INTELLECTUAL PROPERTY AND COMPETITITVE ADVANTAGE Rakesh Basant IIM, Ahmedabad

IP-Advantage/Rakesh Basant Strategic Question How to leverage IP to reduce costs, increase profitability and market share vis-à-vis your competitors? To analyze this question, focus on Conceptual building blocks for analysis Key strategic issues for building competitiveness with IP Firm perspective but implications for research labs, public/private

IP-Advantage/Rakesh Basant Expected Learning Points Ownership of IP may be a necessary but not a sufficient condition for competitive advantage IP needs to be seen in a larger context of corporate and technology strategies to derive maximum value Importance of cross-functional groups to develop and commercialize IP Broad framework for understanding the role of IP in enhancing competitiveness

IP-Advantage/Rakesh Basant Building Blocks Intellectual property (IP) v/s Intellectual assets (IA) Not all innovations are protected and all IP commercialized Technology, an important element of intellectual assets Knowledge embodied in product, process and practices Codified v/s tacit knowledge

IP-Advantage/Rakesh Basant Building Blocks Contd... Appropriability: Ability to appropriate benefits arising from IA Perfect appropriability a misnomer Technology imitation possibilities: complexity, cumulativeness, circumstantial specificity and tacitness Practices tacit/cumulative - difficult to imitate Sector specificity: chemicals v/s engineering, life cycle IPR regime: laws and their implementation

IP-Advantage/Rakesh Basant Building Blocks Contd... Product-Process-Practice linkages Conventional technology/product life cycle (T/PLC) approach v/s simultaneous attention on product and process: sector specificity, T/PLC duration? Issue of standards, design freedom (sector specific) Breakthrough, platform, derivative projects

IP-Advantage/Rakesh Basant Building Blocks Contd... Complementary Assets Required for Commercialization of IP Complementary technologies Manufacturing, Marketing, Distribution, After sales support Customer relationships Complementary intellectual property: Patents, trade secrets & brands? Generic v/s Specialized:Irreversibility, commitment, contracting difficulties, lock-in

IP-Advantage/Rakesh Basant Key Strategic Issues for Competitive Advantage How to access complementary assets? The case of CAT scanner: EMI, GE, Johnson & Johnson Role of various appropriability regimes, asset specificity etc How to leverage the linkages between the 3Ps? Get the linkages right, unbundle to learn and develop capabilities Avoid over the wall syndrome, participation of manufacturing in design process

IP-Advantage/Rakesh Basant Key Strategic Issues for Competitive Advantage Contd.. How to leverage the linkages between the 3Ps? Contd... Process development as an integral part of the product development process to become competitive Lower manufacturing costs Accelerated time to market, lead times Rapid ramp-up Faster introduction of new products

IP-Advantage/Rakesh Basant Key Strategic Issues for Competitive Advantage Contd.. Process development as an integral part of the product development process contd... Enhanced product functionality and customer acceptance Extended proprietary position: appropriability improves, process imitation more difficult and practice most difficult? Issues of quality, delivery times, defect rates etc. Role of process-practice interface

IP-Advantage/Rakesh Basant Key Strategic Issues for Competitive Advantage Contd.. The need of linking the three Ps is very real because Product Life Cycles are becoming shorter Hard to manufacture product designs Fragmented demanding markets High costs of development Implications for public sector labs? Public-private partnership?

IP-Advantage/Rakesh Basant Key Strategic Issues for Competitive Advantage Contd.. How to leverage the links among various IPRs? Complementary IP on new features/process/designs Patent thickets Patents/copyrights for software and trade dress for interface? Combine trade secrets with patents and trademarks Munificence of patented technology: strategic use for different products/sectors

IP-Advantage/Rakesh Basant Key Strategic Issues for Competitive Advantage Contd.. How to produce a design that is closer to the customer? Over the wall syndrome: R&D-Manufacturing-Marketing How to exploit the relevance of tacit knowledge? Links between codified & tacit knowledge: the 3 Ps, appropriability Management of tacit knowledge critical: organizational practices to diffuse (share) - incentives, labour turnover