Bowman Heiden and Ruud Peters discuss IP models for the speed and complexity of convergent, multi-technology innovations

Our emerging connected, digital economy has resulted in the introduction of new products, services and business models with ever-increasing complexity, speed and geography. Over the last 20 years, the amount of money invested in R&D has tripled, according to the OECD, China having passed the EU and now almost on parity with the US. Not only the amount of money that is put into R&D globally is increasing, but also the nature of innovation has changed. More discrete technological innovations, such as steam engines, telegraphs, light bulbs and the telephone and automobile, have given way to convergent, multi-technology products with both increased complexity and speed to market. Technology adoption cycles that used to take 40 to 50 years or longer now are in the range of one to two years. Firms that miss the window of opportunity and enter the market late are already on the cost down-curve. The combination of increased R&D costs and quick reduction in pricing makes it more challenging to achieve a proper return on investment through innovation. The increased complexity and speed to market has rendered the traditional closed innovation models obsolete. For convergent hardware products, such as smartphones, healthcare equipment and modern, connected vehicles, firms don’t have the time, resources and often capabilities to develop all necessary technologies in-house. So, they are more or less forced to look to external actors to help them to speed up their own innovation to remain competitive. This process is often referred to as open innovation, in particular, from the perspective of technology development. To meet this challenge, firms are interacting with a broader ecosystem of actors to enhance both the development of technology and its commercialization. They are looking beyond traditional sources of innovation and traditional market segments, transforming themselves from a closed to an open innovation actor. Open innovation, in the concept of collaborative technology development, requires a change in mindset. From an R&D perspective, firms must overcome the need to try to create everything in-house. Thus market pull is not only about understanding the customer on the product market, but also potential suppliers on the technology market. From an innovation perspective, firms must realize that all successful collaboration activities with external actors result in IP transactions. In essence, open innovation is another name for advanced IP management. ▪ Bowan Heiden is visiting professor at University of California, Berkeley and co-director at the Center for Intellectual Property. Ruud Peters was chief IP officer at Philips and is now an IP consultant. The full version of their article, 'Catch the growth wave of innovation', appeared in ‘Winning with IP: Managing high-growth intellectual property’, Novaro Publishing, January 2021. See details here.