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Tuesday
Mar202012

For You Patent Dreamers

 

The first or maybe the second thought of most product entrepreneurs I encounter is the instinct to patent. Hence I've had a bunch of requests to expand my thoughts on patents over what I've presented during several recent Executive MBA program events. So here's a couple quick (and incomplete) observations. They are directed to you mid-career managers seeking corporate exits and pondering Caribbean vacation homes (fueled by patent royalties). And for gosh sakes I am not a lawyer. So get some real advice if you are taking action here.

1. Patents are not products (unless your new gig is that of a patent troll). This is an important philosophical starting point. Focus your energy first on making products and getting customers to buy them. However. I walked into a technology industry conference breakout session recently and I heard a panelist say: "You really must run your business as two companies. One company must develop technology and the other develops patent portfolios" This statement was made by an intellectual property lawyer who benefits from this reality. Natch! But his comment is not without some merit and it illustrates the resource disadvantage technology entrepreneurs have in the world of patents. But my core message is that the value of a patent will be driven by the value of your product in the marketplace. Focus there first and foremost.

2. Breaking free first. First take no patent action while you are employed by others. If you are working for a technology company today you have an implicit or explicit employment contract. Somewhere In that contract is an implicit or explicit assumption that your employer owns your intellectual work. This is fair in that you are being paid for the purposes of creating or advancing the company's intellectual property in the marketplace. They own it (research the fancy legal term "work for hire"). But know that this claim often extends to your efforts both in and out of the office. This 24x7 extension is prevalent in big technology companies who are skilled at intellectual property protection. Some may even own you for a year after departure. Bottom line: yes your employer can make an intellectual property claim against your evening and weekend projects. Look hard at your employment agreement.

 

3. Should you publicly announce your strategy?  You are indeed making that announcement (or you are at least leaving interesting clues) if you pursue patents. Patents and the patent process are public matters. A patent therefore signals your business strategy to the marketplace and specifically to competitors and partners.  This public signalling can trigger reactions from competitors (and trolls). So your business decision is this in a nutshell: should I patent my efforts (move toward "first to file") and thereby increase my visibility and risk triggering blocking patents and other unhelpful behavior by competitors, or should I get my product to market or at least sufficiently in existence and then argue defensively the existence of "prior art" to void someone else's future patent attempt. Does a patent start a fight or prevent one? Tough call. (especially in my world of software.)

4. Sustained return on the investment. Patents only have value if you can afford to leverage them. Intellectual property lawyers will tell you (of course) that you need to reserve money each year for patent activity. Maybe. But here is what can drive the cost: First you must develop, research, and then file the patent, and then for the life of the patent you must defend it several ways. Your first defense is from other patent holders who might claim infringement when you file (and seek to invalidate the patent or seek that you license their patent). Then once issued, you must continuously monitor for infringement by others and initiate action, or you must defend from rent seekers (holders of related patents who will seek a piece of your action.). In theory a patent allows you to profit from a novel invention. In practice, patents and patents lawsuits are a competitive strategy by which a company blocks competitors, extracts rent, or freezes the marketplace buying decisions. So do patents have a return on investment? Good ones do. The tough part is knowing if you have a good one.

5. Equity value and the long run. You can argue that a patent improves your company's valuation. But I would counter that this is often at the margin (especially again in my world of software) in that the value can be diluted. The value of your company is again ultimately driven by the collective decisions of customers in buying your product or service. That value can be marginally protected by the existence of a patent. But. The moment you have this patent in place, then something else starts to happen (again double-especially in software).You start to see patents emerging with slight variances to your patent, or you get patents that begin to block the advancement of the product within which your intellectual property was embedded (silly example: you patented the power plug and somebody else ran a patented the power chord, you patented a square corner box and somebody else patented a round corner box.). The net effect is an effective erosion of your patent's value in protecting your product or service. The lesson: a patent could be necessary but it's not a sufficient to sustain a total product solution in the marketplace. Hence you start down the road of expensive and time consuming patent portfolios. A patent lawyer will see this positively as a company spreading its intellectual property reach and expanding its ability to extract rent from the world. Correct I suppose. But also a daunting task for an entrepreneur with a still evolving and not yet accepted business model.

You may detect a level of skepticism in my patent comments. You would be correct in that assessment. Entrepreneurs are not in a strong position in today's technology related patent world. The big technology companies are great big patent vacuums. And more than a few of my peers have taken the hit. That said, you should still start your new business because as an entrepreneur your mission is to do something new and not face off with existing multi-billion dollar patent portfolios. Stay clever. Find the open space.

