Converting Intellectual Property Into Intellectual Profit: Lessons from India

It is one thing to be able to develop and secure Intellectual Property (IP) through iron-clad patents and the like, but it is quite another to profit from that IP.  We can all learn from the lessons of fleet-footed Indian firms as pointed out in the examples highlighted in the article below.

Indian firms, across all industries, are filing a flurry of patents for all of the intellectual property (IP) they've generated. For instance, Infosys was just granted two patents by the US Patent and Trademark Office for holography and mobile communications. Earlier, Tata Motors received 40 patents for the design of Nano, its groundbreaking $2,500 car, which should hit Indian roads in October 2008.

Some senior European execs that I met with this week pointed this out and suggested that India’s patent filing prowess provides evidence that the country is becoming a world-class innovator. They're right: Indian companies indeed are emerging as top-notch innovators. But they're also wrong: What proves they're world class innovators is not that they are filing patents to protect the IP they generate, but that they are damn good at monetizing the IP they generate.

These European execs’ notion is indicative of a huge conceptual difference between Western CEOs and Indian CEOs in how they define and drive innovation, and how they measure its success. For Western CEOs, IP might as well stand for “intellectual pride.” Many American and European CEOs proudly report to their shareholders that their firm was very innovative the previous fiscal year because it filed scores of new patents.

But Indian CEOs interpret IP as “intellectual profit." Patents, for them, are just an indicator of how inventive a company is, not how innovative it is. What makes Indian firms proud is not the number of patents but rather their unique ability to rapidly transform their patented inventions into profit-making assets in the marketplace, in the form of new products, services, or processes.

Take Tata Motors: its 40 patents will be useless if Tata's factories can’t transform the Nano’s design specs into 250,000 real-life cars launched on-time and under-budget. That’s why, as CIO Manish Gupta points out, Tata Motors’ innovation metrics not only include number of patents, but also “time-to-volume" and "time-to-value” for new inventions.

Given their eagerness to rapidly extract value from their cutting-edge inventions, some Indian firms don’t even bother patenting them. As Pravir Vohra, Group CTO at ICICI Bank puts it: “Patent filing is an expensive and time-consuming process that would divert our energy from transforming our inventions into business value. Our innovation strategy is all about time-to-value: our industry first-mover advantage doesn’t lie in patenting our IP, but in rapidly transforming it into a strategic market differentiation.”

I have also noticed that in the US and Europe, IP equates with “intellectual paranoia,” as Western firms tend to hoard indiscriminately all their patented inventions, even those that turned out to be commercial flops. This paranoia combined with intellectual pride also prevents Western firms from sourcing IP from external partners, thus lengthening their time-to-market and increasing their innovation cost.

More open-minded Indian firms, on the other hand, are redefining IP as “intellectual partnering.” Rather than reinvent the technology wheel in-house, Indian CIOs and CTOs rely on external providers to address most of their firms’ innovation needs, through IP licensing agreements. Take TCS, India’s largest IT service provider. TCS operates the oldest and largest software R&D lab in Asia. Yet, under the visionary leadership of its CTO Ananth Krishnan, TCS is replacing its closed R&D approach with a networked C&D (Connect & Develop) model. As part of its intellectual partnering strategy, TCS now sources more IP from an external innovation network made up of academic labs, startups, and large software vendors.

Intellectually proud and paranoid US and European companies need not worry about their Indian rivals’ inventiveness, as measured by the number of patents they file. But they must dread Indian firms’ uncanny ability to swiftly monetize IP, whether its invented internally or sourced externally from their innovation network partners.

By: Navi Radjou

Source: Harvard Business Publishing


Paul Ramsek July 16, 2008

Are there examples of more generalized I.P. that were approved as business methods that are not software or drug related that were to be used to form a company of engineers and scientists to have technical I.P. and trade secrets. I have read OPM (warner business book) I understand that the question is more toward a larger business proposition than a family run business.
Intellectual Property comes as a result of the cultivation of the mind and how God designed the person and the discovery of thinking skills and creative thinking skills that may take years to develop under a lot of prayer and guidance from God himself and through the circumstances he places you in.

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