“IP Strategy” is Meaningless without Desired Business Outcomes

By | September 30, 2015
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Desired business outcomes dictate a company’s IP Strategy.

“You can’t sell me IP Strategy, Jackie,” one of my top clients said to me recently when I sat down with him to conduct customer discovery for my IP Strategy practice. This client, a successful serial entrepreneur whose company has engaged me as “fractional Chief IP Counsel” for the last 1.5 years, swears by the services I provide to him–so much so, that he is a primary source of startup entrepreneur referrals that I obtain today. I was thus surprised that he didn’t see my value as providing him with “IP Strategy,” but as something else entirely. He said: “If I had to go on the record of why I value your expertise, it’s because IP is important to my exit, and you look at IP differently than any other lawyer I have known. I know you’re focused on creating value for my startup, so I want to keep you around.” This was great to hear, but I did not quite know what to do with this information in relation to marketing my IP Strategy practice. (Which some of you might realize is an all-too-common aspect of customer discovery.)

When I sat down with another client, the CEO of an established security hardware company, he told me that, if pressed, he would not be able to articulate exactly why “IP Strategy” was a missing element of his existing management team. Nonetheless, this CEO client has embarked upon a plan to incorporate me into his regular innovationstrategy meetings so that I gain visibility to ongoing product development efforts. He knows that such visibility is necessary to ensure that his company does not miss any opportunities to protect the products that result from execution of the company’s multi-year innovation road map. As I wrote about previously, this client sees that having an IP Strategy expert like me involved with his company is crucial to his reducing the risk that his shareholders will not obtain the promised returns that he has projected will follow from his company’s investments in innovation and product development. But, again, it was hard to know what to do with this information when trying to develop a coherent marketing strategy for my IP Strategy consulting practice.

These are only two examples of the disparate–and ostensibly irreconcilable–answers that I obtained when I asked my clients how my IP Strategy expertise brings value to their respective companies. Other clients gave similarly challenging to interpret answers to the “what does IP Strategy mean to you?” question. In the aggregate, although each of the people–all sophisticated business professionals–I spoke to had a general understanding of why they sought out my specific expertise (especially in comparison to hiring a traditional IP lawyer), none could clearly describe exactly why they felt the way they did. It would not be overstating things to say that I was “flummoxed” by the situation that my customer discovery efforts put me in! How was I supposed to improve the marketing of my IP Strategy practice when even my loyalest clients could not tell me why I mattered to their business?!

As I worked to clear of my confusion so that I could continue with the reconfiguration of my IP Strategy practice marketing efforts, I spoke with a close friend who is in an analogous professional services business (i.e., business valuation). He knew immediately the answer to my dilemma:

“You don’t sell IP Strategy. You sell business outcomes. Full stop.” 

That was the proverbial “lightbulb moment” for me. And, candidly, in the last month this insight has resulted in a marked transformation in the way I communicate the value I provide to companies and entrepreneurs as an IP Strategy expert. Moreover, as a leading voice in the small, but growing, world of IP Strategy, I think it is critical to share my insights in how we can better communicate the value our expertise can provide as we continue to strive to change the conversation surrounding IP. So, in the interest of starting an enhanced dialogue relating to the value of IP Strategy to business today, this is the first in what will become a series of posts on the topic in the context of business outcomes.

Prior to establishing an outcome-based approach to IP Strategy, it is critical to recognize that there are as many different desired business outcomes as there are companies and entrepreneurs. While revenue or exit value might seem obvious places where IP can be leveraged to achieve desired outcomes, IP can be used as a mechanism to generate other, less obvious, business objectives. One example is where appropriately structured IP can be used to allow a company to exercise control–or at least have negotiating leverage–when generating business opportunities with other companies. (I will write about this specific example in a subsequent post.) As such, when “selling” IP Strategy to companies, we must stop talking about IP Strategy as being an endeavor that creates value just because we do it. Rather, we must first dig deep to find out the company’s desired business outcomes, and only then can we help our clients understand how IP can be leveraged to help bring about those outcomes and, it is from this process that IP Strategy becomes a worthwhile business endeavor.

To illustrate what I mean here, let’s go back to the clients I mentioned earlier.

Starting with the startup CEO, his desired outcome is simple to state: he wants to maximize the exit value of his company in the shortest possible timeline. His company’s technology is disruptive in a market that is itself disruptive. Notably, he has promised his investors a fairly short time to exit, which means that on exit another company would not be buying a base of customers but, rather, access to his company’s technology. Most companies end up focusing IP protection efforts on the products that they see flowing out of their R&D efforts. However, this CEO realizes that if he does not generate protection that captures the value that histechnology brings to the customer, there could be little reason for another company to buy his company because for the foreseeable future there no products in the market that will embody his company’s technology. Moreover, he might end up totally missing the mark on what products may exist in this disrupted and disruptive market space. Lastly, he really has no desire to develop products in any event because he has positioned his startup company as a technology development play.

