7.3.2 Why use it

Knowing the basic elements of an IP strategy and adopting them into an organisation’s overall strategy will be more significant in the “new economy” than it was before. In an knowledge economy the battlefield has shifted from the tangible assets to the intangible assets where IP is an important part. Nowadays one of the preconditions for being able to compete is that an organisation can create, produce, protect and commercialise IP rights. Decisions concerning IP strategy will often have a long timeframe and a period of effect. All other things being equal, these choices result in a high degree of irreversibility. This does not lie, for example, in heavy investments, which are connected with this concept, but simply in the choice itself. In a strategic decision-making-level the “what should be done” is of higher importance than the “how and how much” element. An IP strategy, which could be worth hundreds of millions, can be obtained for a relative modest amount of money. On the other hand, errors in this area can be incredibly expensive. IP rights can thus to a large extend, be thought of as a marketing related capacity. Since many areas of business are changing very quickly and since it is not possible for an organisation to pursue all paths, the strategic use of IP rights may be a possibility.
Consequently, IP is becoming an increasingly important investment and value differentiator, as intellectual property assets are capable of adding significant value to the enterprise in terms of competitive advantage, sustainability, attractiveness and revenues:1 
McKinsey: 40 technology and innovation companies surveyed could add 10-20% in operating income by better exploitation of IP, but only a small fraction does so.
Sarbanes-Oxley requires that publicly-traded companies report “important” IP assets, all IP risk factors, and any IP litigation, and annually review IP for “impairment”/loss. 2

After reading these paragraphs describing the importance of using an IP strategy, it’s your turn to consider if your organisation needs to implement an appropriate IP strategy. Do you think that your organisation needs some elements from an IP strategy? Why? Where do you think your organisation has not paid enough attention? In the IP acquisition, exploitation, monitoring or exploitation policy element? If you cannot answer at this point, go ahead with reading the rest of the chapter and come back again to give an answer with a broader view.

1 www.falcoarcher.com/FalcoArcherIPStratFndm0105.ppt
2 InnoSupport: Supporting Innovations in SME, 7.4 IP management strategy, 2005