to survive and prosper…IP has become much more of a bridge to collaboration”
Marshall Phelps, Microsoft

67. Eleven Modes of Collaboration Agreements: Illustration of Their Anchor Points
Research
contract
Common
purchase
Subcontracting
Engineering
Patent
licence
production
Trademark
Consortium
(common
marketing)
Distribution
agreements
Ways
of...
designing
supplying
producing
marketing
delivering
Know-how transfer
contract

68. New Business Models Emerge
Then…
One Integrated Company
Now…
Many Distributed Companies
Product Development Cycle
Product Development
Tool Companies
Testing Services
CRO’s
CRM’s

69. New Regional Model Emerge
Then…
Manufacturing
Research
Development
Trials/Testing
Services
Self-contained regional clusters
Region A
Region E
Region B
Region F
Region D
Region C
Region G
Now…
Specialized, networked regions

70. New developments in innovation raise new issues and problems
Greater emphasis on commercializing scientific discoveries, particularly in IT and the bio-sciences
Speed and potential value of scientific progress leads to emphasis on solid and well-designed portfolios of research projects
Universites as active drivers of innovation: Academic entrepreneurship and the entrepreneurial university
University-industry partnerships
Increased search for radical innovation and top-line growth.

71. ‘Closed Innovation: Single Track’1 2 3
“Ideas &
“Current Market Place”
Investigations” 4 5
Research
Development
Commercialization
Based upon ‘Open Innovation: Researching a New Paradigm’ (2006) Henry Chesbrough, Wim Vanhaverbeke & Joel West

72. ‘Open Innovation: Three Lane Highway’
“External Ideas &
Investigations”
“External Technologies 1
Insourcing gate 2 3
“Ideas &
“Current Market Place”
Investigations”
Outsourcing gate
“New Market Place”
Technology spin-offs
“Other firm’s Market Place” 4
licensing 5
Research
Development
Commercialization
Based upon ‘Open Innovation: Researching a New Paradigm’ (2006) Henry Chesbrough, Wim Vanhaverbeke & Joel West

73. Open Innovation Interfaces and Boundaries
Cultural differences
Successful partnerships have researchers in companies working with researchers in the public research organizations (PROs) and research universities
Communication channels, working relationships
Creating a company culture where external contributions are accepted
Functional organizations with specific responsibility to manage the external technology and research function
Example of Hewlett-Packard University Relations
Work pace, expectations
Since private R & D labs work more quickly, a company may establish a small-firm channel to take advantage of the speed difference
MIT Industrial Liaison Program manages university research to meet the expectations of corporate sponsors

74. Impact of Open Innovation
Historically, internal R&D was a strategic asset
Nowadays, companies commercialize both their own ideas/inventions as well as those from others; for example, of other companies, public research organizations (PROs) and research universities
Industries embracing open innovation view public research organizations (PROs) and research universities as a source of graduates and applied research
Researchers in companies have shifted to advanced technologies and product development

75. A Network View of Innovation
Depending on a firm’s strengths, different firms play different roles in open innovation value chain
Some firms generate innovations
Some integrate the innovations of others
Some have a fully integrated model
An open innovation system is a networked system

76. Supply Chain for Innovation in SMEs
Preconditions
Awareness
Intermediaries
Profitability
Public support
Innovation
Awareness
& Audits
Outsourced RTD
Investment in human capital
Seed capital
In-house innovation
Proof of concept
Market
Productive investment
Market pressure
Risk shared innovation
IPR protection
Tools
Financial schemes
Technology & technical centres
IPR supports
Clusters
SME – Universities interface

77. From a network IN an organization ….
To the network IS the organization
Hierarchy
Matrix
Network

78. TYPES OF NETWORKS
Task Networks: involve the exchange of specific job-related resources including information, expertise, professional advice, political access, and material resources.
Social Networks: involve relationships characterized by higher levels of closeness and trust than those that are exclusively task-related. They usually consist of people who share a common background or interest. Since people have more leeway in choosing their friends than their co-workers, these networks tend to be less closely determined by formal organizational arrangements and work assignments. Social networks, however, often play a critical role in mobilizing resources, transmitting information, and providing peer coaching.
Innovation Networks must combine both!
Thanks to H. Ibarra

