The Small and Medium-Sized Enterprises (SMEs) Division of WIPO Managing Intellectual Property Assets...

The Small and Medium-Sized Enterprises (SMEs) Division of WIPO

Managing Intellectual Property Assets for Enhancing the Competitiveness of

SMEs

Guriqbal Singh Jaiya

Director, SMEs Division


From Invention to InnovationFrom Invention to Innovation

While invention depends upon creativity,

successful technological innovation requires integrating new knowledge with multiple business functions.


Innovation – What is it?Innovation – What is it?

The creation of new ideas/processes which The creation of new ideas/processes which will lead to change in an enterprise’s will lead to change in an enterprise’s economic or social potentialeconomic or social potential

[P. Drucker, ‘The Discipline of Innovation’, Harvard Business Review, Nov-Dec, 1998, 149]


What is Innovative Thinking?

– A means of generating innovation to achieve two objectives that are implicit in any good business strategy:

• make best use of and/or improve what we have today• determine what we will need tomorrow and how we can best achieve

it, to avoid the "Dinasaur syndrome«

– Innovative thinking has, as a prime goal, the object of improving competitiveness through a perceived positive differentiation from others in:

• Design/Performance• Quality• Price• Uniqueness/Novelty


Obstacles to Successful Obstacles to Successful InnovationInnovation

• Competitive positionCompetitive position

• Market judgementMarket judgement

• Technical performanceTechnical performance

• Manufacturing expertiseManufacturing expertise

• Financial resourcesFinancial resources


How to classify newness and degree of innovation and what to focus on:

• New to the firm? • First in the market?• First in the world?• Incremental or radical innovation?

Innovation


There are several types of new products. Some are new to the market, some are new to the firm, and some are new to both. Some are minor modifications of existing products while some are completely innovative


Product Development Strategies

OldMarket

New Market

Old Product New Product

MarketPenetration

ProductDevelopment

Market Development

ProductDiversification


Marketing principles…….Marketing principles…….

• Identify opportunities and threatsIdentify opportunities and threats

• Identify customer needsIdentify customer needs

• React to a competitive environmentReact to a competitive environment

• Careful planning to make a New or improved productCareful planning to make a New or improved product

• Use the 4 P’s….Use the 4 P’s….

Product serviceProduct service

PricePrice

Promotion Promotion

Place (distribution)Place (distribution)

• Retain flexibility to react to changesRetain flexibility to react to changes


The Development of Technology: From Knowledge Generation to Diffusion

The Development of Technology: From Knowledge Generation to Diffusion

Basic Knowledge

Invention Innovation Diffusion

IM ITATION

ADOPTION

Supply side

Demand side


Innovation Process

• The adoption of an The adoption of an innovation by similar firmsinnovation by similar firms

• Usually leads to product or Usually leads to product or process standardizationprocess standardization

• Products based on imitation Products based on imitation often are offered at lower often are offered at lower prices but with fewer prices but with fewer featuresfeatures

InventionInvention

InnovationInnovation

ImitationImitation


The Innovation Process• An innovation starts as an idea/concept that is refined and

developed before application.• Innovations may be inspired by reality (known problem).

The innovation (new product development) process, which leads to useful technology, requires: – Research– Development (up-scaling, testing)– Production – Marketing– Use

• Experience with a product results in feedback and leads to incrementally or radically improved innovations.


Translation of a Creative Idea into Useful Application

Analytical Planning

Organizing Resources

Implementation Commercial Application

To Identify:Product DesignMarket StrategyFinancial Need

To Obtain:MaterialsTechnologyHuman ResourcesCapital

To Accomplish:OrganizationProduct DesignManufacturingServices

To Provide:Value to CustomersRewards to EmployeeRevenue to InvestorsSatisfaction of Founders

