The Importance Of Intellectual Property (Ip) For Businesses

The Importance of Intellectual Property (IP) for Businesses,

Chambers and other Business Support Organizations in a

Knowledge-Driven Economy

Dr. Guriqbal Singh JaiyaDirector

Small and Medium-Sized Enterprises Division

World Intellectual Property Organization www.wipo.int/sme

SMEs Website

IP for Business Series

• Making a Mark

(Trademarks)• Looking Good

(Designs)• Inventing the

Future (Patents)• Creative

Expression (Copyright and Related Rights)

http://www.wipo.int/sme/en/documents/guides/technology_licensing.htm

http://www.wipo.int/sme/en/documents/guides_manuals.htm

Barriers to SME IP ActivityIP Challenges for SMEs 1.Cost – Both direct fees and

opportunity costs

2.Value for money

3.Complexity

4.Time

5.Need for secrecy

6.Difficulty in enforcing IP rights

Still the case, since the mid 1900’s

European Commission adopted a Communication on a new industrial property rights strategy for Europe:

Brussels, 16 July 2008

•Ensuring high-quality industrial property rights in Europe that are accessible to all innovators, including small and medium-sized enterprises (SMEs). To achieve this, the Commission will undertake studies on the quality of the patent system and on the overall functioning of the trademark systems in the EU. This would also include the Community trademark, which the Office for Harmonisation of the Internal Market has been successfully registering for over 10 years. . •Facilitating exploitation by SMEs of industrial property rights. The Communication outlines measures to facilitate access to industrial property rights and dispute resolution procedures, and to improve awareness among SMEs of the management of industrial property as an integral element within an overall business plan.

The Commission- continues to work on an efficient and cost-effective, high quality and legally-secure patent system at European level, including a Community patent and EU-wide patent jurisdiction- will explore how the fee structure for the future Community patent can be designed to facilitate access for SMEs.

Pending the adoption of the Community patent, Member States are encouraged within the Community framework for State aid for Research and Development and Innovation- to make use of the provisions to support industrial property rights- explore ways SMEs can make better use of rights within this framework such as reducing patent fees, or tax incentives to promote licensing activity .

The Commission will-explore how mediation and arbitration can further be encouraged and facilitated in the context of ongoing work on an EU-wide patent litigation system.

Member States are- encouraged within the context of the Lisbon strategy to provide sufficient support for SMEs to enforce their industrial property rights.

The Commission will- assess the IPR Helpdesk in China with a view to providing optimised IPR support services for SMEs in third countries and to assessing the potential for continued and expanded support.

Member States are encouraged to- raise awareness of intellectual asset management for all businesses andresearchers, including SMEs.

ICC has launched the BASCAP initiative – “Business Action to Stop Counterfeiting and Piracy”

Model Intellectual-Property Guidelines for Business

May 08;Enterprise Europe Network Launched in Ireland:A new and extensive European business and technology partnering network for companies. http://www.enterprise-ireland.com/News/Press+Releases/2008/PressMay082008.htm

The 5 Chambers (in Cork, Dublin, Galway, Sligo and Waterford) plus Enterprise Ireland have united with all the major players in the European business and technology partnering community to offer an accessible "one-stop-shop" service to help SMEs, in particular, to access the following services:

- Information on European legislation e.g. health & safety, environment and labelling- Finding suitable business partners and identifying market opportunities- Identifying and sourcing proprietary, licensable technologies from international sources- Assisting with intellectual property issues and license agreements- Assistance with licensing out proprietary technology- Helping SMEs access European research funding- Involvement in EU policy making and providing a channel for SMEs to give their feedback to the European Commission.

IP-system Supporting SME´s and Employment

IdeaPilotIdeaPilot

FinnishInnovation

SystemFosteringCreativity

IdeaPilotIdeaPilot

2008 - 2008 -

PILOT

1


IdeaPilotIdeaPilot

FinnishInnovation


4

• Brand-buildingBrand-building

• Investment for commercializationInvestment for commercialization

• Knowledge managementKnowledge management

What is it all about?


IdeaPilotIdeaPilot

12

Background studies:

The Planning situation in SME´sThe Planning situation in SME´s

• The know-how of the entrepreneur is a key factor

• Development is a simple process:• idea – development – implementation – feed-back

• Time is a scarce resource

• The planning skills are often small or limited

• IP is competing with other means of developing SME-business

FinnishInnovation



IdeaPilotIdeaPilot

FinnishInnovation


22

The Strategy for Winning TrustThe Strategy for Winning Trust

understand SME´s appropriate business processesunderstand SME´s appropriate business processes

locate IP-potential companies and decision makers locate IP-potential companies and decision makers responsible for those prosessesresponsible for those prosesses

INTEGRATE IP-services to business processesINTEGRATE IP-services to business processes INTEGRATE first-phase delivery to INTEGRATE first-phase delivery to intermediary organizations service processesintermediary organizations service processes

The critical success factors of the The critical success factors of the project:project:

• home-work concerning the target grouphome-work concerning the target group

• create create desirabilitydesirability towards IP-system towards IP-system

• develop it´s develop it´s usabilityusability

• improve the improve the accessibilityaccessibility of services of services


IdeaPilotIdeaPilot

23

FinnishInnovation



IdeaPilotIdeaPilot

FinnishInnovation


First steps:First steps:

1)1) Focus to the target groupFocus to the target group

2)2) Create an approachCreate an approach

3)3) Build your networkBuild your network


IdeaPilotIdeaPilot

25

FinnishInnovation


---------

”As part of the effort to strengthen national innovation policy, a national strategy for industrial and intellectual property rights will be drawn up.

Attention will be focused on the potential of SMEs and private inventors to use various forms of protection and thereby improve the commercial potential of their products.”

