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IP Strategy

Build, Buy, or Partner: 5 Considerations for your Organization

By July 7, 2022July 8th, 2022No Comments

Innovation is a necessity in today’s fast-paced, global economy. Companies innovate to solve problems they and their customers face, improving current products and introducing new options within their current industry. Organizations may also be searching for creative ways to reach new audiences in tangential or emerging sectors. Deciding how to achieve the innovation required for commercial success is not always simple.

Is a licensing agreement better than proprietary technology? Do you have the talent to develop new inventions or do you need an acquisition to build a skilled team? These questions, and others like them, must be answered by leadership and relevant stakeholders when determining if they will build, buy, or partner to reach growth and strategy goals.

Build, Buy, or Partner Analysis

The method you use to bring innovation to market relies on a multitude of factors and the decision you reach will likely be different every time you’re faced with this type of decision. There are many considerations stakeholders should take into account when deciding whether to build, buy, or partner.

Investment

No matter how you achieve growth targets, it takes investments of money, talent, and time—both now and into the future. The costs associated with building, buying, and partnering vary. For example, acquiring a startup may be the most expensive option; however, if this startup employs a talented workforce that would be difficult to replicate, it could be the best option. In this scenario, it would be essential to retain the startup’s employees in the M&A. An acqui-hire could also be a middle ground between buying and partnering.

When analyzing the required and appropriate investment for each strategy, the competitiveness of the technology landscape and potential ROI should be considered.

Risk

In order to determine an appropriate investment, you must understand the level of risk associated with building, buying, or partnering. There are financial, legal, strategic, and technological risks to consider. Building often increases risk overall, as your company is solely responsible for the resources required, but an M&A that lacks strategic foresight can also be a costly failure.

IP Rights

Building or buying an innovative solution gives your organization sole ownership of the resulting IP. This allows you to decide how to capitalize on your IP autonomously. When partnering with another entity, you lose this capability. IP rights will be shared in most cases, giving both parties some ability to use and monetize the intellectual property.

In order to protect IP—regardless of who owns it—the IP must be readily available. This looks different in each scenario. When developing a new technology alone or with a partner, you must have freedom to operate and, if you want to patent the resulting invention, patentability. In order to buy or license an innovation, the IP must exist.

Time to Market

Monetizing innovation in some way is essential to your business’s success. This is commonly done by bringing a new product to market. Depending on the research, development, and IP strategy involved, time to market can be years. But you may not have years. Bringing products to market faster is often a competitive advantage. A thorough build, buy, or partner analysis can determine which method will deliver products to customers most efficiently.

While buying and partnering can often be faster than R&D for a new invention, it’s not always that straightforward. Mergers and acquisitions can take four to six months—if not longer. If your R&D teams have spent a lot of time on similar projects and you have streamlined innovation workflows in place, building may not take as long as a complex M&A or licensing agreement.

Corporate Culture

Not every company’s culture is suited for internal R&D, acquiring another business, or partnering with a relevant organization. A strong culture of innovation may not readily accept the decision to license existing technology but may be open to a more collaborative partnership, while egocentric leadership may resist collaboration. To succeed, the decision to build, buy, or partner must have support from executives and other stakeholders, who may be influenced by past experiences in similar situations.

It can be difficult to admit that your culture isn’t a great fit for all available strategies for growth. However, doing so can save you from investing resources into an approach that won’t help your organization in the long term.

Strategic Decision Making

The most strategic decision for your specific scenario requires relevant, data-backed insights that paint a compelling picture for leadership and other stakeholders. IP.com’s innovation workflow solutions can help organizations decide when it makes sense to keep innovation in-house, buy an existing solution, or partner with a skilled entity using licensing, joint ventures, blended teams, or startups.

IP.com’s database of global patent and nonpatent literature, as well as litigation data from around the world, enables critical decision-making. Powerful semantic search capabilities allow businesses to identify white spaces, M&A targets, potential partners, and relevant talent. Using the power of AI to accelerate innovation, our suite of solutions can also help you bring innovation to market faster.

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