79. Building an IP Strategy
Deliver Revenue
Biz Strategy
Build Your Portfolio
Strategic Patenting/Branding
Purchase Patents/Brands
Deploy Your Portfolio
Design Freedom
Manage Competition
Enter new Markets
Deliver Revenue
Protecting Inventions/Recognition
Manage Competition
Design Freedom
Markets Development

80. A Hierarchy of IP/IC Management
Visionary
(Drive Growth)
Integrated
(Manage for Growth)
Profit Center
(Manage for Profitability)
Cost Control
(Control Costs, Improve Productivity)
There is no best place to be: it depends on your needs
Defensive
(Build Portfolio, Protect Markets and Technology)

81. Commercialisation of IP
Exploiting IP Assets
Commercialisation of IP
License
Strategic Alliance
Co-Development
Co-Marketing
Passive
Partnership

82. Commercialisation of IP
License
Strategic Alliance
Co-Development
Co-Marketing Sk IP $ $

83. Passive features of a license
Licensor grants exploitation rights to a licensee
Licensee pays royalties and other remuneration to the Licensor
Licensor is passive
Has no further exploitation rights
Licensor has no need to actively do anything
Licensor passively sits by and collects royalties
Licensor IP $
Licensee

84. Strategic Alliance
Strategic Partner
Strategic Partner
In a strategic alliance both parties contribute to their joint venture their respective resources and capability
Aim is to add greater value to their respective positions
By doing so, to
Increase their financial return
To access the capability of their partner which they themselves lack
To acquire skills that they themselves may lack

85. Co-Development Agreements Co-Marketing Agreements
Partners collaborate scientifically to further develop the IP
Take the IP further along the development path
Licensor increase the value of the IP as a result of the collaboration
Co-Marketing Agreement
Partners co-market the products of their alliance
One may manufacture only, and the other may sell products only
They may sell products competitively in the same territory
Or, they may sell in different territories
Licensor retains some marketing rights, achieving greater financial upside

86. KNOWLEDGE AGE
Universities and high schools become the raw material of economic development as coal mines were the raw material of the industrial age !

87. 3 M’s of ENTREPRENEURSHIP
MONEY
MARKETING
MANAGEMENT

88. Entrepreneurship 1
Entrepreneurship drives innovation, competitiveness, job creation and economic growth.
It allows new/innovative ideas to turn into successful ventures in high-tech sectors and/or can unlock the personal potential of disadvantaged people to create jobs for themselves and find a better place in society.

89. Entrepreneurship 2
Entrepreneurship, in small business or large, focuses on "what may be" or "what can be".
One is practicing entrepreneurship by looking for what is needed, what is missing, what is changing, and what consumers will buy during the coming years.

90. Entrepreneurship 3 Entrepreneurs have: A passion for what they do
The creativity and ability to innovate
A sense of independence and self- reliance
(Usually) a high level of self confidence
A willingness and capability (though not necessarily capacity or preference) for taking risks

91. Entrepreneurship 4 A tolerance for organizational bureaucracies
Entrepreneurs do not (usually) have:
A tolerance for organizational bureaucracies
A penchant for following rules
A structured approach to developing and implementing ideas
The foresight to plan a course of action once the idea is implemented and established

92. Entrepreneurial Success
1. People (Entrepreneur /Entrepreneurial Team)
2. Opportunity (Marriage of Market and
Product/Service)
3. Access to Resources (Land. Labor, Capital, Knowledge
And the fit amongst these three elements
(Business Model)

93. “Competitive strategy is about being different
“Competitive strategy is about being different. It means deliberately choosing to perform activities differently or to perform different activities than rivals to deliver a unique mix of value.”
Michael E. Porter

94. Competitive Advantage
An advantage over competitors gained by offering consumers greater value than competitors offer.