The Innovation Process


The Profitability of InnovationThe Profitability of Innovation

• Legal protection

• Complementary resources

• Ease of imitation of technology

• Lead time

Profits from

Innovation

Value of an innovation

Innovator’s ability to

appropriate value from an

innovation


Value Value Appropriation Appropriation

from from InnovationInnovation

Barriers to IntegrationBarriers to Integration

Different TimeDifferent Time

InterpersonalInterpersonal

Different GoalDifferent Goal

Formality ofFormality of

OrientationOrientation

OrientationOrientation

OrientatioOrientationn

StructureStructure

Facilitators of Facilitators of IntegrationIntegration

Shared ValuesShared Values

Leaders’ VisionLeaders’ Vision

EffectiveEffective

Budget AllocationBudget Allocation

CommunicationCommunication

Appropriating Value from Appropriating Value from InnovationInnovation

Cross-Cross-Functional Functional

Integration/Integration/Design TeamsDesign Teams

Time to Time to MarketMarket

Product Product QualityQuality

Creation of Creation of Customer Customer

ValueValue


Product Life CycleProduct Life Cycle

SalesSales

TimeTime

IntroductiIntroductionon

GrowthGrowth

MaturityMaturity

DeclineDecline


New Product Development

Stages in a New Product Development process:

• Idea Generation

• Idea Screening

• Concept Development and Testing

• Business Analysis

• Beta Testing and Market Testing

• Technical Implementation

• Commercialization


Technology Adoption – Diffusion of InnovationTechnology Adoption – Diffusion of Innovation

EarlyAdopters

InnovatorsLaggards

EarlyMajority

LateMajority

Take up Rate

Time

Innovators:Innovators: venturesome; greatest venturesome; greatest needneedEarly adopters:Early adopters: opinion leaders; opinion leaders; needs drivenneeds drivenEarly majority:Early majority: deliberatedeliberateLate majority:Late majority:skepticsskepticsLaggards:Laggards: traditionalists; traditionalists; suspicioussuspicious


New Business Models EmergeThen…

One Integrated Company

Now…

Many Distributed Companies

Product Development

Cycle

Product Developmen

t

Tool Compani

es

Testing Services

CRO’s CRM’s


New Regional Model EmergeThen…

Manufacturing

Research

Development

Trials/Testing

Services

Self-contained regional clusters

Region A

Region E

Region B

Region F

Region D

Region C

Region G

Now…

Specialized, networked regions


Commercialization Model• Strategic Investment is the Foundation of a

Successful Commercialization Model


What Investors Look for?What Investors Look for?

Novelty; world-class; evidence of commercial Novelty; world-class; evidence of commercial interest; clear path to marketinterest; clear path to market

Unencumbered, or encumbered by reasonable Unencumbered, or encumbered by reasonable conditions (Equity, royalties)conditions (Equity, royalties)

Protection (Non-disclosure agreements, Protection (Non-disclosure agreements, Patents, Designs, Brands, Copyright)Patents, Designs, Brands, Copyright)

IP protected by one or more Patents is the IP IP protected by one or more Patents is the IP required to implement the business planrequired to implement the business plan

““Freedom to Operate”Freedom to Operate”


Innovation, Intellectual Property and Poverty Reduction

Critical Ingredients for Innovation:

• Intellectual Capital

• Human Capital

• Financial Capital

• Proximity

• Social Network Capital


Complementary ResourcesComplementary Resources

Bargaining power of owners of complementary resources depends upon whether complementary resources are generic or specialized.

Manufacturing Distribution

Service

Complementarytechnologies

OtherOther

Marketing

FinanceCore

technological know-how


Risk & Return

CompetingResources

Examples

LicensingOutsourcing

certain functions

Strategic Alliance

Joint Venture

Internal Commercialization

Small risk, but limited returns also (unless patent position very strong

Limits investment, but dependence on suppliers & partners

Benefits of flexibility; risks of informal structure

Shares investment & risk. Risk of partner conflict & culture clash

Biggest risks & benefits. Allows complete control

Few Allows outside resources & capabilitiesTo be accessed

Permits pooling of the resources/capabilities of more than one firm

Substantial resource requirements

Konica licensing its digital camera to HP

Pixar’s movies (e.g. “Toy Story”) marketed & distributed by Disney.

Apple and Sharp build the “Newton” PDA

Microsoft and NBC formed MSNBC

TI’s development of Digital Signal Processing Chips

Alternative Strategies for Exploiting InnovationAlternative Strategies for Exploiting Innovation


Uncertainty & Risk Management in Tech-based IndustriesUncertainty & Risk Management in Tech-based Industries

Sources ofuncertainty

Technologicaluncertainty

Selection process for standards and dominant designs emerge is complex and difficult to predict, e.g. future of 3G

Customer acceptance and adoption ratesof innovations notoriously difficult to predict, e.g. PC, Xerox copier, Walkman

Marketuncertainty

Strategies formanaging risk

Cooperating with lead users early identification of customer requirements

–assistance in new product development

Flexibilility—keep options open—use speed of response to adapt quickly to new information—learn from mistakes

Limiting risk exposure—avoid major capital commitments (e.g. lease don’t buy)—outsource—alliances to access other firms’ resources & capabilities—keep debt low


Innovation riskInnovation risk

RISKSRISKS COSTSCOSTS

RESEARCHRESEARCH DEVELOPMENT DEVELOPMENT COMMERCIALISATION COMMERCIALISATION


Mortality of New Product IdeasMortality of New Product Ideas


The “ Right” Innovative Product?