---------

Government Programme 2007:


IdeaPilotIdeaPilot

11

FinnishInnovation


Background studies: The Status of Awareness and Usage The Status of Awareness and Usage of the IP-systemof the IP-system

0 % 25 % 50 % 75 % 100 %

Hyödyllisyysmalli

Tekijänoikeus

Mallisuoja

Patentti

Tavaramerkki

Toiminimi

Liikesalaisuus

käytetään s trategiatasolla Käytetään suunnitelm allises tiKäytetään satunnaises ti Ei käytetä lainkaan

Trade Secret

Trade name

Trade Mark

Patent

Design Right

Copyright

Utility Model

The Usage of the IPR System (most IP-potential companies)

Strategic use

Planned use

Occasional use

No use

(SME - barometer 2007: 82 % has no IPR´s)

Background studies: Background studies: Intermediate organisationsIntermediate organisations


IdeaPilotIdeaPilot

13

FinnishInnovation


R&D networks4 + 11

Universities, 21vocational high-schools, 31

SME´s

Regional developmentcompanieshundreds

Jobs and Society33 outlets

Centres of Expertisecovers 3 000 companies

Technology centres22 outlets

Regional financiersappr. 100 Consultants,

expertsappr. 100

Start-up´sRegional BSP:s50 outlets

EED-Centres15 outlets

Tekes (National Technology Agency)

15 outlets

Foundation for Finnish Inventions,27+ 9 innovation managers

Technology Industries in FinlandTechnology Industries in Finland

The Federation of Finnish EnterprisesThe Federation of Finnish Enterprises

The Confederation of Finnish IndustriesThe Confederation of Finnish Industries

Chambers of Commerce Chambers of Commerce


IdeaPilotIdeaPilot

17

Intellectualproperty?

Fosteringcompany know-how?

Employmentinventions?

Personnel, resources

Avoidingredundant

R&D?

Monitoringtechnical

development?

Competitors?

Trends?

Markets, surveys

Immaterial-strategy

EvaluatingR&D project?

Product developmentPossibilities

to protecttechnology?

Usability: The structure of the IP-workbookThe structure of the IP-workbook

Production

Productionmethods?

Technicalsolutions?

Management

Responsibilities?

Implementing?

Protectingpolicy?

Financing

How to convincefinancier?

Risk analysis?

Marketing

Disclosingbusiness critical

information?

Standing outin the market?

Freedomto

operate?

Make or Buy?Licencing?

Partnerships?

How to protectspearhead-technology?

Key technology?

How to defend

infringements?

ip4inno


IdeaPilotIdeaPilotBusiness advisors, consultants

DISSEMINATIONDISSEMINATION

Information sessions

Training for consultants:Use of Pre-Diagnosis

ADVANCED - Programme

Network of business advisors

Network of consultants, first phase

Network of consultants, advancedtools: IP-Score, Imp3rove

New IP-consultancy concepts available for SMEs

Accessibility: Accessibility: Directly to SME´s, integrated to public serviceDirectly to SME´s, integrated to public service


IdeaPilotIdeaPilot

19

FinnishInnovation


Discussion withthe innovation managerin EED-Centre

1. consulting day

ProductStart

Consulting process for the SME´sConsulting process for the SME´s

1 – 3 consulting days

ProductStart is a consultancy concept created in cooperation with EED-centres and produced by

private business consultants subsidized by EED-Centres

1 – 5 additional consulting days

Accessibility: Accessibility: Directly to SME´s, integrated to public serviceDirectly to SME´s, integrated to public service


IdeaPilotIdeaPilot

20

FinnishInnovation


Idea for product or service

IPRviewpoint

Marketingviewpoint

Technical viewpoint

Financialviewpoint

Networkingviewpoint

Summary, reporting

Product Start

-state-of-the-art-novelty-competition-protection

InnoTraining-Training for Information Specialists

(PRH, VTT, TKK, Tietoas.)

ip4inno-project

(PRH, EU)

Activities 2008 -

2007

InnoInfo-Patent Information

in Product Development

and Marketing(PRH, VTT)

BA-TrainingTraining for Business

Advisors

Pre-DiagnosisTraining for consultants

InnoConsulting-Training for Consultants

(PRH, PKT-säät.)

-road-show for SMEs

2008

EnterPriseFinland-

project

IP-Trainingfor

SMEs

Imp3rove-Training forconsultants


IdeaPilotIdeaPilot

2009

SME Work-ShopsTravelling work-shops

for SMEs

InnoInfo IIPatent Information

Search Interface

for Consultants

IP-BASEproject

(PRH, EU)

1)

2)

3)

4)

5)

6)

7)

8)

9)

10)

11)

12)

13)

IP Awareness and Enforcement: Modular Based Actions for SMEsProject co-financed by the European Commission

Hubert Rothe, Head of Division, Information Services for the Public, German Patent and Trade Mark Office, Munich

WIPO 6th Annual Forum on IP and SMEs, Cardiff, 10 – 11 September 2008

Background• Network of NPOs in Europe founded in 2005,

supported by European Commission, DG Enterprise– Creation of the Innovaccess.eu website,

based on previous EU projects – Presentation of the network by M. Philippe Cadre at the WIPO Forum

2006 in Geneva

• Termination of the IPR Helpdesk project (coordinated by University of Alicante) at the end of 2007

• Call “IP Awareness and Enforcement Project (including IPR Helpdesk)“ published by DG Enterprise in April 2007, based on the CIP Programme

• 19 NPOs, University of Alicante and 6 other institutions filed a common proposal in June 2007

• EC accepted the proposal in October 2007• Project contract concluded with the EC on 31 October 2007• Commencement of the project on 1 November 2007

• Duration: Nov. 2007 - Oct. 2010

• Budget: 7.9 M€

• Coordinator: University of Alicante (ES)• Partners: 19 NPOs

5 research institutions 1 trade organisation

(EURATEX)1 innovation agency (Luxinno)

IP Awareness and Enforcement: Modular Based Action for SMEs

• To significantly raise SMEs’ interest and knowledge about Intellectual Property (IP) issues;

• To raise SMEs’ understanding of the need to integrate IP in their innovation strategies and their business planning;

• To improve the protection of SMEs’ IP rights through the increased registration of rights EU-wide and also internationally and increase the use of non-registered protection methods through the effective promotion of these methods;

• To improve protection and enforcement by SMEs of their IP rights from infringement whether this originates from within or outside the EU;

• To raise SMEs ability to fight counterfeiting and increase knowledge on the methodologies available to detect it

Project objectives

• To develop actions to promote awareness on IPR protection to educate the fashion and design industries (textiles, leather, footwear and furniture) on the risks counterfeiting poses and on the existing means and procedures to combat it;

• To promote and support the use of IP rights in international research, development and technology transfer activities, providing an IP rights support service to actual and potential beneficiaries of CIP and Research Framework Programme actions, especially high-tech SMEs and Public Research Organisations.

