SMBs: The Key to Closing the Innovation Gap Intellectual Property Management and the Internationalization Strategies of SMBs/SMEs G S Jaiya, Director,
Presentation on theme: "Intellectual Property Management for Enhancing the Competitiveness of SMEs and Other Creative Communities G S Jaiya, Director, SMEs Division World Intellectual."— Presentation transcript:
Intellectual Property Management for Enhancing the Competitiveness of SMEs and Other Creative Communities G S Jaiya, Director, SMEs Division World Intellectual Property Organization
Easy to read, practical, business friendly guides
Distribution of IP PANORAMA CD To member states of WIPO To the partner of SMEs division
Spotlight is on knowledge in todays 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
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
The challenge of adding value in todays 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
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
Levels of Product Brand Name Quality Level Packaging Design Features Delivery& Credit Installation Warranty After- Sale Service Core Benefit or Service Core Benefit or Service Actual Product Actual Product Core Product Core Product Augmented Product Augmented Product
Selling Products 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
Whats the Difference? A product A commodity A brand
Would you Buy? A Libyan watch? Japanese coffee? A Kenyan car?
Your answer in all these cases is very probably NO Reason? NO REPUTATION Reputation is the Soul of a Brand
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 $650 higher!
A Brand is More Than a Product Product Scope Attributes Uses Quality/value Functional benefits Organizational associations Brand Personality Symbols Self- expressive benefits Emotional benefits User Imagery Country of origin Brand Brand/customer relationships
The physical goods/service continuum
Continuum of Evaluation for Different Types of Products Clothing Jewelry Furniture Houses Automobiles Restaurant meals Vacations Haircuts Child care Television repair Legal services Root canals Auto repair Medical diagnosis Difficult to evaluate Easy to evaluate High in search High in experienceHigh in credence Most Goods Most Services
Modern Value is in Brands 74% of the value of the New York Stock Exchange and 72% of that of the London Stock Exchange is in brands, management know-how and patents True value is no longer in bricks and mortar
Brand Equity as a Percent of Firm Tangible Assets IndustryBrand Equity Apparel61 Tobacco46 Food Products37 Chemicals 34 Electric machinery22 Transportation20 Primary metals01
The Value of Brands Global Brand Scoreboard 1.Coca-cola67.52$ billion 2.Microsoft59.95$ billion 3.IBM53.37$ billion 4.GE46.99$ billion 5.Intel35.58$ billion (German survey January 17, 2006)
What is a Brand? 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. 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
What is a Brand? Name Term Sign Symbol Design Combination Identifies product/service of seller and differentiates it from competitors Keller, Kevin Lane. Strategic Brand Management: Building, Measuring, and Managing Brand Equity
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
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.
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.
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
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
Centrality of Knowledge KNOWLEDGE underpins PERFORMANCE
But... Wolfgang Stofer, Director of BMWs Treasury Department: Whenever the technology becomes commoditized, we buy it from third parties.
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.
Role of Brands: For the Company Real and marketable asset Higher profit margin (Price Premium) Incremental cash flow Reduces cash flow sustainability risk
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
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
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
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
1961 Coca Cola original vintage advertisement. Features a Valentine's Day
Innovative branding - with a sense of humour Mouse characters started to have themes Bio 2002 in Toronto
Innovative branding - with a sense of humour Bio 2003 Washington DC
Innovative branding - with a sense of humour Bio 2004 San Francisco
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
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
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
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.
Business Strategy is... the group of dynamic, integrated decisions that position the business in its competitive environment Marketing Strategy Product/market definition Pricing Distribution Promotion Customer support Marketing Strategy Product/market definition Pricing Distribution Promotion Customer support Production Strategy Facilities Integration Capacity Quality Production technology Operations control People management Production Strategy Facilities Integration Capacity Quality Production technology Operations control People management Financial Strategy Capital structure Cash flow Financial Strategy Capital structure Cash flow R&D Strategy Basic and applied research Product/process innovation Lead or follow R&D Strategy Basic and applied research Product/process innovation Lead or follow Objectives Growth Profitability Diversification Innovation Market share Working environment Corporate citizenship Objectives Growth Profitability Diversification Innovation Market share Working environment Corporate citizenship Legal Strategy Intellectual property protection Corporate Legal Strategy Intellectual property protection Corporate
Marketing Strategy Production Strategy Financial Strategy R&D Strategy Legal Strategy Execution People Systems Organizational structures Execution People Systems Organizational structures Results Strategy Sets a Dynamic Loop in Motion
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
Basic Research Applied Research Invention Development Production Marketing Technology-Push Linear Model of Innovation
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.
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
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
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 Corporate Strategy: Articulates the ways in which the opportunities created by the firms capabilities can be exploited.
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?
Technologies Markets How will we create value? How will we capture value in the face of Competition? How will we build the organizational capabilities necessary to deliver it? Effective Business Strategies address three key challenges:
Effective Strategies answer three key questions: How will we Create value? How will we Capture value? How will we Deliver value?
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? From Three to Seven Critical Questions
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?
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?
