The High Cost of Executives' Intellectual Property Blind Spots

Strategic business decisions often involve intellectual property, but senior managers' understanding of salient issues is often limited.

- By Frank Tietze, Marcus Holgersson, Pratheeba Vimalnath, and Charlotte van Dijk-Wittkampf

BUSINESS LEADERS KNOW THAT THE unique value propositions a business can offer its customers are the fruits of its investments in innovation. Those leaders ensure that their companies take steps to protect that intellectual property (IP) by filing patent applications, registering trademarks, and guarding the company’s rights under copyright law or keeping its know-how secret. But our research shows that in practice, leaders’ understanding of the nuances of managing IP falls far short of what their own IP experts believe is needed to support sound strategic decisions.

IP rights are tightly connected to business strategy because they don’t just protect innovating companies from copycat competitors; they also enable controlled collaboration and trade of intellectual assets and are critical components of merger-and-acquisition (M&A) discussions. Among top management’s key responsibilities is ensuring that their organization is maximizing the returns on its investments in innovation and IP — and, likewise, understanding IP rights sufficiently to guard against poor decisions.

We set out to gauge the depth of this understanding by surveying senior IP experts and received responses from 47 such individuals with long-term experience in working with and observing executives as they made strategic decisions. What we found is a substantial gap between what these experts believe executives should know and what they judge to be those senior leaders’ actual competence levels based on real-world cases.