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are applied profitably across all its activities for developing and retaining a competitive edge in the market place.
Hence, for a new business, it is a blue print for success. Therefore, in developing a business strategy, there are some common things to consider that apply equally well to the realm of intellectual property.
The World Intellectual Property Organisation (WIPO) defines Intellectual property (IP) as creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce.
Intellectual Property assets are increasingly recognised as key business assets.
The management of IP assets is no longer a discretionary function, nor solely the domain of the legal department. It has become a pillar of corporate strategy.
Thus, a good and well-maintained IP Portfolio improves the competency of a business.
If the enterprise is active in developing technologies, then it may be worthwhile to invest in gaining competency in the IPR matters.
Hence, in this case, the best way is learning by doing.
Most small businesses focus most of their attention on cash flow and profits to survive; but intangible assets may be vital for the long-term survival of the business.
Emerging technologies enable innovation and present companies with alternatives to traditional business models. In the case of business strategy there are a multitude of models, formulas and approaches that provide a framework to assist in development of the strategy.
In my opinion business strategy and IP strategy are at the very least deeply intertwined, if not two sides of the same coin.
Thus, every business that aspires to consolidate and remain strategically positioned in this macro-economic environment have to know about Intellectual Property rights as a key to their survival and in order to gain a significant market share.
IP strategy is simply a component of a business strategy.
It is in this light that companies focus more on the benefits derived from their intangible assets.
The International Accounting Standard (IAS, 38) defines Intangible Assets as identifiable non-monetary asset without physical substance.
An intangible asset must have the following three critical attributes (International Accounting Standard, 2004): identifiable, the company must have control over it and there must be future economic benefits.
For many large businesses their valuations are now driven much more by their intangible assets such as goodwill, know-how, and their intellectual property portfolio.
This trend towards identifying and securing these assets is becoming important for smaller businesses as well.
In developing a business strategy, there are some common things to consider that apply equally well to the realm of intellectual property.
Generally speaking, the business wants to consider the needs of its customers, the nature of the competition and its own capabilities.
(a) Customer-Eventually, the value of the IP a company hopes to control is derived from the needs of the market. Just as a business strategy must consider the needs of customers in various segments, so too must IP strategy consider the needs of customers.
Understanding these needs will drive product requirements, R&D priorities and eventually help prioritise patents to be acquired, licensed, applications to be filed or even trade secrets to be protected.
(b) Competition-In business strategy, a company cannot chart its course without understanding its competition in terms of strengths, weaknesses, distribution strategies, pricing strategies, etc.
In the IP realm, companies can look at the profile of their competitors to understand the relative strengths and weaknesses of their IP portfolios, strategies and technological directions. With this information in hand, a company can patent or acquire rights to technologies to strengthen their own competitive position.
(c) Product-In business strategy, a company looks at its relative areas of expertise.
What does it do better than other companies, how does it differentiate itself? Similarly in IP strategy, a company must consider its portfolio – what does it have, and what does it need to add?
On the business side, a company has to make the build versus buy decision. In IP, a company looks out across the IP landscape with an understanding of the market requirements, competitive implications, and determines if it should invent (make) or acquire (buy) the necessary components to round out the portfolio.
Understanding what the market needs, the competition and the companies’ own capabilities are key elements of both business and IP strategy.
With this information at hand, the company can intelligently plot its course forward with all appropriate milestones and metrics.
Hence, it is very important for businesses to incorporate Intellectual Property Rights in their business strategy formulation as Intellectual property has many facets that it consolidates such as business competitiveness, marketing through distinctive brands, product development, product costing and pricing.
Intellectual property helps to increase customer choices and increased quality of products and creating more value for money.
Business strategy serves to examine the feasibility of the business idea in local and international markets, access venture capital and attracting potential investors and setting the necessary benchmarks that lead to survival of businesses.
Therefore, as the global markets drifts from a resource-based economy to knowledge- based economy, it is increasingly becoming important to yield the benefits availed by intellectual property rights.
These will increase the attractiveness of the business entities by enhancing product choices and quality, creating a market niche that thrives on these products and a loyal customer base that is consistently satisfied as the company’s product meet the customers’ expectations and anticipations.
In the foregoing, Intellectual Property rights will encourage new and potential investors and increase competitiveness and keeping at bay fraudulent competitors and consolidating market segments and giving impetus to enter into new markets.
Another very important benefit of intellectual property rights such as licensing is the fact that it gives the company some revenue streams and market share in markets that are not necessarily profitable for the licensor.
IPRs help in creating and maintaining relationships with employees, consultants, suppliers, subcontractors.
Companies build up their portfolio by applying for more patents. In addition, they are licensing and cross-licensing technology.
In both cases, companies with a strong portfolio are generally in a better position to negotiate.
But to maximise the value of their intellectual assets, companies must understand how they support enterprise business strategy, protect current or future product positions, provide competitive advantage, and add value through creative, non-traditional applications.
The company’s intellectual asset management strategy must be formulated with an understanding of the topography of the IP world, either by geography or type of industry.
Finally for any business to survive in the current economy, it should continuously improve its products and services. This continuous improvement in any entity requires protection before marketing to access some return on investment and safeguard some investments, gain a significant market share and meeting market needs and demands.
Thus, businesses should align their business strategy with intellectual property rights as this increases profitability and growth.
The failure to guarantee the intellectual property rights of local and foreign innovators will mean the end of the technology transfers that drive industrial development.
The ideal business idea or invention is of course one that has novel and protectable intellectual property that meets a clear market need with an acceptable price and performance.
l Raban Wilfred Masuka is an Intellectual Property Expert and Research Scientist. He can be reached on 0772 812 636 and [email protected]. He is a specialist in IP Management, Business Strategy and Development.