What do big companies have in their R&D toolbox that smaller companies often overlook?
Competitive intelligence – what some might call snooping on the competition.
Competitive intelligence research is a powerful strategy for companies of any size, so it pays to know your options.
In the latest issue of Texas CEO Magazine, Steve Pearson, founder of The Pearson Strategy Group, reveals five strategies that companies of any size can use.
He also explains how acting without research can lead to poorly executed innovations, costly strategy missteps, unrecovered R&D costs, risks, or legal entanglements.
Competitive Intelligence: 5 Ways Big Companies Stay Ahead of Their Competitors (Including You)
By Steve Pearson
Smaller and mid-sized companies often skip competitive research to save time or money, or because they lack the knowledge. Acting without research can lead to poorly executed innovations, costly strategic missteps, unrecovered R&D costs, unsupported or unknown risk levels, or legal entanglements.
Smaller innovators can benefit from competitive intelligence and analysis while easily staying on budget. Extensive data (including international sources) is available to anyone who can access it.
Used strategically, pinpointed competitive intelligence can show paths for opportunities while minimizing risk by:
- Identifying disruptive technologies earlier.
- Uncovering an unknown competitor or a known competitor’s movements.
- Revealing details of previous similar ideas (there are almost always similar ideas).
- Heading off infringement lawsuits.
- Opening up ideas for licensing, including patents.
This information helps an organization keep refining both innovation and strategy.
CEOs may not want to invest in every type of research for every project, but these five should be considered:
Snoop on the Competition
All companies leave a trail of publicized information, including patent applications, business activity, research, and related activity. Rooting out and analyzing this information can provide valuable insight beyond the competition issues in a press release. Tedious, time-consuming research isn’t required, as alerts can deliver highly relevant information to the decision-maker’s mailbox in near real time.
Many CEOs believe sending employees to conferences and trade shows, paying for professional memberships, and other expenses will help collect competitive intelligence.
That’s true, but only up to a point. A well-constructed alert about a competitor’s newest patent application for a widget that surpasses that great innovation under development down the hall could reveal critical information not available elsewhere until much later.
Other discoverable information about competitors includes:
- Pending or completed lawsuits and the operational data disclosed during proceedings.
- Latent patents are not being utilized. Would it make sense to buy or license?
- Patterns over time.
Investigate the Firm’s Freedom to Operate
CEOs should consider this research as cheap insurance against unforeseen risks with new products or refinements to existing products. Also called a Clearance Search, the Freedom to Operate search helps keep companies avoid legal snarls.
So many regulations, laws, and other rules make it hard for CEOs and others to grasp the full scope of intellectual property law. Non-compliance with patent laws (infringement) can mean a court judgment, attorney fees, and the time and frustration of a lawsuit. Even for small controversies of $1 million or less, the discovery phase alone often costs $500,000 (1.) while creating huge distractions from preferred business activities.
In the U.S. alone, 303,000 patents were granted in 2013. With patents enforceable for about 20 years, that adds up to hundreds of thousands of potential legal hazards.
Relatively inexpensive IP research could have helped Apple avoid a $533 million settlement with the Texas-based Smartflash. The case is a small patent holder challenging the 800-pound gorilla and winning a judgment that Apple used its patented inventions in iTunes without paying proper licensing fees.
Verify Disruptive Technologies Before Investing Time and Money
The harsh truth is that disruptive technologies, such as 3-D printers, are rare.
Great ideas are often preceded by someone with the same or a similar idea. This is usually not a showstopper, but it allows refinements and, often, the future product morphs in a better direction and gains new opportunities.
External verification also helps R&D and legal teams balance legal risks, shorten timelines, and maximize the pot of gold at the end of the product rainbow.
Not sitting on a disruptive brainstorm? It also pays to look for innovations that may disrupt the current (or future) marketplace. Futurists often look for these disruptors so companies can consider them in long-term strategy development or refinement.
Plan Stage Gate Methodology Before R&D
In the fast-paced world of innovation, many CEOs hear a neat idea and proceed to patent it shortly after lunch with the inventor.
However, using Stage Gates can minimize expenses and time. In brief, companies can refine the inventive process by having the inventor’s group quickly vet the idea and submit those that pass muster for initial patentability research. Worthy ideas can then proceed to initial market research to confirm that today’s expenses will translate into future revenue.
If the idea merits it, move full speed ahead with detailed research on the market opportunity, drafting a patent application, and sending it to R&D.
This step lets us leverage the existing state of the art and avoid reinventing the wheel.
Peek into IP License Filings
No one buys real property or rents office space without knowing the market.
Buyers rely on agents to pull up comps for what others ask or pay. This information lets the buyer and agent negotiate intelligently or walk away from a bad deal.
Similar resources can be reviewed to uncover license filings, including those for intellectual property. Details might include the competition’s spending and future direction, rates, licensors/licensees, whether the licenses are inbound or outbound, and contract details.
What’s the catch? Most licenses are never announced, but the SEC requires publicly traded companies to disclose IP critical to their business.
Other companies may be forced to share this information during the discovery phase of a lawsuit involving contract disputes, fraud allegations, or antitrust charges.
These are not the only approaches to competitive intelligence, but with innovation on the line, they may be the most efficient to consider first. After all, saving time and money should be a priority for a company of any size.
Steve Person founded the Pearson Strategy Group, which helps companies accelerate innovation by providing custom-designed, on-demand competitive intelligence and IP research. He stays active in Austin’s entrepreneurial community.
Sidebar: Uncovering Hidden Gems in Patent Applications
Patent applications can be mined and analyzed for strategic gold. Common data available from U.S. and international IP publications that may be statistically analyzed includes:
- Filing and publication dates
- Assignee – company, university
- Technology area
- Geographic region
- Inventors
Want to license or sell existing patents? Identify companies that might be interested.
Analyze global patent data to identify companies having lots of similar IP. If they’re in that space and have IP, the odds are reasonably good they will consider licensing or purchasing your patent(s).
Looking for a specialized researcher or institution for collaboration?
Examine research papers on the subject of interest and identify the researchers and organizations that published them.
Wondering where competitors are focusing their future strategy?
Monitor their research and patent publications to see where they invest time and resources.
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