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HOW MARKET SMARTS CAN PROTECT PROPERTY RIGHTS.pptx

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					   HOW MARKET SMARTS
          CAN PROTECT
PROPERTY RIGHTS
HBR CASE STUDY | CHAPTER 9 |
PROTECTING INNOVATION
                  
               The LAW
    is often not the best defense
against theft of intellectual property.
Far more effective in such cases are
     MARKET-BASED strategies
   that KEEP PIRATES IN PORT.
   6 Market Strategies
   for Protecting Intellectual Property
 Companies facing threats to their intellectual property have a range of
  alternatives, from defending their core assets to embracing the businesses
  that threaten those assets.
   The choice of strategies – and tactics to support them – depends on the
  nature and intensity of the threat and the strength of a company’s
  resources.
                             Market Strategies




     ?           ?            ?             ?            ?           ?
 Defend Core Assets                                    Embrace the Threats
    6 Market Strategies
    for Protecting Intellectual Property
                                                1. Nip It in the bud
 Defend Core Assets                                           Embrace the Threats
                                 Market Strategies




     1
                “ Act Before Competitors , So Catch Their Breath ! ”

                     PREEMPING / OVERWHELMING / EXCLUDING


 PREEMPTION :
  Being first to market so that you can capture profit of monopoly scale.
  - Intel preempts rivals by tightly managing its relationships with external
  constituencies( Customers, Users, and Suppliers)

 OVERWHELMING:
  - Capital One, the credit card issuer, overwhelms its rivals with a blizzard of new
  product

 KEEP THEIR INTELLECTUAL PROPERTY OUT OF SIGHT FROM THE START
  : For companies that lack Intel’s or Capital One’s resources and core strengths
  - Coke’s recipe has never been deconstructed or revealed
  6 Market Strategies
  for Protecting Intellectual Property
                                  2. Prescribe a Sedative
Defend Core Assets                                     Embrace the Threats
                             Market Strategies




                 2
                          “ Lower The Competitive Intensity ”

                                   THREATEN TO RETALIATE




 CROSS-LICENSING AGREEMENTS:
  - “SEDATING” EFFECT
   on an underground market in weakly protected intellectual property.
  Companies do not sue one another for infringement because they know
  they are likely to infringe the infringer’s patents sometime in the future.
   6 Market Strategies
   for Protecting Intellectual Property
                                            3. Dig a Honey Pit
 Defend Core Assets                                    Embrace the Threats
                              Market Strategies




                              3
                                           “ Entangle Key Assets ”

                                            FORGING SYNERGIES



 CREATE SYNERGIES AMONG RELATED BUSINESSES:
  Company’s economic viability is usually tied to one or a few key properties.

   By forging synergies between such properties and adjacent ones
   company can protect its profits from rivals and poachers.
   - Hit television shows leads audiences to the next program and
         CROSS PROMOTE other shows on the same network.
   6 Market Strategies
   for Protecting Intellectual Property
                                              4. Make a Bundle
 Defend Core Assets                                       Embrace the Threats
                               Market Strategies

                 “ Combine Secure
               with Insecure Products”

              MARRY ASSETS / ADD-ONS
                                               4
 MARRY ASSETS: (Enhanced value of the package )
  In situations where it’s difficult to establish property rights to an asset,
  It can be wise to marry that asset to a complementary product.
  - Excel, Word ( stand alone software applications )can be easily copied
  and disseminated, but the Microsoft itself enhances the value of the
  package so it makes more likely that a would-be copyist will pay for it.

 ADD-ONS :
  Provides additional functions or customization for a core application.
  - In the book industry, publishers sometimes insert a CD or sort of things in
  the back cover of their books.
   6 Market Strategies
   for Protecting Intellectual Property
                                     5. Move the Goalposts
 Defend Core Assets                                       Embrace the Threats
                               Market Strategies




                                                            5
              “ Redefine the Firm’s Boundaries ”

                  EXPANDING / NARROWING



 REDEFINE BOUNDARIES:
   Challenge for companies how to get a piece of COMPLEMENTS.
  - Unlike the increasing piracy rates in music industry, not all music-related
  businesses are vulnerable. For example, blank CDs, computers with a CD
  burner , and portable MP3 players.
   6 Market Strategies
   for Protecting Intellectual Property
                                          6. Let the Dogs Out
 Defend Core Assets                                    Embrace the Threats
                             Market Strategies


                    “ Relinquish Your Core Assets ”

            MOVE THE GOALPOSTS, then“ REALLOCATION
                              ”
                                                                     6
 REALLOCATE RESOURCES TO ADJACENT BUSINESSES:
  For companies that have moved the goalposts and now encompass more
  viable businesses. It may pay to disregard the decline in their core.

   - Several of music companies viewed the online customer as a threat, they
   tried to charge as much for downloads as they did for CDS, even though
   the costs of online delivery are minimal.
    By contrast, Apple wasn’t afraid to set prices low enough to change music
   –buying ha bits.
 SUMMARY.
                                Market Strategies




   1
  NIP IT
In the Bud
                2
              Prescribe
              Sedative          3DIG
                             HONEY PIT
                                                 4Make
                                                 BUNDLE         5
                                                               Move
                                                             Goalposts
                                                                              6
                                                                             Let the
                                                                            DOGS OUT




 Preempt                                    Marry assets     Expand
                                            To               into rivals’
                                            complementary    businesses
                             Create                                      Reallocate
Deny access   Threaten                      products
                             Synergies                                   Resources to
              To retaliate                                  Narrow your Adjacent
                             ( Among        Preserve
Out-                         related                        Own business businesses
                                            The core with
innovation                   businesses )   Add-ons

				
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Lingjuan Ma Lingjuan Ma
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