The right product is one that becomes available at the right time (i.e., when the market needs it), and is better and/or less expensive that its competition.

To have the right product, therefore, one must: Predict a market need Envisage a product whose performance and

capability will meet that need Develop the product to the appropriate time

scale and produce it. Sell the product at the right price

The Small and Medium-Sized Enterprises (SMEs) Division of WIPOTimelyTimelyTimelyTimely

Difficult forDifficult forcompetitors to imitatecompetitors to imitate

Difficult forDifficult forcompetitors to imitatecompetitors to imitate

Commercially exploitableCommercially exploitablewith present capabilitieswith present capabilities

Commercially exploitableCommercially exploitablewith present capabilitieswith present capabilities

Innovation and Competitive Innovation and Competitive AdvantageAdvantage

CompetitiveCompetitiveAdvantageAdvantage

CompetitiveCompetitiveAdvantageAdvantage

Provides significantProvides significantvalue to customers value to customers Provides significantProvides significantvalue to customers value to customers


Strategic Entrepreneurship and Innovation

• Entrepreneurship is concerned with:– The discovery of profitable opportunities– The exploitation of profitable opportunities

• Firms that encourage entrepreneurship are:– Risk takers– Committed to innovation– Proactive in creating opportunities rather than

waiting to respond to opportunities created by others


EntrepreneurshipCreativity is at the heart of entrepreneurship, enabling entirely new ways of thinking and working.

Entrepreneurs identify opportunities, large or small, that no one else has noticed.

Good entrepreneurs also have the ability to apply that creativity—they can effectively marshal resources to a single end.

They have drive—a fervent belief in their ability to change the way things are done, and the force of will and the passion to achieve success.

They have a focus on creating value—they want to do things better, faster, cheaper.

And they take risks—breaking rules, cutting across accepted boundaries, and going against the status quo.


EntrepreneurshipDefining entrepreneurship is difficult because there is no universal, clear-cut definition of the term. In its most basic sense, entrepreneurship is manifest in a business venture when an individual is able to turn a novel idea into a profitable reality. In practice, however, entrepreneurship is more multifaceted, ranging from operating a small business in one’s own home, to bringing a national franchise to a small town, to turning a new and unique idea into a high-growth company. Entrepreneurship can involve starting a business that brings a new store to main street, offering a product or service previously unavailable to a community, or acquiring an existing business that has had a long-standing presence in a community and helping it evolve to reflect one’s own vision and personality.


Entrepreneurship

The word entrepreneurship literally means, "to take or carry between" in the sense of an economic transaction; to be a market-maker. It does not literally convey the notion of innovation that we commonly associate with the term.

Joseph Schumpeter (1883-1950), one of the more well known theorists on entrepreneurship, defined an entrepreneur as one who reorganizes economic activity in an innovative and valuable way. That is, an entrepreneur is one who engages in a new economic activity that was previously unknown. An entrepreneur is a risk taker because being innovative means there are few rules or history for guidance.


Entrepreneurship

Entrepreneurship is the process of creating or seizing an opportunity, and pursuing it regardless of the resources currently controlled.

The Webster’s Third New International Dictionary defines an entrepreneur to be “one who organizes, owns, manages, and assumes the risks of a business”


EntrepreneurshipThe entrepreneur shifts resources out of an area of lower and into an area of higher productivity and greater yield.[J. B. Say, French economist, circa 1800] Entrepreneurship is creative destruction. Dynamic disequilibrium brought on by the innovating entrepreneur, rather than equilibrium and optimization, is the norm of a healthy economy and the central reality of economic theory and practice. [Joseph Schumpeter, Austrian economist, 1911] The entrepreneur searches for change, responds to it, and exploits it as an opportunity. Innovation is the specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service[Peter Drucker, 1985]


Entrepreneurship

Entrepreneurship drives innovation, competitiveness, job creation and economic growth.