Project objectives (continued)

Module 0 – Horizontal Work Packages

• WP1. Developing the Knowledge Base (DK)

• WP2. Developing the IPR Toolbox (IT)

• WP3. IT Support (UA)

• WP4. Communications and Marketing (GB)

• WP5. Cooperation with other actors (SE)

• WP6. Project Management (UA)

• Target audience

• All project partners

• External partners and stakeholders (WP5)

Modules and Target Audiences


Module 1

• WP7. Setting up a user-friendly website for IPR support for European SMEs (FR)

• WP8. Setting up local Helpdesks for IPR andenforcement support for European SMEs

(DE)

• WP9. Planning local actions for Awareness and Enforcement Services (HU)

• WP10. IPR Enforcement Support Services (DK)

• WP11 Delivering awareness and enforcement actions directly to SMEs (CRPHT)

• WP12 Delivering Awareness and Enforcement Actions for SMEs Support Services

(IEEPI)

• Target audience

• Innovative and high-tech SMEs

• SME support services, innovation support actors and networks, e.g. Chambers of Commerce

• IPR enforcement agencies


Module 2 (University of Alicante)

• WP13. Sectoral Handbook(s) Production and Dissemination

• Target audience• Enterprises (especially SMEs) of the fashion and design industries

(textiles, leather, footwear and furniture) from target countries

• Sectoral associations

• Chambers of commerce, regional development agencies, etc.


Module 3 (University of Alicante)

• WP14. IPR-Helpdesk Website Content Generation and Info-Service

• WP15. Helpline for participants in EU-funded Research and Innovation projects

• Target audience

• Current and potential participants, e.g.

• SMEs,

• universities and

• research organisations,

in CIP and RTD Framework Programmes of the European Commission

Expected Results• Establishment of a cost-efficient and useful

trans-national website including an extranet network of European helpdesks

• Development of new IPR enforcement support services

• Implementation of at least 2 new sustainable services on IPR and enforcement issues per country according to the needs of the SMEs and to the national IP policy

• Stronger and sustainable relations between each NPO and the local intermediaries at national level

Project Structure

European CommissionDG Enterprise

Scientific Coordination Committee

(10 consortium members: NPOs of DE, DK, FR, GB, HU, IT and SE,

University of Alicante (ES), CRPHT (LU), IEEPI (FR))

Advisory Board

(external parties)

Administrative Coordination(University of

Alicante)

Management BoardAll 26 consortium members

SPANISH PATENT AND TRADEMARK OFFICE IP PLAN TO SUPPORT SMEs

The aim of this Plan is that Spanish SMEs become aware of IP, in order to include it as a tool in the management of the innovation and business processes.

AIM

The IP Support Plan consist on implementing a set of measures based on:

1. Information: the SPTO must offer to SMEs an information of quality tailored to their needs

2. Visibility: greater knowledge of the SPTO, its activities and services

3. Cooperation: implementing the actions in collaboration mainly with Regional PATLIB Centres of Autonomous Communities and other national and international institutions involved with SMEs

4. Simplicity and proximity: the final result of the actions must contribute to a perception of IP as a simple and easy tool

WHAT IS THE IP SUPPORT PLAN FOR SMEs

SMEs account for more than 90% of all Spanish enterprises among them, the SPTO must be a visible and present organism.

In addition it is necessary to consider that great companies already have a great knowledge of IPR and make use of them, through national and international systems. The SPTO must direct its efforts to spread the IP system between the SMEs, traditionally nonusers.

WHY AN IP SUPPORT PLAN FOR SMEs

SMEs

Entrepreneurs

Technological Centers and Parks

Intermediaries, that optimize and multiply the actions adopted by the SPTO

TARGET GROUPS OF THE PLAN

To carry out the Plan, the SPTO will adopt the following actions:

HOW IS THE PLAN CARRIED OUT :

Create an internal center specialized on SMEs which will coordinate all the actions

Create a SMEs microsite in the SPTO Web

Create an external center to support enterprises on trademarks

Integrate the electronic trademark application on enterprises networks and on One-Stop-Shop for Entrepreneurs

ACTIONS: 1

Strengthen the collaboration with other institutions related with SMEs

Create or improve the following tools:

Patents: Subsidies Reduction of public prices

(technological information reports) SMEs Patent brochure: adaptation of

SMEs WIPO brochure to the Spanish Legislation

Program of Visits to companies

ACTIONS: 2

Trademarks Reduction of Trademark searches fee Massive distribution of specific trademark

leaflets Launch of the new service: Community

Trademarks applications surveillance Trademark Dissemination Programme for

SMEs in collaboration with Chambers of Commerce and enterprise associations

Industrial Property SPTO Presence on SMEs Forums Periodical workshops Dissemination Seminars (in collaboration

with Autonomous Communities and other intermediaries)

ACTIONS: 3

ANNEXINTERMEDIARY ELEMENTS

Intermediary elements

Chambers of Commerce, Enterprise associations

Foundations rooted in the business world (pharmaceutical, technological innovation, design…)

Association of Science and Techonology Parks of Spain, Association of Innovation and technology entities of Spain

Seminars, News in their Bulletins,Links in their websSearch of new clients

Integrate TM applicationsand IP information on One-Stop-Shop for Entrepreneurs

Administrative Bodies related with SMEs

Autonomous Communities: Patlib Centres

Integrate IP on their dissemination and formation programmes

Targeted SME SupportWest Midlands IP Forum – Fillip

• Funded by the RDA – Advantage West Midlands• Managed by Coventry University Enterprises Ltd• Remit

