Guriqbal Singh Jaiya Director, SMEs Division

Guriqbal Singh Jaiya Director, SMEs Division
Managing Intellectual Property Assets for Enhancing the Competitiveness of SMEs Guriqbal Singh Jaiya Director, SMEs Division The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

From Invention to Innovation
While invention depends upon creativity, successful technological innovation requires integrating new knowledge with multiple business functions. The Small and Medium-Sized Enterprises (SMEs) Division of WIPO 20

The Small and Medium-Sized Enterprises (SMEs) Division of WIPO
Innovation – What is it? The creation of new ideas/processes which will lead to change in an enterprise’s economic or social potential [P. Drucker, ‘The Discipline of Innovation’, Harvard Business Review, Nov-Dec, 1998, 149] The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

What is Innovative Thinking?
A means of generating innovation to achieve two objectives that are implicit in any good business strategy: make best use of and/or improve what we have today determine what we will need tomorrow and how we can best achieve it, to avoid the "Dinasaur syndrome« Innovative thinking has, as a prime goal, the object of improving competitiveness through a perceived positive differentiation from others in: Design/Performance Quality Price Uniqueness/Novelty The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Obstacles to Successful Innovation
Competitive position Market judgement Technical performance Manufacturing expertise Financial resources The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Innovation How to classify newness and degree of innovation and what to focus on: New to the firm? First in the market? First in the world? Incremental or radical innovation? The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

There are several types of new products. Some are new to the market, some are new to the firm, and some are new to both. Some are minor modifications of existing products while some are completely innovative The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Product Development Strategies
Old Product New Product Old Market Market Penetration Product Development New Market Market Development Product Diversification The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Marketing principles…….
Identify opportunities and threats Identify customer needs React to a competitive environment Careful planning to make a New or improved product Use the 4 P’s…. Product service Price Promotion Place (distribution) Retain flexibility to react to changes The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

The Development of Technology: From Knowledge Generation to Diffusion
IM ITATION Supply side Basic Knowledge Invention Innovation Diffusion Demand side ADOPTION The Small and Medium-Sized Enterprises (SMEs) Division of WIPO 3

Innovation Process Invention The adoption of an innovation by similar firms Usually leads to product or process standardization Products based on imitation often are offered at lower prices but with fewer features Innovation Imitation The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

The Innovation Process
An innovation starts as an idea/concept that is refined and developed before application. Innovations may be inspired by reality (known problem). The innovation (new product development) process, which leads to useful technology, requires: Research Development (up-scaling, testing) Production Marketing Use Experience with a product results in feedback and leads to incrementally or radically improved innovations. The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Translation of a Creative Idea into Useful Application
The Innovation Process Translation of a Creative Idea into Useful Application Organizing Resources Commercial Application Analytical Planning Implementation To Accomplish: Organization Product Design Manufacturing Services To Provide: Value to Customers Rewards to Employee Revenue to Investors Satisfaction of Founders To Obtain: Materials Technology Human Resources Capital To Identify: Product Design Market Strategy Financial Need The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

The Profitability of Innovation
Value of an innovation Legal protection Complementary resources Ease of imitation of technology Lead time Profits from Innovation Innovator’s ability to appropriate value from an innovation The Small and Medium-Sized Enterprises (SMEs) Division of WIPO 7

Appropriating Value from Innovation
Barriers to Integration Different Time Interpersonal Different Goal Formality of Orientation Structure Facilitators of Integration Shared Values Leaders’ Vision Effective Budget Allocation Communication Time to Market Product Quality Creation of Customer Value Cross-Functional Integration/ Design Teams Value Appropriation from Innovation The Small and Medium-Sized Enterprises (SMEs) Division of WIPO 27

Product Life Cycle Maturity Decline Sales Growth Introduction Time The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

New Product Development
Stages in a New Product Development process: Idea Generation Idea Screening Concept Development and Testing Business Analysis Beta Testing and Market Testing Technical Implementation Commercialization The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Technology Adoption – Diffusion of Innovation
Innovators: venturesome; greatest need Early adopters: opinion leaders; needs driven Early majority: deliberate Late majority: skeptics Laggards: traditionalists; suspicious The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

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 The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

