Skip The Math

By: Bill Harding

wahI commend those of you who read my last post, yet returned despite my talk of “probabilities” and “cost estimation.”  The reward for your courage is this:  NO math!

Plus, a bonus:  Because the World Intellectual Property Organization (WIPO) website does a good job summarizing the application of risk management techniques to the prioritization of intellectual assets (IA) for management attention, I will keep my discussion of the topic brief.

Predicting The Future

Let’s face it:  No one has a crystal ball that’s any better than the next guy’s.  So, when a group of IA auditors try to predict, for example, the chances that a competitor will infringe on a company’s patent, their arguing over setting the probability of that event at a hard number of, say, 78% versus 72% is folly.   For decision making purposes, a coarse measure based on a scale of simply High, Medium, and Low may suffice.  The prioritization discussion could sound something like this:

Auditor 1 says, “We have three formidable competitors in this particular area of technology, and one of them has a history of reengineering others’ products.  So, we should consider the probability that we will be infringed upon by at least one of these competitors to be HIGH.”

Auditor 2 responds, “True, but our company’s development of the next generation product line for this technology is on target for general availability in 10 months.  We plan to drive our current technology to end of life with this new release.  Therefore, the cost to the company if a competitor infringes upon our current technology for a lifespan of nor more than 10 months is relatively LOW.”

Auditor 1, “I hear you.  But because infringement unchecked, even for that short period, may result in conversion of some of our customers who may not come back for our new release, let’s agree the likely cost to the company is MEDIUM.”

Everything’s Important

After a few crisp brainstorming sessions, an IA audit team should be able to present executive management with a list of intellectual asset challenges prioritized by risk.  Hopefully management will find the number of assets at risk with HIGH probability and HIGH cost to be a manageable subset of the full list of IA challenges.

(I suspect you know what is coming next:)  What if all of the IA challenges identified by the audit come back prioritized as HIGH probability and HIGH cost?  That could mean many things:

1) Maybe the audit team did not fully understand the events and or the costs they were asked to analyze; therefore, it’s not the occurrence of an event nor the cost of occurrence that is of HIGH probability, but instead it is their fear of the unknown that is HIGH.  Recommendation:  Don’t manage to fear.

2) Maybe the audit team delegated their duty of analysis to other stakeholders in the company who, predictably (no pun intended), consider their individual parochial interests to be of high priority.  Recommendation:  Don’t manage to competing parochial interests.

3)  Maybe all of the IA challenges in the company really are HIGH priority and HIGH cost.  Recommendation:  Don’t react to being “hopelessly surrounded” by attacking simultaneously in all directions.

In any (or even none) of these eventualities, consider further prioritization of IA actions by the cost (e.g., time, effort, money) and/or by the likelihood of success (“low hanging fruit”) of proposed remedies to the various risks.

Hey, any plan is better than no plan at all.

If you would like to learn more about applying risk assessment techniques to intellect asset management, please follow me on Twitter, and connect with me on LinkedIn.

(Originally posted August 24, 2012)

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