 

Monday
Jan232012

Why you should consciously read fewer newspapers ... and what to do instead.

<<Update: Since writing this post Google announced that the Google Reader product will be end of life. Such is the Google world of "free" advertising-based software. There are no niche's at Google. It's the globe or nothing. I have moved to a product called "NewsBlur" which actually, upon spending time witih it, is signficantly better than Google Reader. Newsblur also has an iPad and an iPhone app. But there are many other products out there which are not Google dependent. Check out Feedly and Flipboard (both are stylistically visually nice but I find them too inefficient when you have larger numbers of feeds).  Bottom line: Newsblur for me. Feedly on the side for just a couple things.>>

During a presentation to Florida Atlantic University's executive MBA program late last year, I was asked by a student to share the newspapers to which I subscribed as a small company CEO. My answer was "none". I've not subscribed to those papers for many years. There was a substantial number of surprised MBA candidates who argued that their Wall Street Journal and New York Times subscriptions mattered. So I will elaborate.

I occasionally enjoy generalized publications but I would suggest that these publications have a low return on intellectual investment for the amount of time invested. I make this statement specifically for professional people who seek a certain degree of specialization in the information they seek. Generalized publications, by their commercial model, write to the broadest possible audience. These publications are NOT rewarded for pursuing niche, specialized, and detailed information (like my interest in telecommunications software). My role as CEO requires insight (foresight?) into my little corners of the world. As such, these general news outlets are an inefficient (and actually merely a random) source of useful information. You could probably end my argument with this first point. But there is more. I find that specialized information, when it does appear, is filtered, homogenized, and recast within contexts and narratives of limited relevance to me. Newspapers and journalists, by their nature, are aggregators and contextualizers of information. However their contextualizing is directed to a target audience which is typically not the "specialist me". Said differently, they can report on an event but mis-characterize its implications. Further, journalists, in packaging their work, insulate me from their information sources and the subject matter experts from which their work is derived. I would rather have a more direct access to these information sources and specialists.

So how do I monitor the world around me? The short answer is that I've created my own newspaper using Google Reader and the RSS feeds provided by various websites. Further I've installed Google-compatible RSS feed reader clients on my iPad, iPhone, and Windows PC's, such that my "newspaper" is available on-demand anywhere. RSS is not new. For those of you unfamiliar with it, RSS feeds can be found by clicking the little "radio sign" that you see on websites while other sites may just say "Feeds". Feeds simply allow you to "subscribe" on your own terms to items published on that website site.

Here's some advice if you are motivated about constructing your own personnally curated newspaper. First here's my objective in aggregating collections of RSS Feeds: I seek to increase the density, quality, and timeliness of relevant information on subjects to which I have access. Said differently, I want to spend less time looking at more insightful information and analysis. Getting to this objective is really all about your selection of RSS feeds and sources. Here's how I do it. In what is my order of priority.

  1. First, I cut out the aggregators. I don't subscribe to the RSS Feeds from the New York Times or Wall Street Journal unless they provide feeds that are narrowly targeted to subject matter (if for example they have a feed just for the telecommunications industry). Subscribing to these mega feeds does not move me toward my goals of focused insight. Further, an over reliance on these mainstream feeds introduces a bias of topical omission.
  2. Second, I focus first on subscribing to independent bloggers. Bloggers are citizen journalists. The blog world has evolved to where I can find these "citizen journalists" for virtually any technical or non-technical topic. Software design? Software development methodology? Telecommunications regulations? Venture capital? The United States has a "deep bench" of talent (to use an old sports metaphor). Access to that talent has traditionally been through the filter of mass media. Now you can go directly to their insight by subscribing to their blogs. I spend considerable time looking for "smart" bloggers.
  3. Third, I focus on professional writers and journalists. I go to the blogs of writers and journalists operating in my industry and interest areas. I scan specialized books, journals, and publications (and sometimes subscribe to the publication's feed). I find the "columnists" that seem sensible and insightful. I then subscribe to their blog feeds.
  4. Fourth, I go to Google Alerts and I setup customized Google Searches for things that I'm tracking (typically a person, a company, or a product). Google Alerts is a service that triggers hourly/daily Google search for you and then delivers the results into your RSS Feed. This last item has the risk of generating to many entries so you need to really narrow the search down.