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 The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Commercialization Model
Strategic Investment is the Foundation of a Successful Commercialization Model The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

What Investors Look for?
Novelty; world-class; evidence of commercial interest; clear path to market Unencumbered, or encumbered by reasonable conditions (Equity, royalties) Protection (Non-disclosure agreements, Patents, Designs, Brands, Copyright) IP protected by one or more Patents is the IP required to implement the business plan “Freedom to Operate” The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Innovation, Intellectual Property and Poverty Reduction
Critical Ingredients for Innovation: Intellectual Capital Human Capital Financial Capital Proximity Social Network Capital It is a value-based competitiveness proposition. The U.S. can no longer successfully compete on cost (primarily), As an advanced industrial, if not post-industrial economy, it must compete on value—unique qualities of performance—rather than cost. Innovation and entrepreneurship generate value that contributes to increases in productivity, which, in turn … The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Complementary Resources
Distribution Manufacturing Finance Service Core technological know-how Complementary technologies Marketing Other Other Bargaining power of owners of complementary resources depends upon whether complementary resources are generic or specialized. The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Alternative Strategies for Exploiting Innovation
Outsourcing certain functions Strategic Alliance Joint Venture Internal Commercialization Licensing Limits investment, but dependence on suppliers & partners Benefits of flexibility; risks of informal structure Shares investment & risk. Risk of partner conflict & culture clash Biggest risks & benefits. Allows complete control Small risk, but limited returns also (unless patent position very strong Risk & Return Allows outside resources & capabilities To be accessed Few Permits pooling of the resources/capabilities of more than one firm Substantial resource requirements CompetingResources Konica licensing its digital camera to HP Pixar’s movies (e.g. “Toy Story”) marketed & distributed by Disney. Apple and Sharp build the “Newton” PDA Microsoft and NBC formed MSNBC TI’s development of Digital Signal Processing Chips Examples The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Uncertainty & Risk Management in Tech-based Industries
Selection process for standards and dominant designs emerge is complex and difficult to predict, e.g. future of 3G Technological uncertainty Sources of uncertainty Market uncertainty Customer acceptance and adoption rates of innovations notoriously difficult to predict, e.g. PC, Xerox copier, Walkman Cooperating with lead users early identification of customer requirements assistance in new product development Strategies for managing risk Limiting risk exposure —avoid major capital commitments (e.g. lease don’t buy) —outsource —alliances to access other firms’ resources & capabilities —keep debt low Flexibilility —keep options open —use speed of response to adapt quickly to new information —learn from mistakes The Small and Medium-Sized Enterprises (SMEs) Division of WIPO 14

Innovation risk RISKS COSTS RESEARCH DEVELOPMENT COMMERCIALISATION The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Mortality of New Product Ideas
The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

The “ Right” Innovative Product?
The right product is one that becomes available at the right time (i.e., when the market needs it), and is better and/or less expensive that its competition. To have the right product, therefore, one must: Predict a market need Envisage a product whose performance and capability will meet that need Develop the product to the appropriate time scale and produce it. Sell the product at the right price The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Innovation and Competitive Advantage
Difficult for competitors to imitate Commercially exploitable with present capabilities Competitive Advantage Provides significant value to customers Timely The Small and Medium-Sized Enterprises (SMEs) Division of WIPO 12

