Molly O. Dix

Center for Technology ApplicationsCopyright 2004 RTI International

Strategic Management of Intellectual Assets Beyond Mere Management to Measurable Impact

PANEL MEMBERSNermien Al-Ali, Ibrachy & DermarkarSharon Oriel, Talisker & Associates Allen Downs, Purdue Pharma

MODERATOR Molly O’Donovan Dix, RTI International


Overview

• Introduction – Dix

• A Comprehensive Model: Managing Knowledge, Innovation, and Protection – Al-Ali

• Strategic Licensing: Lessons Learned – Oriel

• Purdue Pharma: Transformation of Licensing and Intellectual Asset Strategy – Downs


What do the Red Sox and many IAM efforts have in common?


Introduction: IAM Implementation Stages

1. Realization

2. Motivation

3. Process-Based Progress

4. Preliminary Success

5. Comprehensive Management

6. Focus

7. Real Impact


Speakers

Nermien Al-Ali, Ibrachy & Dermarkar

Sharon Oriel, Talisker & Associates

Allen Downs, Purdue Pharma

Comprehensive Intellectual Comprehensive Intellectual Capital Management Capital Management

Nermien Al-AliNermien Al-Ali

Presentation to LES Annual Meeting in Boston

October 18, 2004

APC of Intellectual WealthAPC of Intellectual Wealth

Assets Property Capital

OR Innovation Intellectual Property Knowledge

Intellectual Capital Management – Intellectual Capital Management – Oldest ArtOldest Art

To make profit from cave method…To make profit from cave method…

Need to release human skill and know-how – cannot be drawn or codified

KNOLWEDGE Need to standardize and test the method

or process INNOVATION

Need to prove its yours and you have exclusive use

INTELLECTUAL PROPERTY - IP

Examination Information

Processes Innovation

Raw MaterialsKnowledge

Knowledge – tacit & explicit

Intellectual Capital Life CycleIntellectual Capital Life Cycle

Final Product

To impact the bottom-line with ICM, you need…To impact the bottom-line with ICM, you need…

A model/system to convert intellectual value into commercial value

Focus on the APC or the three types of IC: Knowledge Innovation Intellectual Property

A comprehensive model

ICM Models ICM Models

Piecemeal solutions – not effective Boeing in 1997

Integrative solutions – limited success Rohm & Haas

Best results – comprehensive models Dow, and IBM

A Comprehensive ModelA Comprehensive Model

Manages all forms of IC (no waste of IC resources)

Has a unifying strategy (defines tradeoffs & resource allocation)

Focuses on one stage of ICM that better fits business needs & goals

CICM ModelCICM ModelIP Management - maximize value

Innovation Management - extract value

Knowledge Management - create value

HumanCapital

CustomerCapital

StructuralCapital

CICM™ Model - Nermien Al Ali

Elements of a Comprehensive ModelElements of a Comprehensive Model

StrategyAudit/ Portfolio

Tools

Create Value: Knowledge Management

Extract Value: Innovation Management

Maximize Value: IP Management

ApplicationApplication

Audit

Portfolios or Maps

STRATEGY

Gap Analysis

Tools

Determines ICM

focus

IPM-focused ICM

KM-fo

cuse

d ICM

IM-focused IC

M

How Strategy Affects ICM ModelHow Strategy Affects ICM Model

Audit

Portfolios or Maps

STRATEGY

Gap Analysis

Tools

ICM FocusICM Focus

IM

KM

IPM

Sh

ort

er t

ech

no

log

y cy

cle

– n

ew p

latf

orm

s

Longer technology cycle – same platforms

KM-focused ICMKM-focused ICM

ICMStage

MainSource of

CompetitiveAdvantage

StrategicFocus orQuestion

StrategicObjectives

OrganizationalCharacter

Examples

KM Tacit and explicit knowledge of employees and organization

How are we going to secure the knowledge resources necessary to attain the desired competitive position?

Create the learning organization, enable effective decision-making, be efficient in using existing knowledge and creating new knowledge, provide packaged knowledge

Large with extensive experience and long history/tradition, government and nonprofit organizations with a certain mission

British Petroleum, Skandia, Consulting Companies, Siemens, Ford, Daimler/Chrysler

Focused ICMFocused ICM KM-based ICM

BP ICM Model

KM

IM

IPM

Peer Assist

Employee Transfer

After Action Review

Standard/basic IM and

IPM processes & tools

CoPs

1995 BP is a Big Brain

IM-Focused ICMIM-Focused ICM

KNOWLEDGE

ICMStage

MainSource of



StrategicObjectives


Examples

IM Innovation: new ideas for product concepts and ways of doing business

How do we choose the level of innovation, incremental versus radical, to attain the desired competitive position or establish our product as the market standard?

Create the innovative organization, reducing time to market, responding & introducing change, achieving market leadership & setting market standards

Daring, young or old but continuously reinventing itself in response to changing technology waves

3M, Hewlett Packard, Xerox, Llucent, Nokia

Focused ICMFocused ICM

IM-based ICM HP ICM Model

KM

IM

IPM

Gatekeepers

Councils

Idea banks

Standard/basic KM and IPM processes & tools

Innovation portfolio

Cut Time to Market in Half

IPM-Focused ICMIPM-Focused ICM

ICMStage

MainSource of



StrategicObjectives


Examples

IPM Patents (trade secrets), brands and/or copyrights

How do we use IP to enable competitive positioning and leverage our successful or popular IP (technology, brand, or copyright) in target and analogous markets?