95. Competitive Strategies
How does an organization improve their competitive performance?
Must establish a competitive advantage in 3 areas:
Uniqueness: of resources & processes (Bill Gates knowledge of IBM)
Value: where products/services warrant a higher-than-average price or exceptionally low
Difficult to imitate: when products/services are hard to mimic or duplicate

96. Competitive Strategies
Basic Competitive Strategies: Porter
Overall cost leadership
Lowest production and distribution costs
Differentiation
Creating a highly differentiated product line and marketing program
Focus
Effort is focused on serving a few market segments

97. Competitive Strategies
Basic Competitive Strategies: Value Disciplines
Operational excellence
Superior value via price and convenience
Customer intimacy
Superior value by means of building strong relationships with buyers and satisfying needs
Product leadership
Superior value via product innovation

98. CORE COMPETENCES Definition
Hammel and Prahalad defined core competence as a central value - creating capability of an organization/enterprise.

99. CORE COMPETENCES
Core competences are activities or processes that critically underpin an organisation competitive advantage.
They create and sustain the ability to meet the critical success factors of particular customer groups better than providers in ways that are difficult to imitate

100. CORE COMPETENCES
Core competences are distinctive capabilities that lead a company to a competitive advantage.
Features of an enterprise that cannot be readily reproduced by a competitor.

101. CORE COMPETENCES
Core competences can vary through the time depending on the strategy adapted by the companies and the identification of the core competencies is the first step for a company to decide which business opportunities to pursue.

102. The Five Generic Competitive Strategies
102

103. Low-Cost Provider Strategies
Keys to Success
Make achievement of meaningful lower costs than rivals the theme of firm’s strategy
Include features and services in product offering that buyers consider essential
Find approaches to achieve a cost advantage in ways difficult for rivals to copy or match
Low-cost leadership means low overall costs, not just low manufacturing or production costs!

104. Differentiation Strategies
Incorporate differentiating features that cause buyers to prefer firm’s product over brands of rivals
Find ways to differentiate that create value for buyers and are not easily matched or cheaply copied by rivals
Not spending more to achieve differentiation than the price premium that can be charged
Objective
Keys to Success

105. Where to Find Differentiation Opportunities in the Value Chain
Purchasing and procurement activities
Product R&D and product design activities
Production process / technology-related activities
Manufacturing / production activities
Distribution-related activities
Marketing, sales, and customer service activities
Internally
Performed
Activities,
Costs, &
Margins
Margins of
Suppliers
Buyer/User
Value
Chains
Activities, Costs,
& Margins of
Forward Channel
Allies &
Strategic Partners
105

106. How to Achieve a Differentiation-Based Advantage
Approach 1
Incorporate product features/attributes that lower buyer’s overall costs of using product
Approach 2
Incorporate features/attributes that raise the performance a buyer gets out of the product
Approach 3
Incorporate features/attributes that enhance buyer satisfaction in non-economic or intangible ways
Approach 4
Compete on the basis of superior capabilities
106

107. Types of Differentiation Themes
Unique taste – Dr. Pepper
Multiple features – Microsoft Windows and Office
Wide selection and one-stop shopping – Home Depot, Amazon.com
Superior service -- FedEx, Ritz-Carlton
Spare parts availability – Caterpillar
Engineering design and performance – Mercedes, BMW
Prestige – Rolex
Product reliability – Johnson & Johnson
Quality manufacture – Michelin, Toyota
Technological leadership – 3M Corporation
Top-of-line image – Ralph Lauren, Starbucks, Chanel
107

108. Sustaining Differentiation: Keys to Competitive Advantage
Most appealing approaches to differentiation
Those hardest for rivals to match or imitate
Those buyers will find most appealing
Best choices to gain a longer-lasting, more profitable competitive edge
New product innovation
Technical superiority
Product quality and reliability
Comprehensive customer service
Unique competitive capabilities
108

