Why Western Companies Need Not "Dread" the Sucessful Monetization of Intellectual Property by Indian Firms

indian businessIn his Harvard Business School blog posting entitled “How Indian Firms Convert Intellectual Property into Intellectual Profit,” Navi Rajou of Forrester Research contrasts the intellectual property (“IP”) activities of Indian corporate strategists with those of their Western counterparts. In this post, Mr. Rajou identifies several aspects of Indian corporate strategy that allow Indian firms to effectively monetize their IP.

Mr. Rajou’s examples of the successful IP strategy-related activities of Indian firms can be summarized as follows:

  • Tata Motors, which is introducing a $2500 car in India this year, has obtained 40 patents. However, Tata’s CEO recognizes that these patents are worthless unless the company also makes money from these inventions. Tata’s innovation metrics therefore also include “time to value” and “time to volume”.
  • Some Indian firms do not even bother filing for patents on new inventions because doing so would distract them from the task of earning profits from these inventions. For these firms, first-mover advantage does not center on who files first on new inventions; instead, the true measure of profitability is from rapidly transforming those inventions into strategic market differentiation.
  • Indian firms are successfully avoiding the “Not Invented Here” syndrome that permeates many Western companies. Indian firms recognize that a closed R&D structure significantly limits the ability to innovate at the highest levels. Accordingly, these firms have developed robust programs to externally source and license innovations from academia, start-ups and other idea generating organizations.

Mr. Rajou closes his post by saying that Western firms: “must dread Indian firms’ uncanny ability to swiftly monetize IP, whether its invented internally or sourced externally from their innovation network partners.”

As an IP Business Strategist and consultant (more info here www.jackiehutter.com), I agree wholeheartedly with Mr. Rajou that these Indian firms are implementing best practices in monetizing IP and, therefore, are successfully generating profit from their firms’ IP. However, by seeming to say that Indian firms are uniquely able to monetizing their IP as compared to Western companies, Mr. Rajou sends an inaccurate signal that Indian firms are inherently better at extracting value from IP than are Western firms.

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