Increase competitive prowess by creating stronger entry barriers, leveraging technology, reputation or creative content underlying one product in more than one market, application, or medium

Highly competitive, formidable, aggressive, skill-oriented

IBM, Dow, Disney, Microsoft, General Electric, Coca-Cola, DuPont

Focused ICMFocused ICM

IPM-based ICM IBM ICM Model

Competitive intelligence

IP portfolios

Licensing teams

IM

IPM

KM

Standard/basic KM and IM processes & tools

Create anything, we’ll license

Design around

Strategic Licensing

Lessons LearnedSharon Oriel

Strategic Licensing Four Points to Remember:

Portfolio Analysis & Alignment

Benchmarking

Strategy

Tactics

Intangibles Management Model

Intangibles Portfolio

R&DIntellectual

Capital Generation

AlternativeValue

Generation

TechnologyPurchase

Business Value Assessment

IntellectualCapital

Strategy/Tactics

TechnologyInvestment Plans

Business Intelligence

and Technology Assessment

BusinessStrategy

Key ComponentsPortfolioStrategy Business Intelligence & Technology Assessment Valuation Investment

Portfolio Analysis & Alignment

What is in your portfolio? How are you using your portfolio? Who owns the IP? Licensing potential: in & out

licensing Document your portfolio analysis &

alignment and keep it up to date

Benchmarking the Best

Look for better licensing models & practices

Use team approach to develop questions and make visits/calls

Develop corporate consensus & support

Identify what Company does well: corporate pride

Intangibles Management Model

Intangibles Portfolio

R&DIntellectual

Capital Generation

AlternativeValue

Generation

TechnologyPurchase

Business Value Assessment

IntellectualCapital

Strategy/Tactics

TechnologyInvestment Plans

Business Intelligence& Technology Assessment

BusinessStrategy

Key ComponentsPortfolioStrategy Business Intelligence & Technology Assessment Valuation Investment

Business Strategy

Proactive strategy: create a licensing business that impacts the bottom line

Access external technology to speed up market entry

Set realistic goals with realistic resources

Who claims credit for the $$$$ ?

And Now the Fun Begins

Licensing tactics will reflect portfolio content and business strategy

Sustain the effort throughout the business cycle

Remember that the real work begins after the license is signed

Build skills, reputation, and REVENUE!

Strategic Licensing

The model works: Dow increased licensing revenue from ~$25MM/year to >$250MM/year

Universities: Wisconsin, MIT, Stanford, Columbia

Corporations: TI, P&G, IBM Ventures: Intellectual Ventures

Strategic Management of Intellectual AssetsStrategic Management of Intellectual Assets

Case Study: Transformation of Licensing and Intellectual

Assets Strategy

Allen Downs

Purdue Pharma

October 18, 2004

Licensing Strategy Alignment Across the Value ChainLicensing Strategy Alignment Across the Value Chain

IN-LICENSING

Discovery Development Manufacturing Sales & Marketing

OUT-LICENSING

Tools Targets

Compounds Formulations

Process Products

Products

Targets Leads

Products Capacity Co-Promotion

0

1

2

1996 1997 1998 1999 2000 2001 2002 2003

($ Bil)

Shifting Licensing Strategies Shifting Licensing Strategies –– Purdue Purdue

Drug Discovery

Development Alliance

Analgesics Oncology

Respiratory Antibiotics

Late-Stage ProductsIN-LICENSING

1999 2000 Abuse-Resistant Technologies

OxyContin®

Licensing Strategy Alignment Across the Value ChainLicensing Strategy Alignment Across the Value Chain

IN-LICENSING


OUT-LICENSING

Tools Targets


Process Products

Products

Targets Leads


0

1

2

1996 1997 1998 1999 2000 2001 2002 2003

($ Bil)

Shifting Licensing Strategies Shifting Licensing Strategies – – PurduePurdue

Drug Discovery

Development Alliance

Analgesics Oncology

Respiratory Antibiotics

AnalgesicsFocus

Late-Stage ProductsIN-LICENSING

1999 2000 Abuse-Resistant Technologies

January 5, 2004 Patent Ruling

PARTNERING• Discovery• Development Projects• Late-Stage Opportunities• Patents

OxyContin®

Licensing Strategy Alignment Across The Value ChainLicensing Strategy Alignment Across The Value Chain

IN-LICENSING


OUT-LICENSING

Tools Targets


Process Products

Products

Targets Leads


Intellectual Asset StrategiesIntellectual Asset Strategies

Hold File applications for most promising inventions Prioritize filing scope based on commercial value

Triage portfolio Core Related Non-strategic Low value

Out-license

Goals Maximize value Balance value creation Generate cash flow Reduce expenses

Balanced Value Development & ExtractionBalanced Value Development & Extraction

Use in

Bus

Spinout JV

Sell orLic

CrossLic

Giftor

DonateHold

Publish or Abandon

Core Related Non-strategic Low value

Value ExtractionHigh Low

Invest DivestStrategic Commitment

Update – 6 Months LaterUpdate – 6 Months Later

Out-licensed one compound Partnering discussions for co-development and co-promotion Engaged agents to sell patent portfolios Engaged investment bankers to sell operations

Balanced Value Development & ExtractionBalanced Value Development & Extraction

Use in

Bus

Spinout JV

Sell orLic

CrossLic

Giftor

DonateHold

Publish or Abandon

Core Related Non-strategic Low value

Value ExtractionHigh Low

Invest DivestStrategic Commitment

Molly O. Dix

Education

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