Using IP Strategy to Reduce the Strategic Uncertainty of Business Decisions

As one example of this concept, a company can reduce the risk of investment in new technology by understanding at an early stage the degree to which the company can own the resulting technology by way of broad patent rights (as opposed to just owning the product itself). Such knowledge at an early stage, such as in the innovation process itself, will provide the company with a better understanding of the how unique the product or service will be when introduced into the marketplace. If the technology cannot be wholly or substantially owned, the product is more likely to be knocked-off and will appear less differentiated, thus leading to more competition and possibly lower profit margins. This may ultimately be a satisfactory outcome when the business understands and desires competition and has built such competitive effects into its business and payback models. When the business expectations are directed toward sole ownership of a differentiated product, but the IP rights are not available, the payback expectations of the business will not be met. In short, by not seeking to understand the business uncertainties associated with IP, the business risks associated with IP are greatly increased.

This is not to say that a company that embraces the IP strategy as a fundamental part if its corporate strategy will be provided with a clear roadmap of how to manage its own IP and how to deal with the IP of others. Rather, a company that embarks on a disciplined program of strategic management of IP will be better able to handle the risks associated with IP. In Mr. Raynor’s concept of the strategic management of uncertainty, a company that has a corporate strategy focused on stripping away as much of the unknown as possible has a higher probability of business success with a lower attendant risk profile. This requires adoption of a disciplined IP strategy to be an imperative for companies that hold Mr. Raynor’s view of the necessity of managing strategic uncertainty.