– To raise awareness of IP– To form a Forum of IP Professionals in the West

Midlands to provide businesses with a one stop shop for IP

– To establish a website for IP Resources– Managed Grant Funding for IP related work

Achievements

In the West Midlands, Fillip has:

• Engaged with 327 individuals• Engaged with 305 businesses• Held 12 events• Managed a competition to win IP funding; providing

£149,500 of funding to small and medium sized businesses

• Established 1999

• Funded by The Scottish Government

• Impartial

• Non-commercial

• Confidential

• FREE• Not a funding programme

• Does NOT do work of Patent Attorneys or other

Professionals

nnovators

ounselling

dvisory

ervice

cotland

Invention

Innovation

• Established 1999

• Funded by The Scottish Government

• Impartial

• Non-commercial

• Confidential

• FREE

• Not a funding programme

• Does NOT do work of Patent Attorneys

or other Professionals

What is ICASS?“Service that facilitates, the protection, development

and commercialisation of innovative ideas

originating in Scotland”

Early stage

Intervention

One to one

What does ICASS do?

Counselling

• Talking through ideas

• Asking basic questions

• Putting ideas in context

• Commercialisation issues

Advice• Intellectual Property

• Product development

• Establishing IPR

• How to Protect IP

• Investigating originality

• Confidentiality

• Licensing

Signposting

IP Support for SMEs & Individuals in Wales

• Advice

• Working with UK IPO

• Financial

IP Advice for SMEs & Individuals

• Innovation Managers (IM)– Support for SMEs– Established in 1996 with a network of advisers

• Wales Innovators Network (WIN)– Unique support scheme for lone innovators/inventors– Established in 2002 with dedicated advisers– 2004 number of advisers doubled– Award winning

Supporting Welsh IP:BackgroundWales Innovators Network (WIN)

● Award-winning Welsh Assembly Government Initiative - part of Technology & Innovation team

● Helping individual innovators to progress their ideas

● Support with IP, market research, prototyping, testing, manufacture, commercialisation

● Structured Development Plan

Supporting Welsh IP:Background

Innovation Manager Team

● Science / Technology background, several PhD level

● Sector expertise (e.g. Geoscience, Optoelectronics, Electrochemistry, Composites, Semiconductors…)

● Private sector experience

● Part of Welsh Assembly Government business support team

● 12 focus on Welsh SMEs; 3 focus on individual innovators (WIN)

● IP Accreditation from UK IPO / Coventry University

● Help with funding, testing, academic expertise, collaborative partners, basic understanding of IP system, introduction to esp@cenet searching, signposting & funding to access professional help

Newtown

St Asaph Bangor

Brecon

IP Wales

Pembroke

Carmarthen

Newport UK IPO Treforest Cardiff WAG

Geography of IP Support

15 IMs - Professionally qualified with industrial experience including 1 chartered patent attorney.

Project ManagerEx UK patent examiner

UK IPOIP Training for AdvisorsIP Health Checks Pilot

Swansea

IP Training for Innovation Managers

• Past– 1 day awareness course– Patent Searching

• Current/Future– IP Master Class– Licensing– IP Valuation

• IP Health Checks• Funding Support for IP Professionals

– Accredited list of providers

– Patents - €4,400

– Trade Marks - €2,200

– Registered Designs - €2,200

– License Agreements - €3,600

• IP Commercialisation

Future IP Services

Presentation of CERT-TTT-MWIPI Annual Forum 2008– Cardiff

The “European Institute for Enterprise and Intellectual Property”

• Created in 2004 by the French Ministry of Industry and INPI (French NPO) in order to provide training sessions on the economic and strategic issues of intellectual property (IP).

• Promote "intellectual property awareness" within companies, focusing on SME / SMI.

• Develops and organizes training sessions on the offensive aspects of IP and innovation

• Is implicated in different European projects aiming at the development of IP awareness toward SMEs.

CERT-TTT-M…

• means Certified Transnational Technology Transfer Manager

• project within the FP6 programme of the EU• Based on key assumptions of European IPR

experts :– Lack of TT skilled people– No registered TT profession– No TT education / training programme

recognised all over Europe

2

CERT-TTT-M…

…addresses to the findings of CREST IPR expert group• Lack of holistic/integrated TT education programs• Lack of trans-national/international attitude of

education• No sufficient assessment of TT-skills possible

(comparable)• No clear TT career structure / no accreditation for TT

professionals• No sufficient benchmarks on education TT

programmes in EU-27 (comparable)

3

CERT-TTM…

To build up a blue-print education programme that possibly :

• Professionalizes TT on a trans-national level

• Covers all phases of the TT process

• Meets the need for an official recognized course

• Supports MS policy-makers

• Standardizes the skill-set of TT profession in Europe

• Is based on surveys on demand and supply 4

CERT-TTT-M at a glance

• 11 partners of 7 Member States, 5 PROs, 7 policy makers (also CREST participants)

• Advisory Panel: IPR/TT relevant organisations

• Budget: € 1,3 Mio.

• 6 workpackages

• Duration: 24 months (2007-2008)

5

CERT-TTT-M Partner

6

11 Participants from 7 Countries

Austria: AWS – MCI

Belgium / Flanders: IWT

France: IEEPI – MESR

Italy: ASTER – ERPDA

Latvia: LIDA

Netherlands: EZ – RSM

Sweden: VINNOVA

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

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

Customer Expectation

Dilemma

Time

Perf

orm

an

ce

Expectation

s

Continuo

us Improv

ement

Performance Gap

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

Levels of ProductLevels of Product

BrandName

QualityLevel

Packaging

Design

Features

Delivery& Credit

Installation

Warranty

After-Sale

Service

CoreBenefit

orService

CoreBenefit

orService

ActualProduct

ActualProduct

CoreProduct

CoreProduct

AugmentedProduct

AugmentedProduct

Tangibility Spectrum

TangibleDominant

IntangibleDominant

SaltSoft Drinks

DetergentsAutomobiles

Cosmetics

AdvertisingAgencies

AirlinesInvestment

ManagementConsulting

Teaching

Fast-foodOutlets

Fast-foodOutlets

Cycle TimeThe elapsed time between the start and

end of any customer experience

Right First TimeFulfilling or exceeding customer

expectations, perfectly

Customer experience as viewed through our customers eyes

New Product Development

All businesses must do this or eventually die.…use the firm’s resources to meet objectives

in an ever changing environment.

