Defining Performance: No Simple Matter

Former heads of intellectual property at Apple, IBM, H-P and Microsoft agree that using patents successfully is more elusive than many business executives and investors think.

In my latest Intangible Investor column, Measure of Success, currently running in IAM, I asked three esteemed former heads of IP at Fortune 500 companies, Joe Beyers, Irv Rappaport and Marshall Phelps, how they measured patent performance, and also how they communicated it to non-IP professional.  The answers were both predictable and surprising.

Excerpts from the column:

Peter Drucker, the great management consultant and writer, said that “What you can’t measure you can’t manage.”

One of IP’s greatest challenges revolves around measuring what many believe can not be reliably counted, patent performance. Patent performance is so frustrating a challenge that otherwise courageous companies avoid doing it or simply say that it can not be done.

IP value means different things to different holders at a given point in time. Patents, especially, are informed by context, and context changes over time.

For some businesses patent performance is about royalties, for others, freedom to sell a product unencumbered by law suits or the ability to mitigate risk, for still others, performance is tied to establishing and maintaining market share for a particular products or profit margin.

“Everyone understands the importance of revenues,” said Marshall Phelps, former IP business and strategy head of IBM and Microsoft. “If you build financial expectations for IP into the business unit plans (or licensing targets or whatever), then you have allies in reaching those targets.

“If you have the CEO in line with the IP goals and targets, it helps persuade management in general as well as those lower down in the organization.”

For the complete column and additional comments from Phelps of IBM and Microsoft,  H-P’s Beyers and Apple’s Rappaport visit IAM. Part-two will appear in the Sept-Oct issue.

Photo: IP Review