#202 from R&D
Innovator Volume 5, Number 2
A Model for
Intellectual Assets Management:
Taking the Process from R&D to Business
Barnett is an intellectual assets manager for the polyurethanes
and epoxy products businesses at The Dow Chemical Company,
Freeport, Texas. Phone
How does a
company re-discover a collection of almost 30,000 impressively
titled patents in countries all over the world, the subject and
commercial significance of which is a small-circled secret?
Why does a company file product trademark registrations in
80 countries instead of 50 or 30?
Why does a company file for international patent protection
in 55 countries versus 10 or 15, generating millions in entitled
cost and administration for years to come?
These are all characteristics of companies which tend to
defer intellectual asset management to R&D and their cohort
patent attorney and then hope for the best.
Only four years ago, those characteristics could be used to
describe the reality of Dow.
However, Dow uses
a very powerful and successful matrix management organization that
easily leverages the strengths of each business, function, and
is, in fact, considered one of the "hard" functions
(like sales, manufacturing, and legal versus “soft” functions
like human resources, communications, and public relations) in
that matrix. But
Dow’s legacy of success from its physical assets, sheer scale,
and massive integration made it difficult sometimes to convince
management that companies can better manage intellectual assets
for value at the business level.
management, though, teaches that every component of a successful
enterprise must create value, or risk elimination from the asset
base. Riding on the
fresh wind of value based management and work-process
analysis/optimization, a small group of
innovators from R&D, patent, and business designed an
integrated work process model for just that, Intellectual Assets
initial goal was to ensure protection for valuable ideas and
discoveries, but then align the huge patent portfolio and process
to Dow's business units.
This created the groundwork for teaching individual
businesses new ways to leverage their portfolios for maximum
tangible value. Of
course, patents aren't the only form of intellectual assets,
but this was the starting point.
enterprise is not excluded. The team structured a cyclic, six-step
process which would fit reasonably within the framework of
management team operations, widespread at Dow.
Here's a snapshot of the six steps, which you’ll find
after the fact, will best operate in both series and parallel
fashion, depending on the stage of the business and its growth
Articulate the assets.
Include patents, trademarks, know-how, work processes, or
what ever intangibles fit the business’ profile.
Segment and align intellectual assets as you would define
Establish business ownership, then decide how the portfolios are
being used by the business by category.
Strengthen and protect the strategic ones and seek
alternative value (e.g.. license, donation, or sale) for the
others before ultimate abandonment or expiration.
Monitor and measure inputs and outputs for turnover
Test the portfolio against a written business strategy.
Be sure to integrate short-
and long-term strategic thrusts to assure utility and fit.
The key is to leverage the intellectual assets you have and
identify intellectual assets you need in order to fulfill
ASSESSMENT: Analyze the competition to identify offensive and
defensive actions. This
helps the business understand the magnitude of the portfolio's
competitive advantage and what intellectual asset options it might
pursue to fulfill strategy.
Agree on and use a uniform valuation method. Try to reduce the portfolios to a value estimate agreed upon
across the business. This
is difficult since R&D tends to overvalue and commercial tends
to undervalue. Use
"high road/ low road",
probability or risk functions, or what ever makes sense to
the majority. This
agreement will drive priority and option selection.
With the utility and competitive advantage of the portfolios
measured and understood across functions, the businesses are now
able to pursue the lowest cost, highest value procurement
mechanism for those new assets judged to be necessary to fulfill
short- and long-term business strategy.
Success is in the
details. The work
process on paper looks simple, but needs a lot of understanding
and connection across the matrix, not to mention work process
1993, it's been up and running at Dow, and now accounts for major
changes in performance, perception, and thinking across the
that have really taken it to heart (e.g. the Insite* technologies,
epoxy, and polyurethane businesses) are actively developing and
acquiring technology to fulfill strategies.
Patent portfolio turnover is above industry standards
(especially in the chemicals and hydrocarbons businesses), where
it was well below, only a few years ago.
The corporation is actively seeking to acquire process
technology which it otherwise would have felt obligated to
develop. The bottom line is value creation, which must be measured,
accounted for, communicated, recognized, and celebrated as a
product of both physical and intangible kinds of business assets.
*Trademark of the
Dow Chemical Company.