With intellectual property (IP) and intangible assets accounting for a greater portion of corporate value to become significant management resources for competition or otherwise in recent years, more companies are casting a keen eye on the efficient use of their IP. This is because IP can potentially be a critical item for business that fends off potential competitors by building an entry barrier from as early as the planning stage of creating new businesses or innovations.
What strategy is guiding OMRON's IP initiatives? Here's a report from Cambridge Technology Partners, a long-time supporter of improvement/innovation by the OMRON Technology and Intellectual Property HQ's Intellectual Property Center ("IP Center").
Some say that Japanese companies are slow to put their IP to effective use. Statistics show that IP and intangible assets at Japanese companies make up a significantly smaller portion of their corporate value than their U.S. counterparts*1. To overcome this situation, the Financial Services Agency of Japan stipulated that "(Companies) should also provide information on investments in human capital and intellectual properties in an understandable and specific manner, while being conscious of the consistency with their own management strategies and issues" in the 2021 revised version of Japan's Corporate Governance Code (principles that public companies should refer to as a guideline for corporate governance). Then, the fall of 2022 saw the launch of the "IP and Intangible Assets Executive Forum," which comprises top executives and experts from over 50 organizations, including government agencies, about 30 leading companies, institutional investors, and educational institutions. OMRON is among the proud founding members.
Since 2015, OMRON has championed ROIC (return on invested capital) management and disclosed its status proactively. ROIC is a financial indicator that measures how efficiently a company generates a return on invested capital. It indicates the company's current profit-generating capability. In the context of ROIC, consistently utilizing IP and intangible assets for business opportunities is tantamount to investing in future growth and can improve the company's ROIC down the road. At OMRON, the IP Center supervises governance of all of its IP and intangible assets, drawing up, implementing, and overseeing IP strategies for technology development, new business creation, and innovation of existing businesses. Perceiving such initiatives as a driver of corporate value enhancement, the IP Center is engaged in an expanded scope of initiatives for IP and intangible assets, which covers technology, know-how, and human resource development, as well as traditional IP initiatives focused on patents. In recognition of these endeavors, OMRON has been selected as one of the world's most innovative corporations and research institutions (Top 100 Global Innovators) by Clarivate for seven consecutive years since 2016.
*1 IP-Driven Management Ranking, p. 29, Nikkei Business July 17, 2023 issue
As a way to achieve OMRON's long-term vision, "Shaping the Future 2030 (SF2030)," the IP Center has come up with a value creation story linked to the utilization of IP and intangible assets, in which it gives concrete shape to a business model of implementing "ambidextrous IP activities" that combine the "exclusive type" and "sharing & inclusion type" with optimal balance.
As its name suggests, the "exclusive type" IP initiatives intend to use IP exclusively without sharing it with others in a bid to boost sales and market shares of in-house products. In more concrete terms, it refers to taking out patents for IP created by the technology or product development teams and weeding out infringement and unauthorized use of patents. Also important is taking necessary action in corporate brand infringement and unauthorized use cases. As the business and social environment continues to evolve, the OMRON trademark is being applied to an increasingly broader scope of use. Through cooperation with its counterparts in the U.S., Europe, China, and Asia Pacific regions and international subsidiaries, the IP Center is proceeding with the application/registration of the OMRON trademark in countries across the globe while monitoring infringement cases of the OMRON brand by third parties to detect such incidents early and act accordingly with the specific circumstances and pertinent laws and systems of relevant countries in mind. Among a variety of cases that warrant their attention are unauthorized use of the company name and fake accounts on SNSs, but one that is becoming ubiquitous is selling counterfeit products online, which they are dealing with through collaboration with e-commerce websites and customs offices in various countries.
The "sharing & inclusion type" IP initiatives, on the other hand, place value on alliances with partners in order to achieve a value creation story for each business. By mutually sharing IP that others need, this type of IP initiative intends to expand the business ecosystem to foster the growth of the market while helping to enhance OMRON's position in the business ecosystem. To promote the sharing & inclusion type IP activities, it is necessary to take every opportunity available to become a party to collaborations with various stakeholders inside and outside the company and judge the qualities of IP. For instance, while utilizing IP information held by customers/partners, they need to analyze the needs of intended customers, structuralize their technological challenges, and follow the cycle of hypothesis testing efficiently by giving concrete shape to business hypotheses and setting development themes. While verifying new applications and potential business opportunities, they elaborate IP strategies for the entire ecosystem with an eye toward partner strategies. In some cases, they take one step forward to have repeated discussions with their partners as they disclose each other's know-how. This being the case, it is essential to conclude a patent-sharing agreement or jointly make application plans.
As mentioned earlier, these activities play a vital role in building barriers against would-be entrants at the planning stage of creating new businesses or innovations. It is thus crucial to promote IP activities by combining the two approaches in optimal balance, bearing in mind each business's characteristics and value creation stories.
In a bid to lead the company to sustainable growth by continuously creating new value with intellectual property, in 2018, the IP Center identified its own mission and vision, which has served as a course of action for its members for five years. The members always carry a special card with their mission and vision, which they can refer to when they waver about what to do in their day-to-day business and decide what action to take as the occasion demands. When drawing up the mission and vision, they involved every member in discussing its content and how to live up to it at a "Future Session,"*2 rather than merely sharing what was conceived by management. Throughout the three-month-long meeting, the members were encouraged to offer their opinions voluntarily and continually. At the end of the day, this formative process of the mission and vision greatly helped to foster the members' autonomy. As one member aptly recalled, "The conclusion we have painstakingly drawn is indeed important, but I was made to realize that even more important than that is the process of us putting our heads together."
"We bring the IP specialists together from diverse fields and continue to create innovation," "We enhance our presence to our competitors offensively and defensively."--One can see that they have already stated a thought that breathes life into their drive for success in "ambidextrous IP initiatives."
*2 For the story leading up to holding a "Future Session," please visit the website of Cambridge Technology Partners, our supporting partner.
For us to contribute to the enhancement of corporate value and business success through IP initiatives, it is essential to align the three departments of business, technology, and IP with each other. At OMRON, these three departments work closely with each other while pursuing their own strategies. The high-level IP strategies thus formulated hold the key to business success.
As business becomes increasingly complicated with technology evolving dramatically in recent years, we must formulate more advanced strategies. However, no matter how advanced the IP strategies we develop, it is meaningless if they are not implemented, which would be as if we have no strategies at all. Needless to say, it's "people," or the members of the IP Center, who carry the strategies out. If such "doers" don't have the will to achieve something by any means or weave a never-seen-before future, such strategies end up getting derailed without achieving any business success. Hence, the meaning of us having the mission and vision. For the mission and vision to function, it must be "our mission and vision" that is down-to-earth and gives us a burning desire to realize it, not something that is generic and off the shelf. I must say that the members found it highly challenging to come up with such a mission and vision through concerted and collective effort. Somehow, we ended up having all members cooperate in fulfilling this task as it all started when one member said, "We should have our own mission and vision" when we were discussing the raison d'être of the IP Center. It is not too much to say that this mission and vision are what defines the IP Center that we are a part of.
Going forward, we at the OMRON IP Center will remain committed to IP initiatives, always keeping the mission and vision -- our flesh and blood -- in our hearts.