In this topic, we're going to talk about how innovation value is actually classified in the firm. So innovation has value to customers but it also has value to the firm itself as the organization that produced it. So we're going to look at what sources of value that we can classify for an innovation. And generally speaking, we're talking about human capital, organizational capital, and customer capital, kind of all coming together, as you can see in this diagram where the three circles intersect. That's where the strength of the value really comes together. So we'll look at each on of these forms of value. So Intellectual Capital has basically three parts. The human capital is what it takes to create the intellectual property. The organizational capital, what it is, the resources that are going into supporting it. And then the customer capital is what the customer actually cares about. And it also includes what we call intellectual assets and intellectual property. That's how it's manifested in some patents and other forms of intellectual property or those kinds of things that show up in intellectual capital. Human Capital is the employee experience. What is it that employees know that enables them to do creative and innovative things? The know-how, the years of experience, the particular skills, the creativity, and the motivation. All these things contribute to ways in which human capital supports an innovation. Organizational Capital are sort of the manifestations about how's that captured. We can see that in documents, in drawings. Sometimes in program, software programs. Sometimes, it can be shown in data and research. And sometimes, it can be shown in different processes, ways in which things are done. They're done better, they're done smoother. And they can be shown in inventions as well. So and then third, Customer Capital, and this is where you build customer relationships. You have supplier relationships. You have built a level of what we would call business goodwill, and business goodwill enables you to really capture ideas and needs, innovation needs from users and people in the value chain. And so sometimes that shows up as trademarks or trade names. Or shows up sometimes in the things that are not always tangible in terms of dollars and cents. It shows up in reputation and image. There's some companies that have a high degree of customer capital. They serve their customers very well and those things pay dividends to them. So, let's now look at Innovation Value as an Asset. How are we going to look at that? So we could say Intellectual Property Management actually could generate more intellectual property, and that does yield some short-term returns. Intellectual Asset Management, different intellectual property management focuses on the identity and identifying the value of both unprotected and protected assets. So a company has a lot of things that are valuable, that relate to intellectual property, it has to have a program for managing that. Not everything can be necessarily patented, but some of them, many of these things could and should be protected. And Intellectual Capital Management, this is for you harness the future potential of an innovation. And this is where you have innovation portfolios, you have ideas that somehow are active in the company and you’re managing them as potential opportunities going out into the future. So, Intellectual Property Protection, typically there are five different ways. Patent, that typically almost everybody is familiar with. Copyrights, typically for written work. Trademarks are for the identity of a trade name. Trade secrets, the composition of something. Coca-Cola's formula is an example of a trade secret. And trade dress, how you package something. So, all of these things are innovative ideas that are protected through intellectual property protection. Patent criteria is often based on 3 tests. And it's either must be novel, it must have some utility and it can't be non-obvious. And or it must be non-obvious. And if it is non-obvious, then it must not be obvious to a person with ordinary skill and ordinary skill in the field in which the idea is there. So here are the different Patent Categories and they are just classifications of patent categories. So now let's look at Value Creation. We can generate new knowledge and innovations converts into commercial value. When you have new knowledge, you can generate that by training. You can generate that by customer and market knowledge. You can generate that by capturing lessons learned. Or you can draw from a corporate knowledge base. All of these different sources have the possibility to generate value. So, some are different Value Capture Options are you can sell that innovation. You can license it. You can place it in a spin-off venture. You can merge with some other organization that maybe needs that value, that innovation value. Or you can create strategic alliance, or a joint venture. You can have some kind of an agreement with a manufacturer or supplier. Or you can have some kind of an open innovation agreement. And so there are a variety of ways in which you can capture the value and make it work outside of your own organization. And so extracting that value, you can do that in a variety of different ways as well. And so the methods and strategies for converting new knowledge and innovations into commercial value in the marketplace range from intellectual property protection and selling some of those same examples we just saw. Ways of licensing innovations for use by others. Technology transfer, mechanisms that you can use for delivering the innovation's value to others and that could be a license arrangement. Or open innovations where you have an alliance with some firm or some other organization that needs what you've got. And you need something they've got and so it's a give and take arrangement. And so open innovation can enable you to extract the value of an innovation. So the takeaways of this module, is that really technologies transfer is one strategy, one option, for capturing innovation value. It's an important one. It's fairly well practiced. Intellectual property can be part of an open innovation strategy. Understanding an open innovation strategy can open up a range of opportunities. And finally, innovation property transfer actually also opens up many options to share and capture value of an innovation not only for you, but for the other party that is receiving that.