Acquisition versus Innovationrisk versus reward tradeoff

The Need for Innovation• Commodity businesses compete on price

• Advantage goes to the low cost producer– Perhaps due to lower labor costs, materials

costs, or a superior process

• The only way to avoid commoditization is innovation– Products– Processes– Value-added via integration or services

What is Innovation?• Innovation is the process and outcome of

creating something new, which is also of value.

• Innovation involves the whole process from opportunity identification, ideation or invention to development, prototyping, production marketing and sales, while entrepreneurship only needs to involve commercialization (Schumpeter).

What is Innovation?

• Today it is said to involve the capacity to quickly adapt by adopting new innovations (products, processes, strategies, organization, etc)

• Also, traditionally the focus has been on new products or processes, but recently new business models have come into focus, i.e. the way a firm delivers value and secures profits.

What is Innovation?

• Schumpeter argued that innovation comes about through new combinations made by an entrepreneur, resulting in – a new product, – a new process, – opening of new market, – new way of organizing the business – new sources of supply

Dimensions of Innovation

There are several types of innovation– Process, product/service, strategy,

which can vary in degree of newness:– Incremental to radical,

and impact:continuous to discontinuous

Drivers for Innovation

– Financial pressures to reduce costs, increase efficiency, do more with less, etc

– Increased competition– Shorter product life cycles– Value migration– Stricter regulation– Industry and community needs for sustainable development– Increased demend for accountability– Demographic, social and maket changes– Rising customer expectations regarding service and quality– Changing economy– Greater availability of potentially useful technologies coupled

with a need to exceed the competition in these technologies

New Conditions for Innovation

• Small start-up entrepreneurs increasingly depend on large firms: – as suppliers or customers– for venture finance, – for exit opportunites, – for knowledge (production, markets and

R&D) – and for opening new markets.

New Conditions for Innovation

• Large firms increasingly depend on small start-ups – for NPD, – as suppliers of new knowledge (which they

cannot develop themselves), – or organizational renewal, for

experimentation with busienss models, – for opening new markets, etc


Acquisition versus Innovationcorporate acquisition

buy the companyrapid entry, total control

invites antitrust attention, threat of divestiture

patent acquisitionbuy the patent

avoids antitrust problems

does not give total control


Acquisition versus Innovation (cont.)

license the patent…rent it

minimum investment, fast introduction, fast income

fast competition, lack of control, less reward

innovation…develop new products internally

maximize long term profit, gain technological leadership

no legal problems...


Why is this so difficult?

Shortage of fundamentally new solutions to old problems

Fragmented markets due to increased competition, decreased reaction time

Increase in social and government constraints

Cost


New Product Adoption Process

Innovators

Early Adopters

Early Majority

Late Majority

Laggards

Area under curve sums horizontally to form first three stages of the product life cycle.


New Product Adoption Process is also known as the diffusion process.

Each successive set of consumers behaves differently.

Rate of Adoption is a function of:relative advantage, compatibility, complexity,

availability of trial, observability

Risk Management in New Product Development

Why research and analysis before

new product development

New product development is linked with very limited historical or preliminary data. Hence, risky

Risk can be in form of market, technical, or organizational issues. Risk analysis solves the problem through flexible modeling, primary and secondary research.

A good strategy is a must for evaluating and dealing with the associated and unavoidable risks.

Research conducted to understand customer needs and develop a new product is different from research required to launch a new product.

Product development research is focused on needs of customers while launch research focuses on understanding the motivation and attitudes of early adopters. Successful targeting of early adopters builds the fountain for new product success.

New product have a very high failure rates.

Products fail, not because of technical shortcomings, but due to absence of market.

Over 60% of new product fail before entering the market, and out of the remaining 40% that do see the ray of light, 40% fail to yield profit and are withdrawn from the market.

Timely and reliable knowledge about customer preferences is most important. Such data is obtained from business research.

Success Rate of Entirely New ProductsSuccess Rate of Entirely New Products

3000 rawideas.03%

300 submittedideas.3%

125 beginningprojects

.8%

9 largedevelopments

11%

4 majordevelopments

25%

1.7 launches60%

1 commercialsuccess

Stevens and Burley, RTM May-June 1997

THE PRODUCT LIFE CYCLE

• A reminder that most products do not live for ever

• A conceptual framework only

• Difficult to measure where a product is in its life cycle

The chances for failure are greatestwhen you know the least about the technology being developed and/or

the target market

The “Familiarity Matrix” allows mapping of

R&D projects based on the extent of knowledge about technologies and markets

Edward B. Roberts and Charles A. Berry, “Entering New Businesses: Selecting Strategies for Success” Sloan Management Review, Spring 1985 pp 3-17

