Recent WSJ and HBR articles argue that multinationals must learn a decentralized, local-market model of innovation, termed "reverse innovation," to drive their future growth. In this model, each local business unit (LBU) sets its own business strategy and develops products tailored to traditionally underserved markets. However, thus far none of the articles or commentary appears to address the important issue of intellectual property (IP) protection in reverse innovation.
The LBU cannot simply rely on the centralized corporate- or division-level IP strategy for either offensive advantage or defensive protection of its unique innovation efforts. Rather, we would suggest that the LBU support its product and market strategy with its own business-aligned IP strategy.
Fortunately, the LBU doesn't need many corporate resources to formulate this nuanced strategy. From corporate, the LBU must borrow the organization's high-level framework that guides the overall use of IP (presuming that this exists). In the case of multiple LBUs, the corporate framework might include processes for managing and sharing IP across LBUs.
In formulating the LBU's IP strategy, the primary inputs include:
The resulting IP strategy and corresponding tactics will answer or respond to LBU-specific business, legal, and technical questions, such as:
By aligning its IP strategy with its local product and market direction, the LBU can capitalize on opportunities to gain sustainable advantage in its new markets, e.g. by creating an IP barrier to competitive entry. Similarly, with an aligned IP strategy, the LBU can defend against threats to its products' key features, e.g. stopping copy cats. The centralized corporate- or division-level IP strategy will need refining to support this new model of innovation.