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Intellectual asset management in the engineering and mining sectors

In recent years there have been a number of studies of intellectual asset management (IAM) strategies in various industries. In particular, there is a great deal of research into how IAM is applied within the biotechnology, pharmaceutical and electronics industries. There has been very little corresponding research into IAM practices in the engineering and mining/resource industries.

In an attempt to rectify this, the author conducted a qualitative study into the IAM practices and strategies of engineering and mining/resource companies. The study looked at whether the extensive research and development being conducted in these sectors was being successfully commercialised, and the extent to which recognised IAM practices were being implemented. The study also looked at the motivations behind these companies’ use of available intellectual property systems.

The results of the study were recently presented at the Engineers Australia Centre for Engineering Leadership and Management (CELM) national conference. They reveal some interesting insights.

The study concentrated on engineering, mining and resource companies with significant operations in Western Australia. These ranged from small R&D companies and medium-sized contracting and supply firms through to multi-national mining and resources companies.

The study found no clear correlation between company size and the importance given to IAM practices. Instead, the key determinants of IAM awareness were the nature of the company’s business and the principal sources of company revenue. The extent to which a company’s intellectual assets directly affect its income correlates very closely to the importance given to management of these assets.

At the extremes of the scale, these results were to be expected. At one extreme, resources companies extracting and shipping mineral ores or oil/natural gas see little need for refined IAM practices. Not only is there no obvious commercial need to specifically identify and separately commercialise many of their innovative practices, but there is often a clear reluctance to do so. A senior representative of one well-known Australian resources company explained that, in his experience, attempts to commercialise technology often detracted from the company’s focus on extracting and selling product. As a result, the company does not actively seek commercialisation opportunities.

At the other extreme, R&D companies in the engineering sector are often generating ideas and innovation—intellectual assets—as their only product. These companies frequently have elaborate IAM structures in place, with IAM registers and audits commonplace.

In between these extremes, the correlation of revenue from intellectual assets to importance of IAM management held true. Indeed, one could see the correlation at work within individual companies as they evolved and changed the nature of their business over time.

One example was a company which had started out as an R&D operation with a view to licensing technology, but had since elected to manufacture product for the local market. With this change in focus, and source of revenue, the emphasis on IAM procedures had notably declined. The company continued to operate IP registers and follow the established procedures, but the sense of urgency in capturing ideas had dissipated.

Another example is a world leader in design and manufacture in its field. This company had started up, and become well established, without a focus on IP and IAM issues. It had run into trouble, however, by inadvertently infringing the patent of another party. The resulting court proceedings and product re-designs impacted significantly on the company profit. This in turn led to recognition of the degree to which IP and IAM was relevant to the long term market position of the company, and to a sharp upturn in the rigour of its practices, now reflected in its strong growth.

Although some companies showed a relatively high degree of understanding of IAM practices, it was clear also that many of them saw IAM as being useful for providing short-term competitive advantage, not as a long-term driver of their business. Their use of IAM, in other words, was tactical rather than strategic.

One measure which proved a good indicator of the IAM performance of engineering firms related to organisation structure. Most organisations have one person who is ultimately responsible for the implementation of an IAM policy, or at least for management of IP issues. Those companies with a strong IAM policy and performance demonstrated this by having the responsible person in a senior management position, often within a business development role. In other cases, responsibility sat within a company’s R&D department.

There were also a number of companies that still consider IP to be solely a legal function, with responsibility lying with an in-house legal department. These companies performed poorly when assessed against every characteristic of good intellectual asset management practice, including the identification of valuable ideas, the recognition of opportunities and the actual licensing and commercialisation of intellectual assets.

In short, the study demonstrated that concepts of intellectual asset management are not well known, or in general well applied, in the engineering and mining/resources sector. This means that those with good IAM practices are gaining a significant strategic advantage, but that few companies are grasping these opportunities. In the recent boom, this issue has been largely hidden in the background. It is expected that the current economic climate may bring it out into the open.

Barry Newman, Watermark Local Journal

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