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Every business has intellectual property. This usually is represented by the methods the company serves their Customers. Sometimes it comes from analysis work that is done on how to profitably use their products.
For example, your insurance agent might work for hours helping you understand what your risks are for the particular insurance they provide. They will often even help you understand the needed documentation your lawyer will draw up for your particular business plan.
A classic example of this is a buy/sell agreement between partners in a business. A life insurance agent might sit with this Customer and review possible business values, ways of funding a shareholders agreement and methods of resolving conflicts. Your agent then might even attend a meeting with you and your lawyer to make sure the plans are being drafted properly.
The life insurance agent will often do all of this work for no fees. They only have an expectation that when it comes time for the owners of the business to purchase insurance, they would purchase it from that agent. Our insurance agent in this example is giving away her intellectual property to get the commodity sale (the life insurance policy).
We find that this sort of activity happens all of the time.
The rental company gives away consulting about successful parties in hopes that potential Customer uses their company for their rental needs. A manufacturing company provides free engineering services for a possible Customer with the expectation that the Customer will contract with the manufacturer to build the needed equipment. A clothing designer gives away their knowledge of fashion trends in the expectation their Client will purchase their clothing.
The Problem
Over the past year we’ve been observing that almost every business we speak with has been giving away its intellectual property so they can sell the commodity their business provides. We’ve also seen a margin squeeze on core products we sell our Customers. This means we work harder to sell our traditional products and make less money doing it every year.
This issue comes down to a tactical versus strategic decision within our companies. The basics of providing services have become commoditized in almost every industry. We have trained our Customers to treat us all the same and see little value differentiation in the core service we provide.
Our Customers have come to expect excellence in tactical delivery of our products. It’s almost impossible to differentiate ourselves based on the products we provide. So, we’ve moved towards differentiating ourselves through the intellectual property we develop. Unfortunately, we also have given away this intellectual property, further lowering our margins and not taking advantage of the strategic advantages that live in all our firms.
A Possible Solution
We’ve seen some of our Customers learn to sell their intellectual property as another service they can provide their Customers. For example, the insurance agent as part of a comprehensive planning process is able to charge a fee for helping their Clients put together a plan. The rental company might have a fee based planning department that provides a higher level of service that helps take the complexity out of wedding planning for their Clients. Or, the manufacturer puts together an engineering process that can be sold to their Customers.
If you want to sell your intellectual property, it’s important to turn the process you use into a product. In our company, we use Stage 2 Business Planning and The Objective Review as our core intellectual property products. Both allow our Clients to gain clarity around their corporate value propositions and understand the strategic actions that are necessary to help drive their business to the next level.
If you would like more information or support from one of our associates, please visit us online or e-mail us and your Stage 2 Associate will get back to you with more information.
With Warm Regards,
Stage 2 Planning Partners
Stage 2 Planning Partners © 2006
Securities and Investment Advisory Services are offered through Representatives of NFP Securities, Inc. a Broker/Dealer, Member NASD/SIPC and Federally Registered Investment Advisor 1250 Capital of Texas Highway, Bldg. 2 Suite 125 Austin, TX 78746 - 512-697-6000 Representatives listed on this website are currently registered to conduct securities business in the following states: AZ, CO, CT, FL, IL, IN, MA, MT, NC, NH, NY, PA, RI, VA, VT, WA Stage 2 Planning Partners is an affiliate of National Financial Partners Corp., the parent company of NFP Securities, Inc.
NFP Securities is not affiliated with Harris- Murray
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