The IP Prism™ is the tool that we use to help Little Blues see their businesses differently, which is also, hopefully, means to see them correctly. I recently participated in a forum on the “Role of IP in a Down Economy.” Ironically, the IP Prism has the same role in that discussion as it does in times of boom. The reality is that many businesses are finding today that they are either businesses by contracting services and have markets that address only what they do best and most efficiently. Others are looking to expand because competitors are faltering, and often finding efficiencies and advantages that occur through IP. Companies of all sizes have moved from a thirst for unbridled growth to a yearning for measured sense of security (and, hopefully, survival).

Partnership opportunities exist in this kind of market, but the terms and motivations are often wildly changed. In a downturn it can mean finding someone who needs to offload items they considered doing in –house in the “boom time.” Or perhaps it can mean ending in-house development efforts in favor of the “work of others” who are external to the company, and which has a greater chance of yielding a product.  In either case the nature of partnership in this market is often rooted in survival, whether it be related to the survival of the entire company (for small businesses) or the survival of market capture and aspirations (for the large companies). More than ever, the nature of those partnerships center on the IP potential partners can bring to the take, or what they believe that you can bring. There are still partnerships to be had, and they still find their basis in IP, but now the motivations have changed—gambles are replaced by risk mitigation strategies. But IP is still the yardstick for achieving the goal.

Likewise, as companies expand and contract, the exercise of changing staff and contractor levels should re-emphasize the importance of capturing and tracking your IP rights and assets.   Again, the motivation behind turnover and change has altered buyout—not the things businesses need to do to create a reservoir of value and rights. So while we talk about all the market-entry rights that you should capture, make sure today that as the size of your company likely shrinks, that you capture log books, and refine your retention and rights procedures.

IP in this kind of market is still a source of incremental revenue. Today, however, you may look to use the “incremental revenue” from less core-related IP to keep the company running. It may now be an asset that you’re willing to deplete in current market conditions. At the same time, make sure you understand what you replace this IP with as you spend it so that you still have a source of incremental activity in the future.

As for the scope of your business, it is likely that the market is giving you an idea of where to focus most intensely.  While that makes sense, choosing what you define as your core business becomes even more important.  Your IP resources to support it must be sufficient to cross whatever finish line you select. At the same time, you have to make sure that market associated with your choice will survive the downturn. Thus your focus, and the scope that you select, has to align at the company level and the larger, external environment.  This was the case two years ago when the world market was your goal, but today is a wrong choice. A strategy not capable of passing both tests can prove costly.

The markets, especially the financial markets, will judge all of this brutally in the down market. Banks, VCs, and angels are all dormant.  The competition for what little capital is being offered is being underwritten with great scrutiny. The measure of your business by the financial markets will likely be a microcosm of your management of IP, and how it ties to the economy. Missteps and errors, whether of omission or commission, will be judged as indicators of your likely survival, which means judged harshly.

Ultimately, the prism offers the same guide we recommend in good times. But in down times it is a very different terrain making it a very different ride.