109. Best-Cost Provider Strategies
Combine a strategic emphasis on low-cost with a strategic emphasis on differentiation
Make an upscale product at a lower cost
Give customers more value for the money
Deliver superior value by meeting or exceeding buyer expectations on product attributes and beating their price expectations
Be the low-cost provider of a product with good-to-excellent product attributes, then use cost advantage to under price comparable brands
Objectives
109

110. Focus / Niche Strategies
Involve concentrated attention on a narrow piece of the total market
Serve niche buyers better than rivals
Choose a market niche where buyers have distinctive preferences, special requirements, or unique needs
Develop unique capabilities to serve needs of target buyer segment
Objective
Keys to Success
110

111. Examples of Focus Strategies
Animal Planet and History Channel
Cable TV
Google
Internet search engines
Porsche
Sports cars
Cannondale
Top-of-the line mountain bikes
Enterprise Rent-a-Car
Provides rental cars to repair garage customers
Bandag
Specialist in truck tire recapping
111

112. Focus / Niche Strategies and Competitive Advantage
Achieve lower costs than rivals in serving a well-defined buyer segment –
Focused low-cost strategy
Approach 1
Offer a product appealing to unique preferences of a well-defined buyer segment – Focused differentiation strategy
Approach 2
Which hat is unique?
112

113. The Evolution of Marketing
Transactional Marketing
Relationship Marketing
Collaborative Marketing
Time frame
1950s
1980s
Beyond 2000
View of value
The company offering in an exchange
The customer relationship in the long run
Co-created experiences
View of market
Place where value is exchanged
Market is where various offerings appear
Market is a forum where value is co-created through dialogue
Role of customer
Passive buyers to be targeted with offerings
Portfolio of relationships to be cultivated
Prosumers-active participants in value co-creation
Role of firm
Define and create value for consumers
Attract, develop and retain profitable customers
Engage customers in defining and co-creating unique value
Nature of customer interaction
Survey customers to elicit needs and solicit feedback
Observe customers and learn adaptively
Active dialogue with customers and communities
Adapted from Prahalad and Ramaswamy 2004

114. Example 1 Patent for the fountain pen that could store ink
Utility Model for the grip and pipette for injection of ink
Industrial Design: smart design with the grip in the shape of an arrow
Trademark: provided on the product and the packaging to distinguish it from other pens
Source: Japanese Patent Office

115. Example 2
Decades ago, Coca-Cola decided to keep its soft drink formula a secret
The formula is only know to a few people within the company
Kept in the vault of a bank in Atlanta
Those who know the secret formula have signed non-disclosure agreements
It is rumored that they are not allowed to travel together
If it had patented its formula, the whole world would be making Coca-Cola

117. Example 3
Patent for stud and tube coupling system (the way bricks hold together)
But: Today the patents have long expired and the company tries hard to keep out competitors by using designs, trademarks and copyright
Reverse engineering would have been easy

118. The Interaction of Intangible and Tangible Assets to Create Earnings
Intellectual Capital (unique)
Complementary Business
Assets (differentiated)
Value Creation
Value Extraction
Manufacturing Facilities
Distribution Capabilities
Sales Force
Human
Capital
Intellectual
Assets $
Intellectual
Property
Discuss in detail with an example: car manufacturer
Structural Capital (generic)

119. Intellectual Property Tuned To A Company’s Business
Intellectual Capital
(Unique Assets)
Complementary Business Assets
(Differentiated Assets)
Value Creation
Value Extraction
Intellectual Assets ?%
Human
Capital
(Lead Time)
Intellectual Property $
Sales Force
Manufacturing Facilities
Distribution Capabilities
Patents
Trademarks
Copyrights
Trade Secrets
Know-How
Structural Capital
(Generic Assets)
IP Value Is Created When Leveraged Through Complementary Assets
When Companies Have Different Complementary Asset Strengths They Will Need Different Intellectual Property (Materials, Process, Use)