Familiarity Matrix: A Guide Place Your Project in One of the Nine Boxes

Decreasing knowledge of the technology

De

cre

asin

g k

no

wle

dg

e o

f th

e m

ark

et

Increasing risk of fa

ilure

Familiar New , familiar New , unfamiliarFam

iliar

N

ew, f

amili

ar N

ew ,

un

fam

iliar


Decreasing knowledge of the technologyDe

cre

asin

g k

no

wle

dg

e o

f th

e m

ark

et

Market Penetration

Market Extension

Market Expansion

Product Extension

BusinessExtension

BusinessExpansion

New BusinessModel

BusinessExpansion

ProductExpansion


Market Penetration

Market Extension

Market Expansion

Product Extension

BusinessExtension

BusinessExpansion

New BusinessModel

BusinessExpansion

ProductExpansion

Probability of Success

New Product with unrelated technology in existing market: 50%


Market Penetration

Market Extension

Market Expansion

Product Extension

BusinessExtension

BusinessExpansion

New BusinessModel

BusinessExpansion

ProductExpansion


Existing product in a new market: 15%


Market Penetration

Market Extension

Market Expansion

Product Extension

BusinessExtension

BusinessExpansion

New BusinessModel

BusinessExpansion

ProductExpansion


Improved product in existing market: 75%

“Suicide Square”.03%

Familiarity Matrix: A Guide Place Your Project in One of the Nine

Boxes

Market Penetration

Market Extension

Market Expansion

Product Extension

BusinessExtension

BusinessExpansion

New BusinessModel

BusinessExpansion

ProductExpansion


New Product in a New Market: 5%

Time

Pro

fita

bili

ty

DisruptiveInnovation

ApplicationInnovation

Product Innovation

ProcessInnovation

MarketingInnovation Business

ModelInnovation

StructuralInnovation

Different types of Innovation give greater profitability at different points in the life cycle of a product family

Geoffrey A. Moore “Darwin and the Demon: Innovating Within Established Enterprises” HBR July-August 2004 pp.87-92

New product invention, tailoring, and development

Different Types of Innovation

• Disruptive Innovation – an invention that can displace the present market leader or create an entirely new market

DuPont Diamond Award Winners 2002Tetra Pak, Inc., Sweden / USANestlé Purina PetCare, ItalyFirst Retortable Carton System for Nestlé Dog Food.This represents the first retortable carton packaging system on the market.


• Application Innovation: Takes existing technologies into new markets to serve new purposes


• Product Innovation: Takes an established product to the next level – reduced cost, improved quality, greater functionality


• Process Innovation: Makes processes for established products in established markets more effective and more efficient


• Experiential Innovation: Makes some superficial changes in the product that improve the customer’s experience with the product – adding delight, greater satisfaction, or reassurance


• Marketing Innovation: Improves the interaction with customers


• Business Model Innovation: Reframes the role of the company in the value chain or the way in which the company meets customer needs

http://images.google.com/imgres?imgurl=http://www.aber.ac.uk/continuingeducation/ex1-1/business.gif&imgrefurl=http://www.aber.ac.uk/continuingeducation/student-support/dave&h=409&w=417&sz=16&tbnid=R8ahuIpD9N8J:&tbnh=119&tbnw=121&start=10&prev=/images%3Fq%3Dbusiness%26hl%3Den%26lr%3D%26sa%3DG


• Structural Innovation: Capitalizes on disruption and changes in the industry to restructure industry relationships

http://images.google.com/imgres?imgurl=http://www.chuckmorrisart.com/Business%2520Man.jpg.jpg&imgrefurl=http://www.chuckmorrisart.com/&h=417&w=600&sz=373&tbnid=aHwWpeDEN5EJ:&tbnh=92&tbnw=132&start=29&prev=/images%3Fq%3Dbusiness%26start%3D20%26hl%3Den%26lr%3D%26sa%3DN

A company cannot rest on its laurels; many product class winners have fallen victim to their successUS Steel (steel)

ICI (chemicals)

Kodak (photography)

Goodyear (tires)

Polaroid (instant photography)

Zenith (TVs)

IBM (PCs)

Smith-Corona (typewriters)

http://www.ussteel.com/corp/index.htm

http://www.ici.com/ICIPLC/home/index.jsp

http://www.kodak.com/

http://www.ibm.com/us/

Familiarity Matrix: Optimum Strategies forTechnological Innovation: Finding others who

know more about the markets or the technology

Decreasing knowledge of the technologyDe

cre

asin

g k

no

wle

dg

e o

f th

e m

ark

et

Internal Development, Acquisition, or Joint Venture

Joint Venture

Internal Development

Venture Capital or Educational Acquisition

Internal Venture or Acquisition or License

Internal project, or Acquisition, or License

Venture capital, or Educational Acquisition, or University Relationship

Venture Capital or Educational Acquisition

Joint Venture, Strategic Alliance or University Relationship

New developments in innovation raises 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.

Complementary ResourcesComplementary Resources

Bargaining power of owners of complementary resources depends upon whether complementary resources are generic or specialized.

Manufacturing Distribution

Service

Complementarytechnologies

OtherOther

Marketing

FinanceCore

technological know-how

Waysof... designing

supplying producing marketing delivering

Know-how transfercontract

Source: S. Urban, S. Vendemini, CESAG, Strasbourg

The eleven modes of cooperation agreements: illustration of their anchor points

Researchcontract

CommonResearch

CommonpurchaseSubcontracting

Engineeringcontract

Patentlicence

Commonproduction

Trademarklicence

Consortium(common

marketing)

Distributionagreements

Services•After sale

•Lobbying

•Relations

Source: S. Urban, S. Vendemini, CESAG, Strasbourg

Cooperations modes and value chainCooperations modes and value chain

Distri-bution

•Reciprocal distribution agreements (access to existing distribution networks)

Marke-ting

•Trademark licence

•Consortium (common marketing)

•Joint advertising

Produc-tion

•Subcontracting agreements

•Common manufacturing agreements

•Implementation of engineering contracts

•Patent license

•Production consortium

Logistic

supply•Common purchases

•Access to the specific resources of the country (raw materials, subventions, capital cost, compared advantages)

Link of the chain

Coope-rationmodes

R&D

•Exchanges of existing knowledge

•Organisation of a common research

•Setting up of a common project (design, engineering)

New Business Models EmergeThen…

One Integrated Company

Now…

Many Distributed Companies

Product Development

Cycle

Product Developmen

t

Tool Compani

es

Testing Services

CRO’s CRM’s

New Regional Model EmergeThen…

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

Commercialization Model• Strategic Investment is the Foundation of a

Successful Commercialization Model

‘Opening up’ of industrial research process

R&D Lab of company XFirm X

Developing technological core competences within the company X

University-industry

cooperation

Firm’s

own

research

lab

Public-private partnership

High-tech

SMEs

Pre-competitive R&D with

competitors

Value creation: products, processes etc

Worldwide search and evaluation of technology and knowledge

New firms, s

pin-offs

Firm X itself

Joint ventures

Licensing technologies

‘Open innovation’ Research Campus, with•Venturing

•‘Incubator’