It allows new/innovative ideas to turn into successful ventures in high-tech sectors and/or can unlock the personal potential of disadvantaged people to create jobs for themselves and find a better place in society.


Entrepreneurship

Entrepreneurship, in small business or large, focuses on "what may be" or "what can be".

One is practicing entrepreneurship by looking for what is needed, what is missing, what is changing, and what consumers will buy during the coming years.


Entrepreneurship

Entrepreneurs have:– A passion for what they do– The creativity and ability to innovate– A sense of independence and self- reliance– (Usually) a high level of self confidence– A willingness and capability (though not

necessarily capacity or preference) for taking risks


Entrepreneurship

Entrepreneurs do not (usually) have:– A tolerance for organizational bureaucracies– A penchant for following rules– A structured approach to developing and

implementing ideas– The foresight to plan a course of action once

the idea is implemented and established


Entrepreneurial Success

1. People (Entrepreneur /Entrepreneurial Team)

2. Opportunity (Marriage of Market andProduct/Service)

3. Access to Resources (Land. Labor, Capital, Knowledge)

And the fit amongst these three elements


Major factors determining success of a new product in the market

• The product provides functional advantages• Lower price for comparable product• More attractive design (look)• Reputation of brand• Easy access: Available in the main retail shops• Consistent product quality• Excellent after-sales services


Competitive AdvantageCompetitive Advantage

Criteria…Criteria…

Low cost producerLow cost producer

Product differentiationProduct differentiation

Niche marketNiche market


New Product

Development

BreakthroughBreakthroughInnovationInnovation

?

Need two processes: NPD and NB(usiness)D

?

Innovative Innovative New ProductsNew Products

NewNewBusinessesBusinesses

New Business

Development

An opportunity driven path to

market- a different

business design


Protection of IPProtection of IP

IdeasIdeas

ResearchResearch

TechnologiesTechnologies

ProductsProducts

Utility models, Patents

Collaborative ResearchAgreement

Confidentiality or Nondisclosure Agreements (Trade Secrets)

Technology LicensingAgreement, Branding

ValueValue addingadding


Intellectual Property Questions

Intellectual Property (IP) Issues/questions during New Product Development (NPD):

Can the innovation be legally protected? For how long?

How does one protect an innovation from imitators? How much will it cost? When to protect? Do you need to rely on an IP expert?

The answers are complicated by the fact that one or more types of legal frameworks may be used to protect a particular innovation, product, process, or creative work. These include trade secrets, trademarks, designs, patents, and copyright.

It is necessary to know which are applicable and when each is appropriate. This varies somewhat from jurisdiction to jurisdiction. The advice of a lawyer that specializes in these matters is essential


Intellectual Property Questions

•It is necessary to know which types of intellectual property rights (IPRs) are applicable and when is each type of IPR appropriate. This varies somewhat from one country to another.

•The advice of an IP lawyer is desirable if not essential.


Background

• In September 2000, the WIPO Assemblies approved the creation of “a substantial new program of activities, focusing on the IP-related needs of SMEs worldwide”

• SMEs Division established in October 2000

• Nine professionals and three administrative staff in the SMEs Division of WIPO


Strategy

• 1. Demystification

• 2. New audience

• 3. New Areas

• 4. Proactive

• 5. E-Services

• 6. Partnership


(1) Demystification

• Studies

• Guides

• Events and expert missions

• Website and newsletter

• CD-ROM

• Magazine articles


(1) Demystification (Studies)

• National Studies (on IP and SMEs) completed or under way in Argentina, Bhutan, Mongolia, Nepal, Philippines, Sri Lanka, Tanzania, Sierra Leone, Romania, Chile, Colombia, Costa Rica, El Salvador, Honduras and Paraguay, Egypt, Morocco, Lebanon

• WIPO Survey of IP Services to Tenants of European Technology Incubators

• Norwegian SMEs and the IPR system


(1) Demystification (Guides)

• WIPO/ITC Guide on Marketing of Crafts and Visual Arts; Role of Intellectual Property; A practical guide

• WIPO/ITC Guide on Secrets of Intellectual Property: Guide for Small and Medium Sized Exporters

• WIPO/ITC Guide on Exchanging Value: Negotiating Technology Licensing Agreements - A Training Manual

