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M.I.T. Enterprise Forum of Chicago Delves Beyond Intellectual Property Into ‘Ownable Distinction’
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Added: 04/26/2005
Type: Summary
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M.I.T. Enterprise Forum of Chicago Delves Beyond Intellectual Property Into ‘Ownable Distinction’
CHICAGO, IL April 26, 2005 -- While the topic of intellectual property (IP) is often talked about and largely misunderstood, a company’s IP is only half the battle in carving out market command, according to a local panel of IP experts. A compelling new notion called “ownable distinction”, which is being used as a powerful business tool to fully leverage corporate IP, was debated last week at the April gathering of the MIT Enterprise Forum of Chicago.
In reality, IP is a poorly understood “legal fiction,” according to Darren Cahr, a partner with the Chicago office of Gardner Carton & Douglas LLP and one of three MIT Enterprise Forum panelists. An intangible asset, a company’s intellectual property is nothing more than a “piece of paper saying you have a right to defend it,” Cahr said.
On the other hand, applying the concepts of ownable distinction (OD) to its intellectual property is how a company gains and holds a strong position in the market. With OD, a company has the ability to ultimately create a market in which it is the undisputed leader.
“It’s not enough to have a clever brand or a unique technology. IP is irrelevant without OD,” Cahr said. “IP has little value unless it’s on a strategic vector taking you in a direction. With OD, you must choose and know that direction. IP without OD is like a car without a steering wheel.” He added: “IP is a hammer. It’s not a pot of gold. It’s a tool that needs a goal.”
Companies often have lots of IP of different kinds floating around the organization without a clear executive understanding of what it is, where it is and what business applications it can best serve. A notion emanating from a combination of business, legal and branding strategy, OD is grounded in the context of the market’s dynamics and its customers -- and done correctly, OD is a force that helps prevent commoditization.
"With 75 percent of today’s companies not knowing what their IP is worth and 80 percent of the value of U.S. companies locked up in their IP, the need for IP to be thought of differently is more pressing now than ever before," Cahr said. Added Pragmaxis LLC founder and fellow panelist Peter Balbus: “Businesses today face essentially two choices: commodify your competition or be commoditized yourself. OD is the antidote to commoditization.”
For OD to become a reality within a company, it must receive top-down support and be driven with “intentionality,” Balbus said. “It must directly address the question of where a company’s IP stands in the context of the market and its future direction.” Balbus, a recently elected MIT Enterprise Forum board member, cited hockey legend Wayne Gretzky as being great because he skated to where the puck was going rather than where it was.
One obvious example of solid OD is the Apple iPod. While consumers can buy competing products that are at least as advanced technically, Apple has built and branded an immersive experience around the device and consumers have responded overwhelmingly. Other notable examples of successful OD include the Volkswagen Beetle, Starbucks and the Motorola Razr.
On the flip side, various companies have been innovative with their IP but failed to follow up with solid OD. You may recall the Sony Betamax from 1975, the original Radio Shack laptop in 1983 or the Motorola “brick phone,” which spawned an entirely new cellular telecommunications industry before market leadership was captured by Nokia.
On a humorous note, Balbus highlighted examples of other trinkets which were innovative but lacked clear ownable distinction, including an alarm clock on wheels that hides until its user finds it and a toilet paper dispenser worn on a person’s head for convenience in blowing the wearer's runny nose.
Following the series of successful and not-so-successful examples, USG Chief Intellectual Property Counsel and panelist Michael Geoffrey addressed the audience about the need to communicate corporate value when assessing IP. He added: “It’s not about your IP or your patents. Your major step is getting buy in from the top by communicating value that gets to the core of the business.” USG is a shining example of a company that has mastered the art of ownable distinction. Said Geoffrey, “When I told one of my colleagues that I was taking this position with USG, his immediate reaction was, ‘You’re kidding – they sell dirt!’” Yes they do, but they also command a substantial premium for that dirt in markets around the world.
About the MIT Enterprise Forum of Chicago
The MIT Enterprise Forum is a non-profit organization that promotes the formation and growth of innovative and technologically oriented companies through a series of specialized executive education programs. Through these programs, the Forum provides networking, leadership opportunities, and provocative new ideas to senior business leaders while showcasing MIT's role in entrepreneurship in communities around the world. The Enterprise Forum was formed in 1978 and has 25 chapter organizations worldwide. Participation and membership is open to the general public.
www.mitefchicago.org
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