•Technology transfer and support, …

“Exploring wider range of knowledge areas”

Creating more value faster“More focus and resources for firm’s own competences”

NothingIn the

past

Addenbrooke’s Hospital

Cambridge Biotechnology

Northern Venture Managers Cambridge

University

Pfizer

Lorantis

Cambridge Antibody Technology

Domantis

Abbott

Eli Lilly

Astex

Daniolabs

Neurodegeneration Consortium

Gateway Fund

Biotica

Babraham Bioincubator

Babraham Technix

Babraham Bioscience Inst Technologies Ltd Wellcome Trust

Wyeth Amgen AstraZeneca

Cambridge Crytallographic Data Centre

GlaxoSmithKline

Gilead Sciences

(joint venture)

(Cambridge University administered)

Institute for Medical Research

Challenge Fund

Founders came out of Pfizermacrolide

templates

Vistide out-license

Hepsera out-license

virtual screening collaboration

(Cambridge University)

(funding)

partnership

arthritis collaboration

(funding)

licensing

licensing

Genzyme

antibodies license

validation

(funding)

The New Paradigm for Innovation

“Open innovation…assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology.”

Henry Chesbrough, Open Innovation: Researching a New Paradigm

http://www.openinnovation.net/Book/NewParadigm/index.html

http://www.openinnovation.net/Book/NewParadigm/index.html

http://www.amazon.com/exec/obidos/redirect?link_code=ur2&tag=openinnovatio-20&camp=1789&creative=9325&path=http%3A//www.amazon.com/gp/product/0199290725

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

Open Innovation – buying in ideas or products to add to your model

Revenues

Costs

Market

RevenuesMarket

Revenues

Market

Revenues

Internal

Development Internal

Development

Internal &

External

Shared

Development

Sell Divest

Spin off

License

Shorter ProductLife Cycle

Increasingcosts Decreasing

costs

New RevenueSources

Golden Past Past Present Present Future

Chesbrough, Sloan Management Review (2003)

‘Closed innovation single track’

“Ideas & “Current Market Place”

Research Development Commercialisation

Investigations”

Based upon ‘Open Innovation: Researching a New Paradigm’ (2006) Henry Chesbrough, Wim Vanhaverbeke & Joel West

1

2

3

4

5

http://www.google.co.uk/imgres?imgurl=http://upload.wikimedia.org/wikipedia/commons/thumb/8/81/Stop_sign.png/600px-Stop_sign.png&imgrefurl=http://commons.wikimedia.org/wiki/Image:Stop_sign.png&h=135&w=135&sz=32&tbnid=6KoCwbHaIWgJ:&tbnh=135&tbnw=135&sa=X&oi=image_result&resnum=1&ct=image&cd=1




‘Open innovation three lane highway’

“Ideas & “Current Market Place”

Research Development Commercialisation

Investigations”“New Market Place”

“Other firm’s 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

1

2

3

4

5

IP model enabling “Open Innovation”• R&D on generic technologies• Industry value chains brought together• Partners collaborate and contribute ideas

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

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

TYPES OF RELATIONSHIPS

• It is important to cultivate a broad range of network relationships!• Long-term, high reciprocity (Strong) ties: Close bonds and reciprocal

relationships ensure reliability under conditions of uncertainty. These include peer alliances that function by exchange of favors, ties of trust and loyalty between superiors and subordinates, and career development ties between mentors and proteges.

• Short-term, instrumental ties: Many important ties such as highly circumscribed job-related connections, are often dissolved when the relationship has served its purpose. Some are with individuals the manager may not even like, but must interact with to get things done.

• Distant Acquaintances (Weak ties): These types of relationships are important because they function as bridges between the manager and distant social or organizational groups. As a result, they are often sources of unique or novel pieces of information. A networking strategy that does not take these into account leaves a manager open to the risk of developing an inbred network that will not provide information on external opportunities or threats.

Raufoss – Light Metal Industry

• From an integrated and closed corporation to dynamic cluster– RA (Raufoss Ammunition Company) 1897– Gradual growth of civil production in light metal– Gradual growth of global customers (automotive)

• From national customers to global customer• From closed innovation to open innovation• Challenges for relations and communications

From RA via Industrial Park to a Dynamic Cluster ?

RA

Phase 11896-1997

Raufoss

HARA

Phase 21997-2003

Nammo

Fission

Phase 32004-

HARA

Nammo

Integrated company

Reintegration ?

Fragmentation Dynamic cluster?

Technology - Aircraft• Boeing Co - The first mass

jetliner - the 707.• 98% made in the US 1950’s -

60’s. 20th c.• The 787 - Dreamliner - 21st c.• 70% outsourced to 900

contractors• Half made by contractors outside

the US - primarily Japan and Italy but also China (rudder).

• Boeing does the final assembly.• Boeing maintains the overall IP –

it’s their innovation. – Without Open Innovation and

strong IP the above process could not happen.

Boeing Co.

Boeing - the platform Co.

