IP Strategy: Why it matters for your company’s success
The IP Asset is an article series designed to help you enhance your understanding of how intellectual property strategy can positively impact your business.
Many companies are unsure about the relevance or value of intellectual property.
This is despite the fact that, in 2020, intangible assets (including patents, brand value, customer data, and software) accounted for 90 per cent of the S&P 500’s total assets1.
Many companies and their advisors are still skeptical about intentionally investing in their IP, as opposed to other competing investments.
For those who are investing in their IP, there is often an over-emphasis on IP and patents as a tool for enforcement; however, there are other strategic aspects to what IP can do for your company, especially for SMEs.
What can IP do for my business?
Create a competitive advantage.
Your company’s IP can turn intangible assets into tangible results. Some examples of these practical results include:
- Increase your company’s valuation (balance sheet asset)
- Protect your company’s hard-earned reputation (balance sheet goodwill)
- Generate a new revenue stream through licensing (income statement revenue)
- Show investors that your company is innovative and worth investing in (soft power)
- Deter competitors from knocking off your company’s key products and services (soft power)
- Provide an enforcement tool (hard power)
- Obtain competitive intelligence on key competitors via IP data (soft power)
Achieve business goals using a portfolio of intangible assets.
IP assets are business tools that can be structured like an investment portfolio: creating a balance of assets that are suitable for your company’s stage. At one stage, you may focus more on trade secret protection, branding, and IP aspects of agreements and contracts. At another stage, you may weight your investment more heavily towards protecting R&D investments through a balance of patent protection and trade secret protection.
One helpful tip is to perform a gap analysis on your commercial goods and services with respect to IP protection. This will help to drive your business success and inform IP investments.
Build a collaborative culture that maximizes ROI for IP investments.
It is important to build the right culture of IP for your company, and to make it a team effort. By including your marketing team, product leads and R&D leads in building your IP culture, you can better identify strategically important business functions that merit IP investment to grow their value. Company leaders, including the C-suite, company advisors and the Board, should set and maintain the right tone. If IP is seen only as the job of the legal team, it will likely be viewed only as an expense, rather than a strategic investment. With the right IP culture in place, you won’t leave money, or valuable IP assets, on the table.
IP can provide both value and competitive advantage to growing companies. A holistic and deliberate IP strategy ensures that your IP is used as an asset to further your business goals.
Watch for our next article in this series, which will touch on branding and trademark strategy.
3 Intellectual Property Awareness and Use Survey (IPAUS), Statistics Canada (released February 2021, based on data from 2017-2019)