You’ve just been reading in the news about the latest billion-dollar IPO of a social network that’s never made a profit. Your clients won’t stop talking about artificial intelligence. Your staff want extra budget to subscribe to some must-have third-party tools. And your financial adviser wants to plan for your retirement – even though you’re only just turned 38 years old.
It’s a fast-paced world – that much is true. But this really could still be the moment to cash in on your hard work and create some IP.
Stop and think
If that thought raises your blood pressure, please try to relax. You don’t need to call your lawyer or your accountant or even call an extraordinary meeting of directors.
You just need to stop – and ask yourself one simple question.
How well am I managing my intellectual capital?
Intellectual capital is what creative and marketing agencies have been selling to their clients for years. And it’s safe to say that understanding it underpins any attempt to zero in on the latent intellectual property in a business.
The building blocks of intellectual capital
Let’s break it down. Here are some questions to get you started.
• Do you have the right people?
• Is the business as creative as it can be?
• Does it produce enough ideas?
• Does it manage knowledge effectively?
• Are there the skills and experience across the business?
• Is the culture and spirit of the business just right?
• Do you have the right partners and alliances?
• The right special relationships that add real strength?
• The right kind of secure client engagement?
• A network of valuable informal relationships?
• And a strong reputation and brand image?
• Do you have clear internal agency systems and processes that make you more efficient?
• Do you have client processes that are valuable?
• Have you developed tools for managing workflow or client campaigns?
• Have you built databases of useful information?
• Do you have established company guidelines and policies?
• Do you have a strong culture of organisation?
That’s a lot of questions, sure, and the answer to many of them may be broadly positive. (Though finding the right people is a never-ending discipline.) But let’s now go back to the question of intellectual property, having started to explore the question of intellectual capital.
Let’s ask this:
How should intellectual property be assessed for an agency in broad terms?
Or to put it another way: is intellectual property core to the business strategy – or non-core?
For those agencies for which the IP is core to business strategy, the IP will be closely aligned already with any intellectual capital. For those where the IP is less important (‘non-core’), it is more likely to be ‘accidental’ IP that came out of particular projects.
But the point to make here is that IP definitely requires a particular approach by a business if it’s to start to deliver. ‘Accidental’ IP won’t get you far.
IP takes many forms, whether owned or legally protected: copyright, patents, trademarks, codified knowledge (software), brand names, data, and sometimes trade secrets. But to invest in IP – in protecting and developing it – is a world away from listing your company’s intellectual capital in broad terms. It demands a view on the market, a business case and an ability by those charged with fully thinking about IP to accept and live with any associated risks.
The commercial side of IP
It’s worth saying that meaningful IP is also connected to commercial reality. On its own, it’s an intangible asset. For it to equate to real value in a business needs a commercialisation strategy – and a plan for gaining traction. Too many business people are fixated on the notion of it without understanding that something worth protecting or developing will still take time to realise value, and only then with just the right focus.
Making the leap from IC to IP
How do you make the leap then? How do you build intellectual property out of intellectual capital?
Here’s a one-two-three to get you started.
1. Use your intellectual capital – such as a knowledge strength or particular data – to help identify and assess what IP can become core for the business by making products or services more compelling to any target customers.
2. Use your intellectual capital – such as a client engagement or agency process – to test and prioritise what is core IP.
3. Use the intellectual capital – such as a strategic alliance – to validate and develop a commercialisation strategy.
There’s a lot going on with this top-three. But you probably get the point by now that the value of an agency’s intellectual capital depends on how well it is managed with IP in mind. If an agency’s profits are a consequence of what the company does, valuable IP is a consequence of what an agency does and plans to do around every aspect of its intellectual property.
It is also worth noting that by focusing on your existing IC – your knowledge and services – you may be able to benefit from IP that isn’t yours and build greater value in your existing knowledge base. New partnerships are a great example – and it’s not something agencies have traditionally done well.
Geometry Global’s partnership and the IP fast-track
Last week Geometry Global, a shopper marketing and agency network for activating brands, announced a global strategic partnership with Blippar. Blippar is a technology company specialising in augmented reality (AR), computer vision and artificial intelligence (AI).
What does the link-up tell us about the role of IP?
It tells us there is another approach to the opportunity here. Alongside the obvious benefits of the partnership in terms of cross-referrals and collaboration projects, it demonstrates how rapid advances in tech’s application to marketing communications has prompted smart agencies to channel their intellectual capital through a partner’s IP. These agencies can see that one way to invest in building a competitive advantage in IP is through relationships.
This fast-track route can make a lot of sense. If there is some clear strategic value in IP that you don’t own, applying your IC to that best-fit IP might well be a winning move. It can also mean you don’t need to raise finance and implement unfamiliar investment strategies. Blippar – once a £1bn-valuation company – has posted increasing net losses in its most recent financial results, so let’s not forget that many companies with IP need your IC to gain traction in their market.
It’s the same idea that the founders of Cognifide, a digital tech consultancy, leveraged when they sold a majority stake to WPP in 2014. Cognifide had built its business with a clearly defined strategy of partnering with Adobe, enabling the business to become the number-one partner for the Adobe Experience Manager (AEM) platform, with more than 30% market share. It was the fruits of that partnership that made Cognifide so attractive to WPP.
It’s not just the small and agile agencies that need to understand and apply IP, of course.
Remember how the already long-established Apple managed to change its spots and its fortunes, all those years ago, by re-imagining its business with its game-changing iPod and then iPhone.
You can too in your own way.
My aim here is to ensure that the next time you are reading a news story about a competitor agency that has been bought by a leading management consultancy, complete with references to exploiting the strategic value and strong IP in the business, that the story doesn’t just make you stressed. Instead, it should excite you that you are embarked on a similar journey, and with IP – whether yours or someone else’s – that is either poised to add value soon or else is delivering already.
Associate Partner at Waypoint Partners