There is a theme to the above priorities. I subscribe to the RSS Feeds of PEOPLE BEFORE ORGANIZATIONS. I look for smart people with knowledge, passion, focus, depth, and insight about something interesting 

There is a reasonable argument that the highly social Twitter could represent the replacement platform for RSS feed aggregators (and that I'm therefore a social media dinosaur). I spend time on Twitter . But in my case, the core Google Reader and RSS still seem more efficient in delivering full form reads in my niches and quirky interests.  Also, there's lots of chat about crowd source methods for filtering or prioritizing news of the world. But that again is always about someone else (or the "crowd") filtering for you. I WANT TO BE MY OWN CURATOR. Or at minimum I want to aggregate many curators to develop my own picture of the world. I'm therefore an advocate for any software platforms that give me broad access to people and long form access to what they have to say.

Finally, here's an interesting point of consideration beyond my original motivation of time and control. I find that if an "important" industry topic emerges across the published media, that I will have picked up on days (if not weeks) ahead of mainstream publications. You get the distinct impression over time that you and mainstream journalists share similar sources. But even if I don't pick up on it, when news does emerge, I have a range of thoughts (narratives) about it immediately.

Thursday
Jan052012

Strategy Consultants and Their Glass Ceiling (Actually Floor)

As many of you know, I spent a decade in management consulting (essentially through the 1990's). So when Walter Kiechel's, The Lords of Strategy: The Secret Intellectual History of the New Corporate World popped up in Amazon, I pulled it down to my Kindle with the idea that I might grab some nostalgia (and hey even have a few shallow thoughts!) for those years spent chasing the billable hour. Walter Kiechel's book is heavily weighted toward Boston Consulting Group (BCG), Bain & Company, and McKinsey. But more interestingly it flows through the intellectual concepts underpinning their consulting work (and the personalities associated with those concepts). I liked it.

Here's what struck me first. Kiechel's book illustrates that the past 40 years have seen an intellectualization of business. Consultants and their pals, the business school professors, became the "intellectualizers" and "analyzers".  In retrospect this is what drew me to consulting. These folks became the "intellectualization monetizers". These consultants and academics built frameworks and methodologies and then applied them to clients. Alas, less frequently, they actually built solutions and solved a problem. OK. I've inserted that "less frequently" in the prior sentence in part because I like causing trouble and to actually make a point. I found that often the management consulting business of the 1990's was a bunch of conceptual tools and methods in search of work. I suppose this had to be so. The industry was growing and could not scale beyond the firm's principal partners without a more formalized tool set and defined service delivery structure.

Here's what struck me second. The flow of methods and frameworks in this book seemed, when viewed retrospectivly in a continuum, as a long series of fadish absolutes. Positioning, core-competence, knowledge management, re-engineering, shareholders, change management. Each absolute was radical, transformative (and urgent!). Each of course justified a consulting engagement. And each added some value (maybe). But each framework was ultimately incomplete or insufficient and therefore ultimately required a redirection or extension into new frameworks (and engagements). It seems clear that the temporality of each construct speaks ultimately to it's intrinsic value. It would be interesting to walk back through all this stuff and assess what aspects have been embedded into business today.

Here's what struck me next. Looking beyond the consulting frameworks and methodology, the consultants core value to a client was an ability to drive rigor. Today, I think and analyze with rigor (so I learned something in ten years). But today I don't really practice "strategy" as an activity. As I read this book, I started mapping my decade as a consultant against my decade as a small company CEO. So how do I view big consulting today from the context of small business CEO? Actually the answer is in a consulting engagement story! I remember my large tech company client that replaced its senior executive in the midst of our engagement. The new executive reviewed and loved (!) our efforts. Then he promptly terminated our engagement. His rationale was that his senior management team members were abdicating their responsibilities in having consultants driving the direction of the company. He also noted more importantly, that the core insight required to proceed was sufficiently established and, as such, he believed that it should now simply be validated through ongoing action and rapid adaptation (rather than further analysis and planning). I remember quietly agreeing. The company’s strategy at this point would advance (evolve) based on continuous execution. The consultants natural limit in creating value had been reached.

