Fail to protect associated IC (no. 5 in our list of IP mistakes)

Any organization benefits from two core resource pools that it can tap into to gain competitive advantage and long term sustainable growth. These are: physical assets and intangible assets (that form the company’s intellectual capital (IC)).

Resources in the physical asset pool can include land, machinery and other similar facilities. These are resources that you can touch, see, feel. Some characteristics of these assets are 1) they need to be acquired and internalized within the company; 2) their value can easily be determined by the market and therefore they can easily be traded; 3) all of them are traditionally accounted for 4) most of them offer significant marginal returns in time (with the possible exception of land – the value of which is determined by market fluctuations).

The second pool of resources is an organization’s intellectual capital. Resources in this pool include the company’s organizational capital, relational capital and human capital (examples of what they include can be found in my earlier blog Building from the base up, or is that down?). These assets are: 1) resulting from the intellectual process of a person/group of persons; 2) mostly intangible in nature, not accounted for traditionally and hard to evaluate to the market value; 3) dynamic in nature (open to change e.g. a process can change to meet certain needs, a relation can evolve according to existing interest, etc.); 4) creative (in anything from human management and corporate culture to patents and creative designs); 5) unlimited (nurturing ideas, relationships and creativity give a company and infinite resource pool that can prove to have significantly increase marginal returns over time).

As opposed to most other assets included in the intellectual capital pool– intellectual property (in the form of patents, trademarks and copyrights) can in a sense become tangible (through their tight connection with the products/services they support) and definable (through the right they bestowed on the owner). Therefore IP as such is often bought, sold, and leased/licensed much like physical assets. IC for which IP is a subset will however remain intangible and highly intrinsic within the company and its individuals throughout its existence.

The strategic challenge here is to realize the balance between investing in developing the physical resource pool vs. the intangible one, and indeed to recognize these intangible resources and capture them adequately in a manner that cannot easily or legally be replicated by the market.

Protecting IC associate to IP is tightly related to relationship management. Now, pressured by the growing power of customer and employees but also by harsh competitive environments, companies are slowly rethinking their IC management approach. From managing physical assets and reacting to their external environment to nurturing human relationships (with employees, clients, suppliers) and creativity within their company, thus taking the active role of shaping their market (through innovation, constantly renewed and optimized processes, empowerment the creative spirits of employees and nurturing a culture of change acceptance).

Focus on IC management has been proven as a success recipe for a wide array of companies for which it has overall translated into: employee and client loyalty, higher innovation/creativity outputs, excellent brand reputation, long term client/supplier expectations, attraction of valuable talent, and more. (Whether through corporate culture and relationship management i.e. Google, Ikea; IP protection and employee incentive programs i.e. Apple, IBM; focus on cooperate processes optimization i.e. GE, GM; client relationship management i.e. Ikea, Amazon; or other.)

Here are some questions that you should ask yourself if you want to be a good IC manager: is the right culture nurtured within the company; is the right image of the company projected to different stakeholders (employees, customers, shareholders and society as a whole); how are the company’s actions interpreted; what will the stakeholders associate with them; how will they react and how will the company be affected by their reaction?

Are you asking yourself the right questions?

(This is number 5 in our list of IP mistakes and how to avoid them.)

Image credit: lumaxart

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