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“We Show the Money”

Part of the value of this analysis is that it can go beyond picking winners and losers to offering insight on a company’s technology strategy. Take Dow Chemical. The Midland, Mich., giant slipped from 455 patents in 1989 to 263 in 1995 (although it still patented at twice the industry rate). Meanwhile, Dow was laying out substantially more to come up with each patent than its competitors, while its citation intensity ranked below the industry norm.

But that was only part of the story, because another Narin-Lev measure shows that Dow was getting much closer to the cutting edge: Science linkage had grown significantly, from below the industry average to almost double it. Technology cycle time, meanwhile, ran at the industry average. These two measures taken together indicated that Dow was patenting developments close to the cutting edge of science, as fast as competitors turned out more standard inventions.

The study tracked firms as a group and not individually, and therefore the researchers didn’t check with Dow officials to find out whether these findings did indeed reflect changed internal thinking. But TR contacted Dow R&D vice president Richard M. Gross, who confirms that around 1990 his company did alter its strategy.

The strong science linkage, for instance, stems from a concerted push into new growth arenas that hinged on developing a more fundamental understanding of the science behind both its core existing businesses and promising emerging areas. For example, research into metallocenes-a new class of catalysts used to make plastics with more precisely tailored properties-allowed the company to develop improved polymers vital to everything from cushioning for high-end athletic shoes and sports equipment to thinner but stronger garbage bags.

This science focus was linked to a broader push to raise patent quality. “We had encouraged quantity historically, as a lot of companies had,” Gross acknowledges. Indeed, the since-dismantled patent honor roll at the main R&D building in Midland, Mich., spanned an entire wall, with brass plates bearing the names of top inventors. But as competitive pressures forced Dow’s Inventions Management group-now called Intellectual Asset Management (IAM)-to examine the costs and returns associated with this vast portfolio, it got a shock. “We had a $40 million liability on just patent costs,” relates Sharon Oriel, an IAM manager. “And yet we couldn’t show that other part-what’s the value.”

That wake-up call triggered a vigorous campaign to drop, spin off or license patents that didn’t fit the needs of Dow’s 14 global business groups, and target future patenting more closely on the company’s objectives. Working with Cambridge, Mass.-based consulting firm Arthur D. Little, IAM has developed proprietary methods of tracking patent status, costs and benefits, which it uses to facilitate business group planning. Oriel says this provides a new dimension to measuring innovation that resonates with what the “show-me-the-money” business groups have always wanted from research. Now her group wears T-shirts that say: “We show the money.”

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