Innovate or Perish: Managing the Enduring Technology Company in the Global Market

Conclusions

An IP commercialization strategy has the opportunity to unlock value from under-utilized assets within a firm and spur innovation across industries; however, it also has inherent risks, some of which can be mitigated and others that cannot. Firms considering an IP strategy focused on “market and commercialize” should acknowledge the similarity in purpose to venture capital investing. In the case of IP commercialization, firms are investing IP as capital, rather than cash. However, the model is in large part a “success-based” model such that the financial success of the IP is linked to the execution success of the commercialization path. In many cases, this will require performance by a third party, the licensee. Thus, commercialization agreements should focus adequate attention on mitigating risks associated with the performance of the development partner. For example, providing the development partner with needed pricing flexibility while ensuring a minimum return from unit sales manages risk that the partner will understate the value of the IP in a broader package or set of offerings to the end customer. Additionally, IP owners may consider stipulating specific investment levels by the development partner for marketing, development, and other activities necessary for bringing the IP to market. Finally, risk in missed market opportunity due to longer-than-anticipated development activities on the part of the licensee can be mitigated through specific performance milestones ...