Commercialising IP in a downturn

07 May 2009
History tells us that great innovation can be born out of a recession. So how can businesses on both sides of the Tasman position themselves best for when better times return? Mark Hargreaves explains.

The innovation systems in New Zealand and Australia have come under scrutiny lately.  New Zealand’s Ministry of Economic Development recently called for tenders to conduct a review of our IP system to determine how it can be changed to improve productivity. In Australia, the Cutler report on the national innovation system was released last year.  It advocated a host of changes to drive innovation in Australia.

Both countries face similar challenges to differing degrees.  Distance to markets means commercialising ‘weightless goods’ will be crucial to increasing productivity and driving economic growth.  But to do that, more investment in R&D will be needed, as will better strategies to commercialise our technologies internationally.

The current downturn could be used by companies in both countries to focus on these issues.  While generally, discretionary spending on R&D and IP is likely to be down in the medium term, that shouldn’t stop companies positioning themselves for the upturn that will follow.  Newspapers abound with examples of great companies and technologies that have sprung from the mire of recession.

But what does this mean in practice?  Two areas of opportunity spring to mind.

The first is to consider collaborating with a third party to share R&D costs if funding R&D is a challenge. Also look to the various public sector grants that are available to fund R&D. Alternatively, look for opportunities to license-in IP to fill gaps in your R&D portfolio.  Competitors all over the world are collaborating more and more in specific areas to address these issues.

The second opportunity involves companies looking at their business structure to see if there are alternatives which may drive growth and productivity.  There are many examples of businesses in New Zealand and Australia successfully commercialising their IP today.  This ranges from licensing patents, designs and ‘know-how’ through to outsourced manufacturing in Asia and outsourced distribution to world markets. 

The model of designing and manufacturing locally and shipping to the world is becoming harder to sustain.  Australasian companies should look at these business models and consider whether they could run more efficiently and productively by adopting a different structure.  Perhaps a product is being sold successfully in New Zealand and Australia but other markets beckon.  If the costs associated with establishing the business overseas are too great, consider licensing the IP underlying that product to someone better positioned to do it.

This economic trough is as much an opportunity as a challenge.  Hard decisions may be needed and hard work will certainly be required, but now could be the best time for local companies to increase their ability to generate export earnings by refocusing or transforming their businesses. 

When the gloom lifts, there could be real gains to be made.

This article was published in IPNewz, May 2009.

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