Notably, the quickly evolving market and technology in which this client is playing requires us to continually re-evaluate the company’s ongoing technology development efforts to ensure that any patents (and other types of IP and intangible asset protection) accomplish the desired outcome of locking up the technology that will be embodied in as yet to be determined products Accordingly, the IP Strategy we have undertaken for this startup is fairly aggressive in relation to other early stage companies but, again, this is because his desired business outcome mandates such activities. As an example of this “aggressive” IP Strategy, I am on retainer to this company as “fractional Chief IP Counsel” and meet regularly with them. I therefore not only know what technology breakthroughs they have generated almost in real time, but also what customers they are talking to and how those customers are reacting to the company’s technology offerings. In other words, we have made IP a process for this startup, as opposed to the usual case where IP is an event.

This client’s desired business outcome of a large and early exit has also resulted in the generation of a competitive technology road map to make sure we create an IP Strategy that aligns with the future business models of likely acquirers. Significantly, unlike with established companies, it would be impossible for this client to create the equivalent of a “five year innovation road map” because the company does not have the market expertise to predict the future in this way, especially when innovating in a space where both technology and markets are being disrupted. Indeed, a “five year innovation road map” would not only be irrelevant (because the company will not be around then), but also will likely be so speculative that it would be none other than wishful thinking. However, we can look at the business models and customers of companies that are already in similar businesses but that will need access to protected technology like that of my client’s to continue to generate innovative customer solutions in order to develop an IP Strategy that makes this startup a more desirable acquisition. In short, our IP Strategy must be “technology directed,” not “product directed” to allow the startup CEO’s desired business outcome to be achieved.

For the CEO of the established security hardware company, the desired business outcome is different, which mandates an alternative approach to IP Strategy. That is, this company, unlike my startup technology company client, is in business for the long-haul. The company has developed, and is now in the early stages of implementing, a five year innovation road map. The desired business outcome for these efforts is to provide their existing customer base with security hardwareproduct innovations that drive revenue growth. While the company is using technology to implement these product innovations, its focus is on products, not technology. Indeed, this client is using existing technology in a new way to create innovative products. This means that IP Strategy efforts must be “product directed,” as opposed to being “technology directed.” Notably, however, such “product directed” IP Strategy efforts must protect the product’s value in the market (the “benefits”) and not how the product works (the “features”) to ensure that competitors cannot tweak the product’s features to provide the same innovation to customers. But, at the end of the day, this company understands how it wishes the future to play out, as evidenced by its creation of a five year innovation road map that is based upon the company’s deep knowledge of customers’ current and future needs in the markets it serves.

As should be apparent, with this new focus on business outcomes, as opposed to IP Strategy as a general proposition, prior to “selling” IP Strategy to a client, an on-boarding process must be undertaken. In this process, IP Strategists like myself must spend time understanding the potential client’s short and long-term business objectives, as well as the technology and competitive landscapes. Unless and until these aspects are well-understood, I can make no recommendations as to how IP can be leveraged to better ensure the client’s desired business outcomes can be achieved. In this regard, I have benefited greatly by becoming more skilled in customer discovery, as well as by reviewing resources addressing “outcome selling.”

It should also be apparent that with this “business outcome” directed approach the last step in the IP Strategy process should be engaging a traditional IP practitioner. Of course, this is the first step that most companies take when IP is identified as something that needs to be addressed, many of whom mistakenly believe that they “do” IP Strategy. In fact, traditional IP practitioners “do” IPLegal Strategy in that they figure out when and how to file for IP and how to manage the process once it is underway, which is merely amounts to tactical execution of an overarching IP Strategy plan created elsewhere. While it would be great if these traditional practitioners were to recognize that their role is different from that of an IP Strategist like myself, I know from experience that the desired business outcomes of most lawyers and law firms (i.e., to create the billable hours necessary to sustain the business of law) prevents this from being standard advice. Nonetheless, I can hope that more corporate leaders will start to recognize that IP Strategy should operate as a means to achieve their desired business outcomes, not an outcome onto itself.

One thought on ““IP Strategy” is Meaningless without Desired Business Outcomes

  1. Pingback: 10 Key IP Strategy Insights for Innovative Companies for 2016 and Beyond | IP Asset Maximizer Blog

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