We were fortunate. Our skies over Seattle was clear and we had a great showing of the lunar eclipse. The next total lunar eclipse is not till December 2010.
To mark this memorable event, here is the quote of the night from my almost 10-year old son.
Being a parent is hard. I have watched enough cartoons to know that it’s true.
-Tark
One advantage of working for a large company is that they have all the resources, including a technology group that handles all the licensing activities. An advantage of self-employment is that I have the ability to dive into different interesting areas that I did not have the opportunity to before.
I talked about intangible assets before. Patents are one of the most quantifiable and perhaps most controversial forms of intangible assets. IBM is famous for its patent portfolio, and for maintaining the top slot for the number of patents issued year after year. Not to forget, their technology licensing revenue generates over $1B annually. If you are interested, check out IFI’s latest report on 2007 top patent owners.
Technology licensing can be a great revenue model for a small firm that does not have the resources to enter or effectively compete in its target markets, or where their technology is applicable to a number of industries. Technology licensing can also enable firms to derive additional revenues through their intangible assets, such as in the case with IBM, ARM, etc. Such licensing agreements can enable a firm to enter a new market quickly and/or reduce potential risks, such as with going into a foreign market. Technology licensing also plays a role in the establishment of industry standards, such as with Qualcomm and CDMA technologies. Through cross-licensing, firms can also gain greater freedom to develop new products and compete in new markets without worrying about potential litigation.
In simple terms, technology licensing is an agreement where one party (the licensor) owns valuable intangible asset(s), and gives another party (the licensee) the legal right to use, modify and/or potentially resell that intangible asset in exchange for some form of compensation. These valuable intangible assets, or intellectual properties (IP), could be patents, copyrighted materials, expertise/know-how, trade secrets, trademarks, and more. There are also many different types of IP licensing: patents, technology licenses, copyrights, trademarks to name a few. In summary, for an effective licensing agreement one needs:
Technology licensing is certainly an untapped potential for many firms. It is a high margin business that can bring recurring revenue after the initial investment is made and development activity is completed. From a business perspective, building a technology licensing program should be strategically planned, carefully managed, aggressively marketed and legally protected. Below are some of the key building blocks relating to challenges of establishing a technology licensing program. In future articles I will get into some these in more detail. As always, drop me a note if any topics rings an interest with you.
View your technology licensing program as a business
IP, once viewed as a cost center, is now the focus of many firms as a potential revenue stream. However, to maximize their value, these intellectual assets need to be managed to become a profitable business. This process could be handled by establishing a licensing team (a combination of individuals who are intimately knowledgeable with the technologies, business people, product managers) that would have the responsibility to determine potential exploitation mechanisms for the technology. In addition to providing the IP rights, you may be required to develop a service business to support your customers. After all, if your customer is not successful, you are not successful. Whatever your strategy, make sure you establish a strategic intellectual property plan and process to maximize the value of your intangible assets.
Establish an effective organization structure to manage IP
Your organization structure will influence how effectively you can manage your IP. Smaller companies usually delegate the intellectual property asset management function to outside experts. Larger companies usually have their own departments for handling intellectual property asset management related functions, such as IP development, licensing and litigation. However, unless there is an integrated strategic plan and/or centralized management of all IP, it will be a challenge to maximize their potential value due to conflict of long-term vs. short-term focus. In addition to your organization structure, your organizational incentives will also determine how effectively you can build, support and grow your licensing business.
Utilize IP expertise
Licensing strategies differs from technology to technology, market to market, prospect to prospect, as well as US vs. foreign markets. In addition, your success depends on the successful outcome of the licensing negotiation. License terms capture conflicting interests between the licensee and licensor that require careful negotiation and trade-offs. So, get an expert to successfully navigate the unknown waters.
Know your legal protection rights
For your technology licensing business to be viable, you need to have technology that is legally protectable by law. So, whether you are utilizing patents, copyrights, trademarks or other methods, know how to protect them and what the process is in case of infringement. Also realize that litigation is quite expensive and takes time. So, do your homework and manage the risk.
Recognize you are in a marathon
You can’t just build your patent portfolio and stop. Technologies and markets move too fast. You need to build your innovation culture to keep churning new ideas and to build on existing ones to further improve their protection. Otherwise, it will be a short-lived business.
Remember to get paid
Licensing revenue leakage is lost revenue.Your license management program is the key part of your process to ensure you collect your royalties on-time. In addition, your program also needs to ensure that licensees are complying with the terms of the license and operating within the boundaries agreed upon.
Learn to value your intangibles
Putting a $ amount on your intangibles is perhaps the most challenging part of the process. How do you determine what the licensee would be willing to pay and under what payment terms? Understanding how your technology will benefit the potential licensee (cost reduction, competitive positioning, new markets, …) both financially and strategically, is an important starting point. Also, continuously evaluate your strategic market position and maintain your leadership status in the market to maximize your value.
Technorati Tags: technology management, intangible assets, intellectual property
Creativity was wandering around aimlessly, without a purpose, almost lost. Inspiration wondered what might be the cause of such restlessness. As she reached her arms forward, something changed, something awakened. A glimmer of excitement and light appeared in Creativity’s eyes. Creativity could see and feel the purpose and the meaning she was yearning for. But would she, could she, should she?
Every step was a question in Creativity’s head. Each step forward was followed with a step sideways and back, yet it didn’t seem to matter. Could she? Would she? Inspiration longed for her sister’s help… If only she would come by and give her a helping hand. Inspiration couldn’t do this on her own…
It was dark, and Creativity was exhausted. Exhausted with the questioning, wondering, wishing, doubting… Just then, she looked up and saw a shooting star: “I wish I may, I wish I might; have the wish I wish tonight”. She tilted her head down. As the tears rolled off her peachy cheeks, her internal struggle to gather her strength and her will was obvious.
Inspiration reached out for her sister with all her heart and mind. She needed her, and she needed her now. This couldn’t wait! What happened next was magical. The two sisters were reunited: Motivation and Inspiration. They reached for each other and touched Creativity. They could not be stopped now. They were unstoppable.
…
For the first time in my life, I really felt the difference between motivation and inspiration. In life, many things motivate me: something new, something challenging, my integrity, the need to deliver my best… I don’t seem to run low in motivation; but now I am looking for my inspiration. My light went out, or it is really dim. I can’t tell.
A successful manager is a good motivator. A good leader is inspirational. A great leader delivers both: inspiration and motivation. One can’t just count on motivation to get through, day after day… Yes, the job gets done, but it is tiring, exhausting, draining. It is inspiration that simplifies and energizes, letting one finish with more than what one started with. Without it, the experience is like harnessing several dead horses together to increase speed.
I mentioned before that creativity is about combining ideas, approaches or actions in a unique and unexpected way, and establishing useful associations among what seems disparate ideas. Yes, inspiration is certainly needed to kick start the imagination and curiosity. But motivation is what drives the endless experimentation, trial and error, and the need to succeed.
It seems that many see motivation as an external force, a fear that is the opposite of inspiration. For me, inspiration and motivation are sisters who work best together, especially in the time of need. They are the why and the how so we can deliver the what.
At one time or another we may all lose our inner light for one or the other. We may not feel inspired.. Or we may not feel motivated.. But somehow, through the support of the other, we can rekindle what was once lost or dimmed. It is if we lose both that we may lose all hope. If you are not inspired nor motivated, what’s left?
May your light of inspiration and motivation forever burn bright, so in turn you can create and innovate with all your heart and mind.
…
In the end, Creativity went up a hill and came down a mountain.
The End
Technorati Tags: creativity, inspiration, motivation