The SME India -SMEs need to learn innovation management, owning one IP likely to increase growth by 21%: Tarun Kumar Bansal

As an entrepreneur would you believe you could possibly source 21 percent growth only by owning one IP? Yes, it is possible.

SMEs need to focus on their innovation management and ensure their innovation gets patented, explains Tarun Kumar Bansal, President, Sagacious IP, leading global IP research and consulting firm. In an interaction with TheSMEIndia, he explains how SMEs need to approach innovation and patents for their innovations. Edited Excerpts:

Q. How can SMEs think of innovation management?

Industry research shows that SMEs that own at least one IP right are 21% more likely to witness growth. Likewise, they are 10% more likely to become a permanent high-growth firm (HGF). Despite this, in 2018-2019, only 607 patents were filed by Indian small entities in India.

However, this does not mean that small and medium-sized enterprises (SMEs) are not innovative. During my personal interaction with SMEs, I have found that their management as well as employees are highly innovative. Then why does the number of IP Filings not reflect this? The reason is that SMEs are not managing their innovations properly and don’t have the right processes to capture and secure IP rights.

In this case, top management plays a crucial role when it comes to thinking about innovation management as it can ensure continued success and expansion of their businesses. Innovation Management as a process can be kicked off by organizing awareness sessions for employees and defining roles within the team.

Q. Cost happens to be one of the biggest factors to drive this. How can this be looked at?

Many organizations in India still perceive IP as an expenditure in their annual budget and consider it something which is beyond the reach of a budding enterprise. Lack of resources and awareness at organizational level often drives enterprises to keep their innovation hidden to avoid the costs of IP protection. Eventually, these enterprises tend to overlook the likelihood of accidental disclosures, which ultimately leads to snapping of IPs out of their hands.

I agree that a full-fledged IP regime can occupy a significant portion of working capital, especially if protections are also sought globally. However, having said this, companies can still not forgo this indispensable process and optimizing expenditures related to IP can be a wise choice.

Below are some of the ways in which companies can optimize their IP costs:

Choosing Inventions to Protect Wisely and Searching Prior Art Before Patent Filing – All inventions aren’t patent worthy. Having a proper process to review and choose the right inventions to protect is a crucial part of innovation management. Further, for selected innovations, conducting a prior art search or patentability search to determine whether an innovation is novel or not is a crucial step.

Patent Landscaping –A patent landscape helps in analysing the evolution, trends, and current reach of the technology so that companies do not end up reinventing the wheel. Sometimes, solutions already exist in the market, and it may prove to be cheaper to simply obtain licenses to existing patents.

Out-Licensing: Apart from generating revenue from your IP, out-licensing can help you create IP cost-effectively, especially in countries with developed IP ecosystem. Accordingly, companies may find and negotiate with partners in various countries to not only license/practice the given invention but also to pay/share patenting costs in their jurisdictions.

Regular Pruning the IP Portfolio – As maintaining existing IP rights could be an annual cost, it may be a wise choice to annually review all the IP rights held by a company and do away with the rights that may have become obsolete.

Lastly, Government of India offers significant incentives to companies looking to create IP rights in India or abroad.

Q. How can SMEs look at strengthening IP frameworks?

Large corporations operating on a multi-national level often have strong IP portfolios that enable them to compete with their rivals. While this is one side of the business spectrum, the other side is populated with SMEs.

SMEs are resource-constrained and thus every IP investment made by them must ensure exclusivity/timely protection and support scaling-up of the business. They must also not miss protecting their important innovations that can help them compete against their large rivals. Accordingly, SMEs must have proper framework to both protect their unique knowledge for exclusive use by them as well as processes to fully leverage IP. The best way (as explained in next answer) is to set up an innovation management process, define responsibilities properly and have right incentive policies for inventor/innovators.

India has been innovative in multiple industries. But what stops SMEs from going to the next level?

Patent filing statistics (see below) published by the Indian Patent Office show that most of the inventions originating in India, nearly 40-50%, come from natural persons and start-ups. Furthermore, SMEs in India are lagging in terms of registered IP rights which is unlike most other top patent filing destinations.

The above graph clearly implies that India is thriving on individual excellence rather than on proper innovation management processes and protocols. This implies that Indians are highly innovative when working alone and/or have decision-making powers. But while working with corporations (of any size), their focus changes. In contrast, Indians are leading innovation and patent filings when working in foreign offices of MNCs and this further indicates that Indians can do wonders if they’re given the right amount of knowledge and environment to do so.

Q. Global competitiveness to improve IP/Patent filing? What’s the way ahead here?

Increasing global competition will surely increase IP awareness and policies in Indian SMEs. With more and more global companies eyeing India as a lucrative market, consumers will be spoilt for choice. SMEs will be unable to sell products with old technologies and due to the threat of IP litigations, they will not be able to copy latest product features of global MNCs. Hence, companies will have to innovate or use IP strategically to overcome these issues and remain competitive.

Below are some steps that SMEs can take to move forward with Innovation Management, IP creation, and IP Utilization.

Increase IP and Patent Awareness in Organisation – Organizations can build more IP and foster innovation by creating a level of awareness and education about patents and other IP assets.

Encourage Innovation among Employees – Organizations can establish a process of monetary and non-monetary rewards for employees working on and developing economically viable innovations/patents for the organisation.

Make Organisational Resources More Accessible – Increasing employees’ access to organisational resources for the purpose of experimenting and producing innovative inventions, can significantly boost the innovation.

Make Idea Submission and Review a Very Easy Process – To encourage more employees to submit new patent-worthy ideas, a quick and easy idea submission and feedback process providing will go a long way.

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