• ITC Guide on Exporting Automotive Components

• ITC Guide on Pharmaceutical SMEs (Forthcoming)


http://www.wipo.int/sme/en/documents/guides/guide_marketing_crafts.html

http://www.wipo.int/sme/en/documents/guides/guide_secrets_ip.html

http://www.wipo.int/sme/en/documents/guides/technology_licensing.htm


(1) Demystification (Guides)

Published• Making a Mark

(Trademarks)

• Looking Good (Designs)

• Inventing the Future (Patents)

http://www.wipo.int/sme/en/documents/guides_manuals.htm

http://www.wipo.int/sme/en/documents/guides_manuals.htm


(1) Demystification (Guides)• Translation and/or customization: Under

way, with funding from several sources, in the following countries: Algeria, Argentina, Australia, Canada, Czech Republic, Egypt, Estonia, Hungary, Italy, India, Israel, Kenya, Lebanon, Malaysia, Malta, Mongolia, Morocco, New Zealand, Philippines, Poland, Slovakia, Spain, Tanzania, Tunisia, Vietnam

• 16 Countries members of the OAPI


(1) Demystification (Events)

• Special programs, seminar and workshops organized by the SMEs Division in Geneva in partnership with selected associations and organizations (IASP, INSME, IPI, MOST, WASME)

• Annual WIPO Forum on IP and SMEs for IP Offices of OECD Countries


(1) Demystification (Events)• WIPO-Italy Forum on Textile

and Clothing Industries of the Mediterranean Basin Countries (Prato, Italy - December 2003)

• Participants from Algeria, Cyprus, Egypt, Jordan, Israel, Lebanon, Malta, Morocco, Palestine, Syria, Tunisia, Turkey


(1) Demystification (Website)

• The Website of the SMEs Division is in six UN languages (English, French, Spanish, Arabic, Russian and Chinese)

• More than 60,000 pages viewed every month in 2004

• Contents include sections such as IP for Business, IP and E-Commerce, Activities, Best Practices, Case Studies and Documents


(1) Demystification (Website)


(1) Demystification (Newsletter)

• Monthly e-newsletter in the 6 UN languages (Free)

• Content includes articles, updates with information, links and documents

• Launched in August 2001

• Total number of subscribers: >19,000


(1) Demystification (CD-ROM)

• 50,000 copies of the SMEs Division CD-ROM distributed to SME support institutions, IP Offices and others worldwide

• Marketing and customization

• E-learning CD ROM (in partnership with KIPO: “IP Panorama”)

• SAARC CD-ROM (in preparation)


(1) Demystification (Articles)• Some articles recently published:

– What to do if you are accused of copyright infringement

– Tapping into Patent Information: a buried treasure– International trade in technology – licensing of

know-how and trade secrets

– Intellectual Property and E-commerce: how to take care of your business’ website

– Offshore outsourcing and IP– Savvy marketing: merchandising of IP rights


(2) New Audience

• Bringing IP issues to SME events• Bringing new business perspective to IP

events• New partnership: Open door policy• IGOs, government focal points, SME support,

training and financial institutions, chambers of commerce and industry, SME associations, SME research institutions, private sector institutions, universities, etc...


(3) New Areas• Creative Industries

• IP for financing (venture capital, securitization)

• Accounting and valuation of IP assets

• IP Asset Management, IP Due Diligence and IP Audit

• Fiscal policies and IP (tax incentives for R&D activities, patenting, licensing etc.)

• IP services to SMEs by incubators, technology parks, chambers of commerce and SME associations

• IP needs of SMEs in agriculture, biotechnology, handicrafts, software, textiles, etc


(4) Being Proactive

• Original Content

• Links

• Best Practices

• Case Studies


(5) E-Services

• Web site content

• SME mail

• E-mail newsletter

• Distance learning (proposed)

• Discussion forum (proposed)


(6) Partnership• National and Regional IP Offices

• National SME focal points in government, private sector

• Chambers of Commerce and Industry

• SME Associations; Cooperatives

• Incubators, Science Parks, Technology Parks

• Universities; R & D Institutes

• Private Sector Consultants

• SME Finance Institutions (including venture capitalists)

• Other UN Agencies (ITC, ILO, UNIDO, AfDB)


Thank You

Guriqbal Singh Jaiya

[email protected]

www.wipo.int/sme/en/index.html

www.wipo.org

http://www.wipo.int/sme/en/index.html

http://www.wipo.org/

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