120. Intellectual Property Tuned To A Company’s Business Beverage Companies
Intellectual Capital
(Unique Assets)
Complementary Business Assets
(Differentiated Assets)
Value Creation
Value Extraction
Intellectual Assets
Human
Capital
(Lead Time)
Intellectual Property $
Sales Force
Manufacturing Facilities
Distribution Capabilities
Patents
Trademarks
Copyrights
Trade Secrets
Know-How
Structural Capital
(Generic Assets)
Line Shows the Percentage of Company Value (Market Capitalization) That is Protected By This Asset
Most value is in Trademark, Trade Secret, Distribution and Sales

121. Intellectual Property Tuned To A Company’s Business Paper Companies
Intellectual Capital
(Unique Assets)
Complementary Business Assets
(Differentiated Assets)
Value Creation
Value Extraction
Intellectual Assets
Human
Capital
(Lead Time)
Intellectual Property $
Sales Force
Manufacturing Facilities
Distribution Capabilities
Patents
Trademarks
Copyrights
Trade Secrets
Know-How
Structural Capital
(Generic Assets)
Most value is in Trademark, Know-How, Manufacturing and Sales
Some value in Patents

122. Intellectual Property Tuned To A Company’s Business Software Companies
Intellectual Capital
(Unique Assets)
Complementary Business Assets
(Differentiated Assets)
Value Creation
Value Extraction
Intellectual Assets
Human
Capital
(Lead Time)
Intellectual Property $
Sales Force
Manufacturing Facilities
Distribution Capabilities
Patents
Trademarks
Copyrights
Trade Secrets
Know-How
Structural Capital
(Generic Assets)
Most value is in Human Creativity, Trademark, Copyright, and Distribution

123. Intellectual Property Tuned To A Company’s Business Pharmaceutical Companies
Intellectual Capital
(Unique Assets)
Complementary Business Assets
(Differentiated Assets)
Value Creation
Value Extraction
Intellectual Assets
Human
Capital
(Lead Time)
Intellectual Property $
Sales Force
Manufacturing Facilities
Distribution Capabilities
Patents
Trademarks
Copyrights
Trade Secrets
Know-How
Structural Capital
(Generic Assets)
Most value is in Human Creativity, Patents, and Trademarks
Some value in Know-How, and Sales

124. Introduction to IP Management
Legal
Technical
Business
Export
Financial
Relationships
Accounting
Tax
Insurance
Security
Automation
Personnel

125. Understanding the Process of Innovation
The Process/Steps of Innovation
Pre-IPO
Time $
Viable
Market acceptance
Heading to IPO or M&A
Expansion
Legal Entity
Founders = Mgt Team
Minimal Revenue
Slow Growth
High Growth
Head Count
Multiple Cycles
Bright Idea
Experimental
Research
Business Plan
Proof of Concept
Start-Up
Support Functions
Administration
Marketing
Revenue Growth
Seed
Idea / Concept

126. IP Management Needed in all stages
The Needs of Each Stage
Recruitment
Business Development
A & P
Market Access
Corporate and Secretarial
Financial
Training
PR and Marketing
Networking
Business Development
Time $
Expansion
Business Plan
Prototype/ POC
Project Management
Business Premises
Management Training
International support and Mkt. Access
Diversification strategies and support
Recruitment
Training and Incentives
Start-Up
Seed
Idea / Concept
IP Management Needed in all stages

127. Basic Message 1
IP adds value at every stage of the value chain from creative/innovative idea to putting a new, better, and cheaper, product/service on the market:
Trademarks/ GIs Ind. Designs/Patents/Copyright
Patents / Utility Models/Trade secrets
All IP Rights
Patents / Utility models
Industrial Designs/ Trademarks/GIs
Invention
Commercialization Marketing
Exporting
Financing
Product Design
Licensing
Literary / artistic creation
Copyright/Related Rights
All IP Rights

128. Basic Message 2
IP Strategy should be an integral part of the overall business strategy of an Enterprise
BUT: Ignoring the IP system altogether is in itself an IP strategy, which may eventually prove very costly or even fatal
IP Strategy is influenced by the Business Model and Revenue Extraction Model of a business

129. Basic Message 3 (More for Less)
Own Use
Licensing
Franchising
Merchandising (Mickey Mouse, Hello Kitty)