Strategic Entrepreneurship and Innovation
Entrepreneurship is concerned with: The discovery of profitable opportunities The exploitation of profitable opportunities Firms that encourage entrepreneurship are: Risk takers Committed to innovation Proactive in creating opportunities rather than waiting to respond to opportunities created by others The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Entrepreneurship Creativity is at the heart of entrepreneurship, enabling entirely new ways of thinking and working. Entrepreneurs identify opportunities, large or small, that no one else has noticed. Good entrepreneurs also have the ability to apply that creativity—they can effectively marshal resources to a single end. They have drive—a fervent belief in their ability to change the way things are done, and the force of will and the passion to achieve success. They have a focus on creating value—they want to do things better, faster, cheaper. And they take risks—breaking rules, cutting across accepted boundaries, and going against the status quo. The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Entrepreneurship Defining entrepreneurship is difficult because there is no universal, clear-cut definition of the term. In its most basic sense, entrepreneurship is manifest in a business venture when an individual is able to turn a novel idea into a profitable reality. In practice, however, entrepreneurship is more multifaceted, ranging from operating a small business in one’s own home, to bringing a national franchise to a small town, to turning a new and unique idea into a high-growth company. Entrepreneurship can involve starting a business that brings a new store to main street, offering a product or service previously unavailable to a community, or acquiring an existing business that has had a long-standing presence in a community and helping it evolve to reflect one’s own vision and personality. The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Entrepreneurship The word entrepreneurship literally means, "to take or carry between" in the sense of an economic transaction; to be a market-maker. It does not literally convey the notion of innovation that we commonly associate with the term. Joseph Schumpeter ( ), one of the more well known theorists on entrepreneurship, defined an entrepreneur as one who reorganizes economic activity in an innovative and valuable way. That is, an entrepreneur is one who engages in a new economic activity that was previously unknown. An entrepreneur is a risk taker because being innovative means there are few rules or history for guidance. The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Entrepreneurship Entrepreneurship is the process of creating or seizing an opportunity, and pursuing it regardless of the resources currently controlled. The Webster’s Third New International Dictionary defines an entrepreneur to be “one who organizes, owns, manages, and assumes the risks of a business” The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Entrepreneurship The entrepreneur shifts resources out of an area of lower and into an area of higher productivity and greater yield. [J. B. Say, French economist, circa 1800] Entrepreneurship is creative destruction. Dynamic disequilibrium brought on by the innovating entrepreneur, rather than equilibrium and optimization, is the norm of a healthy economy and the central reality of economic theory and practice. [Joseph Schumpeter, Austrian economist, 1911] The entrepreneur searches for change, responds to it, and exploits it as an opportunity. Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service [Peter Drucker, 1985] The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Entrepreneurship 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. The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Entrepreneurship 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. The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Entrepreneurship 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 The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Entrepreneurship 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 The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

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 The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Major factors determining success of a new product in the market
The product provides functional advantages Lower price for comparable product More attractive design (look) Reputation of brand Easy access: Available in the main retail shops Consistent product quality Excellent after-sales services The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Competitive Advantage
Criteria… Low cost producer Product differentiation Niche market The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

An opportunity driven path to market- a different business design
Breakthrough Innovation Need two processes: NPD and NB(usiness)D An opportunity driven path to market a different business design ? ? New Product Development New Business Development New Businesses Innovative New Products The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Protection of IP Value adding Ideas Research Technologies Products Confidentiality or Nondisclosure Agreements (Trade Secrets) Collaborative Research Agreement Utility models, Patents Technology Licensing Agreement, Branding The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Intellectual Property Questions
Intellectual Property (IP) Issues/questions during New Product Development (NPD): Can the innovation be legally protected? For how long? How does one protect an innovation from imitators? How much will it cost? When to protect? Do you need to rely on an IP expert? The answers are complicated by the fact that one or more types of legal frameworks may be used to protect a particular innovation, product, process, or creative work. These include trade secrets, trademarks, designs, patents, and copyright. It is necessary to know which are applicable and when each is appropriate. This varies somewhat from jurisdiction to jurisdiction. The advice of a lawyer that specializes in these matters is essential The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Intellectual Property Questions
It is necessary to know which types of intellectual property rights (IPRs) are applicable and when is each type of IPR appropriate. This varies somewhat from one country to another. The advice of an IP lawyer is desirable if not essential. The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Background In September 2000, the WIPO Assemblies approved the creation of “a substantial new program of activities, focusing on the IP-related needs of SMEs worldwide” SMEs Division established in October 2000 Nine professionals and three administrative staff in the SMEs Division of WIPO The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Strategy 1. Demystification 2. New audience 3. New Areas 4. Proactive 5. E-Services 6. Partnership The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

(1) Demystification Studies Guides Events and expert missions Website and newsletter CD-ROM Magazine articles The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

(1) Demystification (Studies)
National Studies (on IP and SMEs) completed or under way in Argentina, Bhutan, Mongolia, Nepal, Philippines, Sri Lanka, Tanzania, Sierra Leone, Romania, Chile, Colombia, Costa Rica, El Salvador, Honduras and Paraguay, Egypt, Morocco, Lebanon WIPO Survey of IP Services to Tenants of European Technology Incubators Norwegian SMEs and the IPR system The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