Types of Complementary Assets Competitive manufacturing Sales and service expertise Brand name Distribution channels Customer relationships Complementary technologies COMPETENCIES Things you can do Things you own RESOURCES Core technological know-how in innovation Other
Types of Complementary Assets Things you can do – Manufacturing capabilities – Sales and service expertise Things you own – Brand – Distribution channels – Customer relationships COMPETENCIES RESOURCES
Uniqueness & Complementary Assets over the Life Cycle: Ferment Takeoff Maturity Uniqueness Complementary Assets
The Commercialisation Pipeline IdeaInventionIP Commercialization Decision Do it yourself Assign IP Out-license IP Partner Etc
How are commercialisation strategies actually chosen? Ability to exclude incumbants 1 Complementary asset environment 1 Others –Go where the easy money is –Past Experience –Internal constraints & politics –Business network of the entrepreneur –Risk adversity –Market forces –etc
Build, Buy, Partner: Benefits and Tradeoffs Build Buy Partner Time to Market & Control & Profit Cost & Risk Most product control Own the IP Most profit opportunity Longest time to market Risk in market shifts High development costs Highest switching costs Pros Cons Shorten time to market Own the IP Acquisition costs Integration costs Least Control Integration Costs Shared gross margins - Least Profit Opportunity Shortest Time to Market Conserves Resources Try before you Buy Lowest Switching Costs Credibility and access
Which horse to pick? BuildBuyPartner LeadershipCore Business Time to Market Reduce Risk
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
Ways of... designing supplying producingmarketingdelivering Know-how transfer contract Eleven Modes of Collaboration Agreements: Illustration of Their Anchor Points Research contract Common Research Common purchase Subcontracting Engineering contract Patent licence Common production Trademark licence Consortium (common marketing) Distribution agreements
New Business Models Emerge Then… One Integrated Company Now… Many Distributed Companies Product Development Cycle Product Development Tool Companies Testing Services CROsCRMs
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
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.
Closed Innovation: Single Track Ideas & Current Market Place ResearchDevelopmentCommercialization Investigations Based upon Open Innovation: Researching a New Paradigm (2006) Henry Chesbrough, Wim Vanhaverbeke & Joel West
Open Innovation: Three Lane Highway Ideas & Current Market Place Research Development Commercialization Investigations New Market Place Other firms Market Place External Ideas & Investigations licensing External Technologies Technology spin-offs Insourcing gate Outsourcing gate Based upon Open Innovation: Researching a New Paradigm (2006) Henry Chesbrough, Wim Vanhaverbeke & Joel West
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
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
A Network View of Innovation Depending on a firms 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
Supply Chain for Innovation in SMEs Preconditions Awareness Intermediaries Profitability Public support Innovation Awareness & Audits Market pressure Outsourced RTD In-house innovation Risk shared innovation Seed capital Proof of concept IPR protection Investment in human capital Productive investment Market Tools Financial schemes Technology & technical centres IPR supports Clusters SME – Universities interface
From a network IN an organization …. To the network IS the organization Hierarchy Matrix Network
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
Building an IP 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 Deliver Revenue Biz Strategy
A Hierarchy of IP/IC Management Cost Control (Control Costs, Improve Productivity) Profit Center (Manage for Profitability) Integrated (Manage for Growth) Visionary (Drive Growth) Defensive (Build Portfolio, Protect Markets and Technology)
Exploiting IP Assets Commercialisation of IP License Strategic Alliance Co-DevelopmentCo-Marketing PassivePartnership
Commercialisation of IP License Strategic Alliance Co-DevelopmentCo-Marketing $$ IP Sk
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 Licensee IP $
Strategic Alliance 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 Strategic Partner
Co-Development Agreements Co-Marketing Agreements Co-Development Agreement –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
KNOWLEDGE AGE Universities and high schools become the raw material of economic development as coal mines were the raw material of the industrial age !
3 Ms of ENTREPRENEURSHIP MONEY MARKETING MANAGEMENT
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.
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.
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
Entrepreneurship 4 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
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)
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
Competitive Advantage An advantage over competitors gained by offering consumers greater value than competitors offer.
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
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 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 Competitive Strategies
CORE COMPETENCES Definition Hammel and Prahalad defined core competence as a central value - creating capability of an organization/enterprise.
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
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.
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.
The Five Generic Competitive Strategies
Low-Cost Provider Strategies Make achievement of meaningful lower costs than rivals the theme of firms 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 Keys to Success Low-cost leadership means low overall costs, not just low manufacturing or production costs!
Incorporate differentiating features that cause buyers to prefer firms 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 chargedObjective Keys to Success Differentiation Strategies
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 Activities, Costs, & Margins of Suppliers Buyer/User Value Chains Activities, Costs, & Margins of Forward Channel Allies & Strategic Partners
How to Achieve a Differentiation-Based Advantage Approach 1 Incorporate features/attributes that raise the performance a buyer gets out of the product Approach 2 Incorporate features/attributes that enhance buyer satisfaction in non-economic or intangible ways Approach 3 Compete on the basis of superior capabilities Approach 4 Incorporate product features/attributes that lower buyers overall costs of using product
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 Types of Differentiation Themes
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
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
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
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
Focus / Niche Strategies and Competitive Advantage Achieve lower costs than rivals in serving a well-defined buyer segment – Focused low-cost strategy Offer a product appealing to unique preferences of a well-defined buyer segment – Focused differentiation strategy Approach 1 Approach 2 Which hat is unique?