Consulting's "natural limit" is reason why the charms of the strategy consultancies don't work "down market" and why I've found strategic planning and frameworks of limited benefit this past ten years: strategy in entrepreneurial organizations seems largely driven from continuous action and adaptation. Further, the need for strategy in some ways is directly proportional to the CEO's distance from products and customers. And for entrepreneurs the distance is just not that great.  So here's the corollary: Since strategy consultants typically structure and analyze, and since they typically don't do action and adaptation (also called the long slog of actually making products and customers) then they are consigned to self standing engagements in large organizations of sufficient complexity that require the (re)discovery, (re)analysis, and (re)structuring of business realities currently hidden from the senior executives. This is not an argument against planners and strategy (by the way I'm indeed ducking a definition of that word) though it may be an argument that strategy in companies like mine is not a project unto itself. Also an aside, in the book, Kiechel cites a budget (I'll call it cash management) process and product alignment to sales opportunities as the "lowest level" of strategy ("do what we did last year ... but better). Would it not be interesting that these are actually the sufficient strategic foundations for entrepreneurs and generally dynamic product-centered organizations? I await the counter arguments.

Finally, in the end consultants don't make products and they don't make customers. This is a strategic planner's "glass ceiling" or maybe actually "glass floor". In reading Lords of Strategy you can see the consulting industry shift in later years to accommodate this need to achieve dynamism and outcomes. In my firm it began with "change management" methodologies and more recently with tight relationships with private equity (hello Mitt Romney). Bain may have had the right idea (certainly from a consulting engagement profitability perspective) in having an embedded long term presence at a client to help translate their efforts into "shareholder value". Considering the tag line "when buying Bain services you are buying corporate profits at a discount", I suspect that Bain's work looked up toward the boardroom and shareholder and to a lesser degree toward the work of making products and customers. Alas, arguing shareholder value versus customer product focus is possibly a false choice or at least grist for the consulting mill's next framework.

Walter Kiechel has a blog if you wish to follow his work. Also here again is his book: The Lords of Strategy: The Secret Intellectual History of the New Corporate World

 

Saturday
Nov192011

Where Citations Come From

Randall Munroe you are a smart and funny man.

Munroe's blog has more than a couple yucks www.xkcd.com

Tuesday
May102011

So Why Am I Writing This Review? It's Because Everybody Made Me Do It.

(I'm pulling my 2008 review of of Here Comes Everybody onto the blog.  Clay Shirky redefines the structure of information sharing in a way that remains in evidence today. )

Here Comes Everybody: The Power of Organizing Without Organizations


So why am I writing this review? Well Clay Shirky would probably tell me (in part) that my sharing of perspectives "anchors community" and that sharing also enhances my standing within the community. So I'm helping build our society (Woohoo. I have a high social conscience!!!) while also enhancing my own social standing (Oops. I'm a social climber?). On the other hand ... I may also be an artful evader of real world responsibility (and what could possibly be a more artful evasion of real work than a book review!). Or on the other other hand, I may be a digital Don Quixote always tilting at intellectual windmills, or I simply prioritize poorly and thus waste energy on unimportant matters like Amazon reviews. I dunno. Let's all decide. Such matters are, per the author, to be understood collaboratively.

More seriously, Clay Shirky is examining yours and my willingness to establish an online personae and our willingness to collaborate freely across the internet (eg. including the rationale for my spending a moment to write this review). Conversely, he explains how and why the internet is structuring itself around the ways we naturally interact with each other. Shirky connects these matters to life in describing how we, as members of one or many little societies, now continuously (re)congregate around people, information, projects, and ideas.

Much (digital) ink is already spilled regarding this book. I will just take a step back and note that Mr. Shirky is chronicling an interesting parallel evolution of the Internet. The internet continues (on the surface anyway) to shift to where the money is: as a global platform for delivering monetized content. Like the old television networks, today's internet content providers of various ilk have created "walled gardens" and private streams of content through their emerging control of end point devices (See Zittrain's "Future of the Internet and How To Stop It" for worries about your cell phone and your television set top box). These providers then create communities for the purpose of monetizing that content (Yes you do Amazon). Social networking technologies are creating the possibiility that we first form our own communities and associations - all for our own reasons - and just like in the real world!. We then individually and collectively introduce and evaluate information within those communities and we collectively enhance and advance that information (or diminish it) - all for reasons distinct from external influence or interest. Clay Shirky details all of this deeply. But most interestingly his insights move us away from a world of often anonymous informational gatekeepers who in his words "filter then publish" and toward a world of infinite individual media sources (you and me) whose generated information is "published then filtered" by trusted individuals and groups. The result is an ever-richer base of information leavened with supporting context and perspective.

Read this book to understand what's sociologically so interesting about Flickr, Facebook, Wikipedia, Twitter, and the such. Here Comes Everybody: The Power of Organizing Without Organizations   Like most of my favorite authors, Clay Shirky also has a blog