I have the most valuable currency of the 21st century. So do you.
It was June 2011. Nortel Networks was sinking, and sinking fast. This Canadian behemoth, one of the juggernauts of the communications industry, had run into insurmountable financial difficulties and was on its way to final bankruptcy.
At its peak in the 1990s, it had been worth $250 billion, and had more than 90,000 employees. But Nortel had taken a kick in the stomach during the credit crunch, and was still struggling to get back into shape after the economic downturn in 2001 and 2002. It had been in Chapter 11 bankruptcy protection since mid-2009.
By June 2011, receivers had sold off every asset that Nortel had ever amassed. After every building, vehicle, workstation, and chair had been sold, they had liquidated assets to the tune of $2.3 billion dollars. Disappointing for a company of that size and certainly less than creditors would have hoped for.
But there was one more asset that Nortel had amassed over the years, and which was to prove to be the most valuable asset it had: its patent portfolio.
It did this not by putting a price on their patents, not by hogging them around for people to have a look at and pick the good bits out. Rather, they did it by way of an auction.
A patent auction.
This might be a surprising concept to many, but auctions have emerged over the past 3 years as a viable way of selling intellectual property (IP), whether it be patents, trademarks, domain names, design rights, and copyright, by offering it publicly or privately to potentially interested parties (who are usually competitors amongst themselves to derive some price tension) and having them bid for it. It’s one of many new IP-based mechanisms that have emerged in the recent economy that entrepreneurs can benefit from if they understand the power of having a barrier to entry against competitors in the form of IP.
The good news is that there are many ways in which budding entrepreneurs and innovators can tap into this wealth and create IP-centric companies that are geared for maximum profit from their very outset.
IP is the Currency of the 21st Century
So here’s the good news: we are entering an era where our proprietary thoughts and ideas, our intellectual property, will become our most valuable commodities. In the 21st century, the currency of this new economy we are entering will be intellectual property – patents for inventions, trademarks to protect brands, copyright to protect software, design rights to protect industrial designs, and trade secrets to protect the magic of how business is done.
For this to happen, there are only three requirements: the information contained in these thoughts and ideas of ours must be in a format that others can understand, it must be capable of being protected somehow, and it must be of use to someone else.
In other words, it must belong to you, but you must be able to share it and continue sharing it so that you can derive revenue from it or confer an economic or social benefit on others. How IP can do this – protect your business ideas, while helping you multiply your profits – is one of the main threads that winds its way through this book.
At its core, intellectual property is nothing more than information packaged in a way that renders it valuable to someone. Done correctly, it becomes an asset; a very valuable asset if managed with the care and diligence afforded to other, traditional corporate assets such as buildings, plant, machinery, IT infrastructure, staff, and the like.
But there is one thing that makes information in the form of IP assets a commodity that is different to all other assets that we have today: you can share it with others, but it can still remain yours to use over and over. This is different to, say, a house that I can sell, but then I no longer own it. The same applies to a car, a bike, hamster, badminton set, pot of gold… the list goes on. But if I give you information and I can still retain the IP rights in it, then I can sell it many times over and still retain control over. An intuitive example is the software industry, which is built on that model. Increasingly, we are seeing whole new business models based around IP in which the IP rights are being disengaged from the underlying businesses and used in IP pools for collaboration, knowledge sharing, and open innovation.
However, what many fail to realize is that it is the same foundation on which most businesses in operation today are built, except that it gains immense power once it has been identified, codified, and protected in the right way. It’s the ultimate gift that keeps on giving and, to me at least, seems to be the very epitome of humankind’s intellectual development – a currency based on thoughts. In one of George Bernard Shaw’s less sardonic moments, he expressed it this way: ’If you have an apple and I have an apple and we exchange these apples, then you and I will still each have one apple… but if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas.’ The problem, in this competitive world of ours, is that if I share my thoughts with you, there is a great possibility that you might copy my idea and compete with me unfairly. This is the number one reason people get stuck when engineering their escape from the 9-to-5: they’re scared someone else will steal their idea. It’s also a hurdle when companies want to collaborate with contractors, distributors, suppliers, or competitors.
What this means is that you require special ways of thinking about the information that you share with others and that which they share with you, and also in the way your share it. This proprietary information by itself is extremely valuable if steps are taken to couch it in the right terms and if you can protect it in the right way.
That is the topic of my upcoming book. Subscribe to be notified of its release.