Why Businesses Need To Unlock The Gate To Their Intellectual Property

02/03/2016 12:44 PM AEDT | Updated 15/07/2016 12:51 PM AEST
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Intellectual Property. Two words you hear a lot these days.

Everyone bangs on about the need to protect their IP.

To lock it up and swallow the key.

Businesses of all shapes and sizes fear nightmare scenarios will ensue should the hermetic seal on their golden knowledge bank be broken -- instant erosion of market share leading to liquidation landslides and general corporate calamity.

Here's a simple message to all those intent on keeping their IP frozen.

Let it go.

From where I sit, the only reason why people and entities want to own IP or a patent is because they don't have the gumption, the belief or the ability to do something well or fast enough to stay ahead of their competition.

The clamour to protect IP smacks of laziness and an unwillingness to move as fast as we humanly can. It certainly has no place in the second decade of the 21st century.

Arguably, it hasn't had a place since the open-source movement began near the end of last century.

According to Wikipedia, the movement conceded that producing original things and concepts took a great deal of time, money and effort but that the cost of reproducing said things was low -- the 'marginal cost' -- and should not be inflated by the likes of copyrights that monopolised price artificially.

Such is the rate of change, the IP of today might be out of date by tomorrow, so energy spent protecting is far better spent updating and reiterating.

That's the only way businesses will survive and thrive in this age of transformation.

Especially those once-moribund sectors in the direct path of the sharing economy that is causing general mayhem and disruption via the likes of Uber, Airbnb and Airtasker.

To digress for a moment, the term 'sharing economy' is a misnomer. It should be more accurately termed something like the 'DIY Transaction Economy'. Most of us don't willingly give up our homes to strangers for days on end for any altruistic, communal reason. It's for cold, hard cash.

Back to the disrupters. They have come armed with a great insight, a load of chutzpah, a website, a transaction system and little else -- to threaten industries that have huge resources tied up in actual assets.

Their alacrity to achieve market share in lightening-quick time is matched only by the utter dread of the traditional players seeing their age-old business models crushed before their very eyes.

The rampant disruption renders much of the IP that the legacy businesses jealously guard against one another, close to obsolete.

Because their biggest threat is from the new players rather than their old competitors.

In a former role, I was global lead on the Gillette account in New York.

At the time, Gillette's IP was so advanced that they were legally forced to hand it over to their nearest competitor, Schick, to allow for a truer competitive environment.

During the protracted back and forth, The Dollar Shave Club started up to change the game and go on to become one of the world's most successful disrupters.

It was a big learning curve for all involved. While we were immersed in the minutia of what IP could and couldn't be released to our biggest rival, we were blindsided by a start-up, one whose disruptive new business model posed a far greater threat to anything our IP wrangling was attempting to resolve, and, at the same time, rendered much of that IP obsolete.

The upshot? Both Gillette and Schick now have 'shave clubs'.

Winning businesses these days simply aren't caught up in guarding the secrets to their success. Their revolutionary offering steals a march on the traditional players and they back themselves to relentlessly improve and stay ahead of the curve.

Indeed, in many cases, it is actually in disruptors' best interests to enable other businesses to plug directly into their IP to grow the fledgling new markets.

Tesla is a brilliant example. In June 2014, Elon Musk's electric car phenomenon removed all patents off its proprietary tech and pledged not to initiate lawsuits against anyone who, "in good faith", wants to use its technology.

Their move to 'open innovation' was ostensibly to accelerate the advent of sustainable transport. They hope that access to their already complete R&D will help to spur others to enter the electric car market. Currently, plug-in electric cars make up only half of one percent of the total vehicle market in the US. Tesla recognise they cannot shift that dial all by themselves and are helping others to come on board.

So there is a hard, fast profit imperative behind the IP philanthropy.

Especially when you consider any growth in electric car numbers will need sustenance from a wide network of car-charging stations. There are now three standards competing for the fast-charger market and Tesla owns one of them.

Further, a larger electric-car market will also demand more batteries to power the vehicles. Tesla is building its US $5 billion 'Gigafactory' in Nevada to supply enough Lithium ion batteries to sustain its own projected growth of electric cars from 2017. A great move that will even further optimise its market share.

Still, there's no doubt that beyond the economic benefits, Tesla truly believes opening up its IP can assist the transition away from fossil fuel consumption, in the interests of the planet and humanity.

So hats off to them.

All we need now is for businesses in all sectors to follow their lead and favour R&D over IP.

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