Economist Paul Romer teaches that the value of a knowledge asset "is proportional to the size of the market in which you can sell it." This, of course, is fundamental to valuation analysts whose reports include extensive market and industry analyses. What may not be as understood is Romer's predicate: "Knowledge does not become an economic good until it solves a problem."
When valuing patents or other IP, how much time do analysts and managers spend understanding and analyzing the problem the asset solves? How does it match up to other solutions available? How can it be differentiated? Can that differentiation be monetized? Most of the time, these questions are answered too narrowly, defined by a specific product or service. Much as companies struggle with corporate mission statements (ref. Railroads or Buggy Whip companies), IP managers and analysts need to undertake a thorough testing of all hypotheses of an intangible asset's value.
Patent Baristas applies this reasoning to the value of patenting an invention, stating inventors need a business plan that not only describes how long they are going to need IP protection and honestly evaluates an organization’s willingness and wherewithal to protect a patent, but also looks in frank detail at exactly how an organization is going to make money from the invention: what problem does it solve and how big a market is there for that solution?
Mary Adams has developed a series of steps to help companies understand and capitalize on the intangibles side of their businesses in a way that businesspeople can apply to improve their own operations. Company managers, technology transfer officers, M&A and valuation analysts will benefit from an enlightened and stimulating presentation of these processes on September 20.