Perspectives

The CLO strategist: Intellectual property

A framework for CLOs to lead in developing an effective IP strategy

When intellectual property (IP) is largely a matter of searches, filings, negotiations, and enforcement actions, its world begins and ends in the legal department. Add strategy to the mix, and suddenly that world expands across the organization—and beyond. While managing IP in line with enterprise strategy is a multidimensional endeavor, it’s also an opportunity for CLOs to bring real impact to the organization.

Creating strategic alignment

Suppose your organization made an important discovery. If you kept the rights to the discovery, it could generate significant business revenue. If you released the rights, it could unleash broader, faster innovation.

A strong intellectual property strategy can guide decisions like this. At the same time, it creates an opportunity for the chief legal officer to:

  • Lead in an area of commercial significance
  • Wield greater influence within the organization
  • Support the success of the enterprise

But what formula makes an IP strategy strong? The two key factors are alignment with the enterprise strategy and the CLO’s ability to build and leverage cross-functional relationships.

Strategic alignment is important because the way IP assets are managed can affect growth, asset value, and the company’s success in the marketplace. As business decisions shift in response to changing conditions, an effective IP strategy shifts in tandem to continue supporting commercial goals.

The CLO strategist: Intellectual property

The five self-reinforcing choices

To develop an effective IP strategy aligned with the business strategy and focused on the strength of cross-functional relationships, consider the five self-reinforcing choices, which we’ve adapted from Lafley and Martin’s seminal guide:

  1. Vision
  2. Focus
  3. Value
  4. Capabilities
  5. Leadership

Let’s look at IP strategy through the lens of these five choices:

Articulate a sense of purpose, define your aspirations, and describe what success looks like.

By fully integrating with leadership across the organization and endeavoring to understand specific business or functional considerations, the CLO can determine where the business needs IP strategy support. The credibility built through these relationships also positions the CLO to proactively work with business leaders on ways that intellectual property can help them identify, grow, and build new areas of opportunity.

The CLO may seek to enlist the legal team in setting the legal function’s vision for supporting the respective business units, where appropriate, and communicate the overall IP strategy across the team. It’s also helpful to train everyone on the team to recognize and suggest IP opportunities aligned to the strategy.

Clearly define what you will and won’t do.

How can the legal department best enhance the use of IP to achieve business strategies? One place to start is the IP incentive system. Incentives can work for or against the IP strategy. A careful examination of incentives, as well as their relationship to the business strategy, can help to determine where the IP strategy should fall along the spectrum of innovation capture.

Identify the differentiated contributions that enable competitive advantage.

A strong IP strategy enables—and potentially accelerates—competitive advantage through monetization. Monetization begins with reviewing the portfolio to identify underused and noncore assets. With these assets, the CLO can formulate ways to generate revenue from IP divestment, licensing, and technology transfers. Along the way, the organization can also realize savings from a more streamlined asset portfolio.

Objective data is key to an effective monetization process because it provides a basis for understanding value for price setting and negotiation. Market and rights analytics can add further decision support.

Determine existing and in-demand competencies. Then identify investments, processes, and technologies to support them.

The CLO will likely need to make a strong business case for investing in upgraded processes and technologies to support the IP strategy. To help with the business case development, apply lessons from the functional assessment of IP needs and show other leaders how improved IP processes and technologies can benefit the business. To foster utilization of the new systems once they’re in place, invite select colleagues from business units and other functions to pitch in on process improvement and IP vendor selection.

As the legal function leader, the CLO should identify opportunities to improve legal department processes so that they’re more integrated with the business. For instance, automation can help the CLO’s team focus on the legal aspects of IP while empowering the businesses to take more responsibility for what they specifically need.

Consider the culture, talent, training, and behaviors necessary to enable success.

IP isn’t just a legal conversation. It’s a business conversation, where IP strategy and corporate strategy are aligned and mutually reinforcing.

So an understanding of the value of IP—along with a bias for protecting IP assets—can often be woven into the fabric of the organization’s culture. That’s a task for the CLO as both business advisor and legal function leader, in collaboration with compliance and other relevant leaders.

When strategy goes awry

In our experience, when an IP strategy goes awry, the culprit can be found among three main sources of friction:

Incoherence:

Results from pursuing innovations that are unrealistic or bear little relevance to the organization’s business.

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Incongruence:

Refers to a misalignment between those who are driving innovation and those who are managing it.

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Inconsistency:

Occurs when the organization fails to send a clear message to the market about enforcing its intellectual property rights.

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Making an impact on business outcomes

When IP is largely a matter of searches, filings, negotiations, and enforcement actions, its world begins and ends in the legal department. Add strategy to the mix, and suddenly the world expands across the organization and beyond. Managing IP in line with enterprise strategy—and in collaboration with other functions and the business units—is a multidimensional endeavor. It’s also an opportunity for CLOs to flex their business muscles and bring real impact to the success of the organization.

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