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From IP to IC Putting intellectual property in context
Manufacturing Innovation 2012
May 8, 2012
Ken Jarboe
Athena Alliance
www.athenaalliance.org
www.intangibleeconomy.org
Placing IP in the larger context
Athena Alliance
May 2012
IP is one part of Intangible Capital (aka
Intellectual Capital aka Intangible Assets)
Athena Alliance
May 2012
Business
investment in the
US, tangible and
intangible
investment
(% business
output)
From OECD, Intellectual Assets and Value Creation, March 23, 2008
Based on Carol A. Corrado, Charles R. Hulten, and Daniel E. Sichel, “Measuring Capital and Technology: An
Expanded Framework,” Federal Reserve Board, August 2004, and
. . . “Intangible Capital and Economic Growth” NBER Working Paper No. 11948 January 2006
Intangibles are important to the economy
Intangibles are important to a business
Athena Alliance
May 2012
Intangibles information gap
Intangible book value
Tangible book value
Intangibles: most valuable productive assets in study
of 613 U.S. firms reporting R&D in 2006
OWN ACCOUNT INTANGIBLES
33% OF TOTAL ASSETS
INTANGIBLES EXPLAIN 44% OF
MARKET CAPITALIZATION
44%
42%
14%
33%
26%
10%
31%
surplus
intangibles
Equity*
P&E*
own
intangibles
other
assets
Goodwill
*P&E and equity revalued to current prices; goodwill includes accounting intangibles
Courtesy of Charles Hulten. Data from Charles Hulten and Janet Hao, “What’s a Company Really
Worth?” NBER Working Paper 14548, 2008.
other
assets
Athena Alliance
May 2012
Accountants’ list of intangibles A. Marketing-related intangible assets
(1) Trademarks, tradenames
(2) Service marks, collective marks, certification marks
(3) Trade dress (unique color, shape, or package
design)
(4) Newspaper mastheads
(5) Internet domain names
(6) Noncompetition agreements
B. Customer-related intangible assets
(1) Customer lists
(2) Order or production backlog
(3) Customer contracts and related customer
relationships
(4) Noncontractual customer relationships
C. Artistic-related intangible assets
(1) Plays, operas, ballets
(2) Books, magazines, newspapers, other literary
works
(3) Musical works such as compositions, song lyrics,
advertising jingles
(4) Pictures, photographs
(5) Video and audiovisual material, including motion
pictures, music videos, television programs
Source: Financial Accounting Standards Board. Statement of Financial Accounting Standards No. 141: Business Combinations.
June 2001, paragraph A 14, pp. 28–29.
D. Contract-based intangible assets
(1) Licensing, royalty, standstill agreements
(2) Advertising, construction, management, service, or
supply contracts
(3) Lease agreements
(4) Construction permits
(5) Franchise agreements
(6) Operating and broadcast rights
(7) Use rights, such as drilling, water, air, mineral, timber
cutting, and route authorities
(8) Servicing contracts, such as mortgage servicing
contracts
(9) Employment contracts
E. Technology-based intangible assets
(1) Patented technology
(2) Computer software and mask works
(3) Unpatented technology
(4) Databases, including title plants
(5) Trade secrets, such as secret formulas, processes,
and recipes.
Athena Alliance
May 2012
Economists’ list of IC
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May 2012
• Computerized information
–Software
–Databases
• Innovative property
–R&D, broadly defined
–Copyrights and licenses
–Designs
• Economic competencies
–Marketing and branding
–Strategic firm practices
See Carol A. Corrado, Charles R. Hulten, and Daniel E. Sichel, “Measuring Capital and Technology: An Expanded
Framework,” Federal Reserve Board, August 2004, and
. . . “Intangible Capital and Economic Growth” NBER Working Paper No. 11948 January 2006
Source: Mary Adams, ICA@Trek
Mary Adams and Michal Oleksak, Intangible Capital: Putting Knowledge to Work in the 21st
Century Organization, Praeger, 2010.
Employees collaborating together
and with external partners
to create re-usable knowledge
that meets a market need
through a viable business model
Strategic
Capital
Human
Capital
Relationship
Capital
Structural
Capital
Parts of Intangible Capital
Athena Alliance
May 2012
Most people only see parts
Athena Alliance
May 2012
Getting the bigger picture:
How does your IP fit with your IC?
Athena Alliance
May 2012
Quickscan -- 20 questions
Ranking on:
Best
Above average
Average
Below average
http://www.iprplaza.com/page6948/
(to get you thinking!)
Athena Alliance
May 2012
Human Capital
Do your management and employees have the competencies and
knowledge needed to successfully exploit and continue to renew
this IP?
Structural Capital
Do you have the processes needed to support the production,
marketing and sale of this IP?
Relationship Capital
Do you have the right networks to get access to target customers
and partners? Is this IP a good fit with your existing brand?
Strategic Capital
Is there a good market opportunity for this IP and do you have a
business model in place to take advantage of this opportunity
Survey On Human Capital
Athena Alliance
May 2012
How would you rate the management team’s understanding of what
it will take to commercialize this technology?
How would you rate the management team’s knowledge of the
industry related to this technology?
How would you rate the employees’ competencies related to
production/delivery of this technology?
How would you rate the employees’ competencies necessary to
renew and continue to build this technology?
How would you rate the employees’ competencies necessary to
support customers of this technology?
Survey On Structural Capital
Athena Alliance
May 2012
How would you rate the company’s ability to create marketing
processes appropriate for creating demand for this technology?
How would you rate the company’s ability to create sales processes
appropriate for selling this technology?
How would you rate the company’s knowledge base related to this
technology?
How would you rate the company’s access to related technologies
that it will need to commercialize this technology?
How would you rate the company’s ability to create an effective
process for producing the technology?
Survey On Relationship Capital
Athena Alliance
May 2012
How would you rate the fit between this technology and the
company’s existing customers?
How would you rate the company’s access to the right prospect
group for this technology?
How would you rate the company’s access to the right partners to
produce and deliver this technology?
How would you rate the company’s brand as consistent with this
technology?
How would you rate the company’s understanding of the target
market for the technology?
Survey On Strategic Capital
Athena Alliance
May 2012
How would you rate the fit between this technology and the
company’s existing business model?
How would you rate the company’s ability to create an appropriate
business model for this technology?
How would you rate the opportunity in the marketplace (strong
opportunity usually means fewer incumbent competitors)?
How would you rate the outlook for the market need that this
technology is addressing?
How would you rate the level of freedom from regulation in the
market for this technology?
Results:
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May 2012
And suggestions for improvement
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May 2012
Next steps & refinements:
Tie to company profiles:
"the exhausted improvisers" - weak structural capital
"the lone rangers" - weak relationship capital
"the starving dreamers" - weak strategic capital
"the walking dead" - weak human capital
Web resources:
Athena Alliance
May 2012
http://www.iprplaza.com/page6948/
