“…if you don’t license, chances are very good that someone else has a very good technology too.  It’s rare that you’re the only game in town.  So do you want to participate in the licensing revenues, or not?” — Steve Baggett, Director of External Business Development at P&G


In the earliest phase of the technology lifecycle, it pays to be very open.  Neither you nor others know yet the best use of a particular technology, and no one has an appropriate business model to commercialize any applications either.  As the dominant design emerges, tightening the protection for one’s ideas becomes very important. In the mature phase, IP management must become more differentiated and segmented, to support different applications of the technology in different uses.  In the decline phase, firms can now aggressively harvest the fruits of their earlier investments in IP protection.

Managing internal and external innovations and IP within an open business model ultimately requires the construction and support of a rich internal innovation network, connected to a diverse external innovation community. This effort is worth it since this type of innovation will sustain the most enduring businesses of the 21st century.

The table below is very helpful to identify an organization’s current business model and to guide how it can improve innovation and IP management practices to transition successfully towards an open innovation strategy.

Matrix of Business Models Framework

Type Business Model Innovation Process IP Management Examples
1 undifferentiated None NA Mom and pop restaurants
2 Differentiated Ad hoc Reactive Startup technology companies
3 Segmented Planned Defensive Technology push companies
4 Externally Aware Externally Supportive Enabling Asset Mature industrial R&D firms
5 Integrated Connected to Business Model Financial Asset Leading financial firms
6 Platform Leading Identifies New Business Models Strategic Asset Intel – Pentium

Walmart, Dell



For more information, see Ch. 5 Open Business Models by Henry Chesbrough