(1) Demystification (Guides)
WIPO/ITC Guide on Marketing of Crafts and Visual Arts; Role of Intellectual Property; A practical guide WIPO/ITC Guide on Secrets of Intellectual Property: Guide for Small and Medium Sized Exporters WIPO/ITC Guide on Exchanging Value: Negotiating Technology Licensing Agreements - A Training Manual ITC Guide on Exporting Automotive Components ITC Guide on Pharmaceutical SMEs (Forthcoming) The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Published Making a Mark (Trademarks) Looking Good (Designs) Inventing the Future (Patents) The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Translation and/or customization: Under way, with funding from several sources, in the following countries: Algeria, Argentina, Australia, Canada, Czech Republic, Egypt, Estonia, Hungary, Italy, India, Israel, Kenya, Lebanon, Malaysia, Malta, Mongolia, Morocco, New Zealand, Philippines, Poland, Slovakia, Spain, Tanzania, Tunisia, Vietnam 16 Countries members of the OAPI The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

(1) Demystification (Events)
Special programs, seminar and workshops organized by the SMEs Division in Geneva in partnership with selected associations and organizations (IASP, INSME, IPI, MOST, WASME) Annual WIPO Forum on IP and SMEs for IP Offices of OECD Countries The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

(1) Demystification (Events)
WIPO-Italy Forum on Textile and Clothing Industries of the Mediterranean Basin Countries (Prato, Italy - December 2003) Participants from Algeria, Cyprus, Egypt, Jordan, Israel, Lebanon, Malta, Morocco, Palestine, Syria, Tunisia, Turkey The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

(1) Demystification (Website)
The Website of the SMEs Division is in six UN languages (English, French, Spanish, Arabic, Russian and Chinese) More than 60,000 pages viewed every month in 2004 Contents include sections such as IP for Business, IP and E-Commerce, Activities, Best Practices, Case Studies and Documents The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

(1) Demystification (Website)
The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

(1) Demystification (Newsletter)
Monthly e-newsletter in the 6 UN languages (Free) Content includes articles, updates with information, links and documents Launched in August 2001 Total number of subscribers: >19,000 The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

(1) Demystification (CD-ROM)
50,000 copies of the SMEs Division CD-ROM distributed to SME support institutions, IP Offices and others worldwide Marketing and customization E-learning CD ROM (in partnership with KIPO: “IP Panorama”) SAARC CD-ROM (in preparation) The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

(1) Demystification (Articles)
Some articles recently published: What to do if you are accused of copyright infringement Tapping into Patent Information: a buried treasure International trade in technology – licensing of know-how and trade secrets Intellectual Property and E-commerce: how to take care of your business’ website Offshore outsourcing and IP Savvy marketing: merchandising of IP rights The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

(2) New Audience Bringing IP issues to SME events Bringing new business perspective to IP events New partnership: Open door policy IGOs, government focal points, SME support, training and financial institutions, chambers of commerce and industry, SME associations, SME research institutions, private sector institutions, universities, etc... The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

(3) New Areas Creative Industries IP for financing (venture capital, securitization) Accounting and valuation of IP assets IP Asset Management, IP Due Diligence and IP Audit Fiscal policies and IP (tax incentives for R&D activities, patenting, licensing etc.) IP services to SMEs by incubators, technology parks, chambers of commerce and SME associations IP needs of SMEs in agriculture, biotechnology, handicrafts, software, textiles, etc The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

(4) Being Proactive Original Content Links Best Practices Case Studies The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

(5) E-Services Web site content SME mail newsletter Distance learning (proposed) Discussion forum (proposed) The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

(6) Partnership National and Regional IP Offices National SME focal points in government, private sector Chambers of Commerce and Industry SME Associations; Cooperatives Incubators, Science Parks, Technology Parks Universities; R & D Institutes Private Sector Consultants SME Finance Institutions (including venture capitalists) Other UN Agencies (ITC, ILO, UNIDO, AfDB) The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Thank You Guriqbal Singh Jaiya The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Guriqbal Singh Jaiya Director, SMEs Division

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