The Evolution of Marketing Transactional MarketingRelationship MarketingCollaborative Marketing Time frame1950s1980sBeyond 2000 View of valueThe company offering in an exchange The customer relationship in the long run Co-created experiences View of marketPlace where value is exchanged Market is where various offerings appear Market is a forum where value is co-created through dialogue Role of customerPassive buyers to be targeted with offerings Portfolio of relationships to be cultivated Prosumers-active participants in value co- creation Role of firmDefine 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
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
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
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
The Interaction of Intangible and Tangible Assets to Create Earnings $ $ Structural Capital (generic) Complementary Business Assets (differentiated) Intellectual Capital (unique) Value CreationValue Extraction Sales Force Distribution Capabilities Manufacturing Facilities Human Capital Human CapitalIntellectualAssetsIntellectualAssets Intellectual Property
Structural Capital (Generic Assets) Intellectual Assets $ Complementary Business Assets (Differentiated Assets) Distribution Capabilities Sales Force Manufacturing Facilities Intellectual Capital (Unique Assets) Value CreationValue Extraction Human Capital (Lead Time) 1.IP Value Is Created When Leveraged Through Complementary Assets 2.When Companies Have Different Complementary Asset Strengths They Will Need Different Intellectual Property (Materials, Process, Use) Intellectual Property Tuned To A Companys Business Know-How Intellectual Property Trade Secrets Copyrights TrademarksPatents ?%
Structural Capital (Generic Assets) Intellectual Assets $ Complementary Business Assets (Differentiated Assets) Distribution Capabilities Sales Force Manufacturing Facilities Intellectual Capital (Unique Assets) Value CreationValue Extraction Human Capital (Lead Time) 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 Intellectual Property Tuned To A Companys Business Beverage Companies Know-How Intellectual Property Trade Secrets Copyrights TrademarksPatents
Structural Capital (Generic Assets) Intellectual Assets $ Complementary Business Assets (Differentiated Assets) Distribution Capabilities Sales Force Manufacturing Facilities Intellectual Capital (Unique Assets) Value CreationValue Extraction Human Capital (Lead Time) Most value is in Trademark, Know-How, Manufacturing and Sales Some value in Patents Intellectual Property Tuned To A Companys Business Paper Companies Know-How Intellectual Property Trade Secrets Copyrights TrademarksPatents
Structural Capital (Generic Assets) Intellectual Assets $ Complementary Business Assets (Differentiated Assets) Distribution Capabilities Sales Force Manufacturing Facilities Intellectual Capital (Unique Assets) Value CreationValue Extraction Human Capital (Lead Time) Most value is in Human Creativity, Trademark, Copyright, and Distribution Intellectual Property Tuned To A Companys Business Software Companies Know-How Intellectual Property Trade Secrets Copyrights TrademarksPatents
Structural Capital (Generic Assets) Intellectual Assets $ Complementary Business Assets (Differentiated Assets) Distribution Capabilities Sales Force Manufacturing Facilities Intellectual Capital (Unique Assets) Value CreationValue Extraction Human Capital (Lead Time) Most value is in Human Creativity, Patents, and Trademarks Some value in Know-How, and Sales Intellectual Property Tuned To A Companys Business Pharmaceutical Companies Know-How Intellectual Property Trade Secrets Copyrights TrademarksPatents
Introduction to IP Management Legal Technical Business Export Financial Relationships Accounting Tax Insurance Security Automation Personnel
Pre-IPO Expansion Start-Up Seed Idea / Concept Time $ Bright Idea Experimental Research Business Plan Proof of Concept Legal Entity Founders = Mgt Team Minimal Revenue Slow Growth Support Functions Administration Marketing Revenue Growth High Growth Head Count Multiple Cycles Viable Market acceptance Heading to IPO or M&A The Process/Steps of Innovation Understanding the Process of Innovation
Expansion Start-Up Seed Idea / Concept Time $ Business Plan Prototype/ POC Project Management Business Premises Project Management Management Training Corporate and Secretarial Financial Training PR and Marketing Networking Business Development Recruitment Business Development A & P Market Access International support and Mkt. Access Diversification strategies and support Recruitment Training and Incentives The Needs of Each Stage IP Management Needed in all stages
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: Literary / artistic creation Invention FinancingProduct Design Commercialization Marketing Licensing Exporting Patents / Utility Models/Trade secrets Copyright/Related Rights Patents / Utility models Industrial Designs/ Trademarks/GIs Trademarks/ GIs Ind. Designs/Patents/Copyright All IP Rights
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
Basic Message 3 (More for Less) Own Use Licensing Franchising Merchandising (Mickey Mouse, Hello Kitty)