Some cross-sector ‘platform’ candidate innovation biographies in firms & regions arising from WP3 Food Biotechnology ICT New Media KIBS Automotive Tourism

Branding

Culinary Tourism

Wine Tourism

DANFORS

Revitalise Food-River Tourism (e.g. Douro)

Oenotechnology Guidance Systems

Knowledge Intermediaries

Food Biocluster

Functional Foods

Vehicle Processing Systems

Biofuels

Bioengineering

Bio-imaging

Firm Level Innovation BiographiesEURODITE, Toulouse Targets for Innovation Investigation Research in Aquitaine, France integrates the wine industry and biotechnology

to develop the new field of Oenotechnology In Emilia-Romagna, Italy meat industry the Food and ICT industries have

collaborated to produce Biosensors for testing the maturity of Parma ham The German automotive industry is actively engaged in innovative activity

with a number of farms and agricultural research institutes in Brandenburg to develop Biofuels

In Bavaria, bioscientific knowledge on milk-based Lactobacteria are the subject of research collaborations with the brewing and fermentation industries

In Bornholm and North Jutland, Denmark the Agro-Food and Tourism industries are collaborating on innovatory Culinary Tourism activities also involving the delineation of Food Cultures involving anthropological research

Innovation research in Midi-Pyrénées, France focuses on specialised tourism-based vehicle guidance systems integrating knowledge from Aerospace, Automotives and ICT with that from Tourism, Agro-food and Bioscience

In Hordaland (Bergen), Norway Tourism demand to experience Aquaculture processes in organic fish farms has led to interactions between the Agro-Food industry, New Media, ICT and Knowledge-Intensive Services to realise a network facility

In Jura, Switzerland the traditional Watch-making industry is being transformed into a Tourism asset by formation of Agro-Food, Tourism, ICT, New Media and traditional fine-mechanics ‘experience economy’ networks

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

Pre-IPO

Expansion

Start-Up

Seed

Idea / Concept

TimeTime

$

• 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

SeedIdea / Concept

TimeTime

$

•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

Understanding the business/role of IP

ManufacturingPatent Distribution Sales Brand

• Understand the value chain of the business and industry

• Understand how profits are generated

– primary product

– spare parts and related products

– service and maintenance

• What are the important features of the IP? How does it add value to the business?

• What are the important features of the industry other than IP?

– other important intangible and tangible assets in the value chain

– competitive structure of the industry

– customer characteristics and purchasing criteria

– substitute products or services

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 andProduct/Service)

3. Access to Resources (Land. Labor, Capital, Knowledge

And the fit amongst these three elements(Business Model)

Entry Strategies

• New Business– Develop a new product or service– Develop a similar product or service– Competitive approaches

• Existing Business– Buying a business– Franchise– Joint venture – customer or supplier

“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

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

Relative costs and differentiation

Relative costs

Differentiation

High

High Low

Low

NicheOutstanding success

Disaster Lowest cost

PRICING OBJECTIVES

PRICINGOBJECTIVES

ENVIRONMENTALANALYSIS

CORPORATEOBJECTIVES

PROFITORIENTATED

VOLUME ORIENTATED

COSTORIENTATED

COMPETITIONORIENTATED

PRICING STRATEGIES

• Segmented/Differential:

•random/periodic/second market discounting

• Exploiting Competitive Position:

•price signalling/penetration/experience curve/geographic pricing

PRICING STRATEGIES

• Product Line Pricing:

• image pricing/price bundling/premium pricing/complementary pricing

• Dynamic Pricing Strategies:

•multi-tiered price or channel pricing

Low-Cost Provider Strategies

• Make achievement of meaningful lower coststhan rivals the theme of firm’s strategy

• Include features and services in productoffering that buyers consider essential

• Find approaches to achieve a cost advantagein ways difficult for rivals to copy or match

Keys to SuccessKeys to Success

Low-cost leadership means low overall costs, not just low manufacturing or production costs!

• 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 differentiationthan the price premium that can be charged

ObjectiveObjective

Keys to SuccessKeys to Success

Differentiation Strategies

Where to Find DifferentiationOpportunities 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

InternallyPerformedActivities, Costs, &Margins

Activities, Costs, &

Margins ofSuppliers

Buyer/UserValue

Chains

Activities, Costs,& Margins of

Forward ChannelAllies &

Strategic Partners

How to Achieve aDifferentiation-Based Advantage

Approach 1

Incorporate features/attributes that raise theperformance 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 capabilitiesApproach 4

Incorporate product features/attributes thatlower buyer’s 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 Strategiesand Competitive Advantage

• Achieve lower costs than rivals inserving a well-defined buyer segment –

Focused low-cost strategy

• Offer a product appealing to uniquepreferences of a well-defined buyer segment – Focused differentiation strategy

Approach 1

Approach 2Which hat is

unique?

An Aspect of Good Management• People Management – because IP is generated by people

and used by people

• Knowledge Management – because a lot of knowledge is informal and may or may not crystallise as recognisable category of IP

• IT Strategic Planning – because a lot of IP is IT-related; someof the more complex IP issues arise in IT context

• Contract Management – because IP is often created (or improved) in context of a contract (eg, supply contract or joint venture relationship)

• Asset Management – because IP is an asset, albeit intangible; it has a value

• Risk Management – because there are risks to an organisation flowing from its actions, or failure to act, in relation to IP (including risk of lost

opportunity)

Introduction to IP Management 1

• Legal

• Technical

• Business

• Export

• Financial

• Relationships

• Accounting

• Tax

• Insurance

• Security

• Automation

• Personnel

Introduction to IP Management 2

• Trademarks (Brands)

• Geographical Indications

• Industrial Designs

• Patents and Utility Models

• Copyright and Related Rights

• Trade Secrets

• New Varieties of Plants

• Unfair Competition

Bringing it All Together Example No. 1Example No. 1

• 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


• 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


• 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

® Registered Trade Mark

‘TM’ Unregistered Registered Design

Copyright: Labels & Artwork

Patents: Several dozen!


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 / artisticcreation

Invention

Financing Product Design

CommercializationMarketing

Licensing

Exporting

Patents / Utility Models/Trade secrets

Copyright/Related Rights

Patents / Utility models

Industrial Designs/

Trademarks/GIs

Trademarks/ GIsInd. Designs/Patents/Copyright

All IP Rights

All IP Rights

Basic Message 2

• IP Strategy should be an integral part of the overall business strategy of an Enterprise

• The IP strategy of an Enterprise is influenced by its creative/innovative capacity, financial resources, field of technology, competitive environment, etc.

• BUT: Ignoring the IP system altogether is in itself an IP strategy, which may eventually prove very costly or even fatal