Pivot Your Business With Intangible Assets In Challenging Times

Posted on 08 Jun, 2021
By Fu ZhiKang (IP Strategist)

IP Strategist Fu Zhikang and EverEdge Managing Director (Asia) Tyler Capson discuss two ways to pivot your business in challenging times to capture new opportunities, and five risks to manage for a successful outcome.

Why are intangible assets valuable?

In recent years, intangible assets have grown to become an indispensable part of a company’s value. According to the 2020 study by Ocean Tomo, intangible assets had accounted for only 17% of value in S&P500 companies in 1975. Fast forward to 2020 and the tables are flipped—these assets have grown fivefold to 90%. For companies listed on the Singapore and Hong Kong stock exchange, about 10% of them have more than 80% of their market value in intangible assets.

Owning strong intangible assets are especially important in innovation when you take your ideas to market. When releasing a new product into a competitive market, your intangible assets not only provide strong barriers to entry but deter competitors from copying your product—whether through the filing of patents or trade secret protection. When you have a copy-proof product that is differentiated in the market, you can command a margin and gain proper returns on your investment in product development.

#1. Pivot your business with core intangible assets

In a global economic crisis such as COVID-19 where companies must transform the way they do business to survive, intangible assets are even more critical than ever. Companies that successfully make use of their intangible assets to pivot and capture new opportunities have turned them into business value.

Case in point: Razer shipped out its first batch of surgical masks within two weeks of announcing that it will be converting some of its manufacturing lines in China to produce surgical masks. By tapping on their intangible assets—the collective know-how of Razer's engineers, they were able to pivot and adapt their machines to produce surgical masks.

Another example of a successful pivot with intangible assets was a diary company selling yoghurt and ice cream. To contain their dairy products, the company developed a unique crushable cup that utilises less raw materials and at a lower cost than their competitors. They were granted a patent on the design of the crushable cup and licensed it to major yoghurt companies globally. With the cup, the company was able to successfully pivot from being a dairy company to a packaging company.

Read also: Intangible Assets 101 For Startups

#2. Pivot your business through partner collaboration

Leveraging on a partner’s intangible assets is another effective way to pivot your business. When repurposing an existing facility into an automated mask production and packing line, Razer took only 24 days to complete this complex set up. How they managed to achieve this feat was by partnering Sunningdale Tech, a Singapore manufacturing consultancy company in the medical devices space. Combining Sunningdale Tech's expertise and Razer's technical know-how, they were able to pivot successfully in a short time.

In the sphere of training, our IP Strategist Zhikang had worked with an enrichment centre seeking to move online. To overcome their challenge of having limited reach and online content, they partnered with other well-branded, non-competing enrichment centres. In the collaboration, all parties were able to pool together each other's intangible assets—brand, database and content and leverage them to achieve greater outreach and expand their programmes offerings. With the new intangible assets generated as a result, they will be able to build greater business value post-COVID.

Read also: Partnering For Commercial Advantage

5 risks to manage when pivoting your business

Pivoting your business involves risks as you could potentially lose a lot of intangible asset value in the process. Here are five risks to be aware of along with tips to manage them properly for a successful pivot:  

1) Confidential information leakage or theft

Most companies experience confidential information leak through their own customers, suppliers and employees. Once this happens, it will be hard to maintain your competitive advantage. When looking to pivot, make sure that you keep your confidential information and trade secrets private and restrict access on a needs basis. 

2) Inability to prove intangible asset ownership

In collaborations where multiple parties contribute different intangible assets in different capacities, there may not be clear proof of intangible asset ownership for either party. This makes it difficult to raise capital from investors or pass any type of due diligence process when seeking to exit the business. When going into a collaboration, define in a contract your background, foreground, sideground and postground intellectual property from the onset. Should you be involved in legal disputes, you can then prove your contribution towards creating the product or service. 

3) Hazardous use of open-source code software

Open-source software code is highly vulnerable to malicious bugs and viruses. With 80% of all software code being open-sourced and used by most companies, it is the number one area where these malicious codes can get into the larger software platform and networks. When using open-source software code, take steps to scan for any malicious code, understand who owns the software code and know your rights of use for any open-source libraries. 

4) Brand ownership and major brand risks

50% of the companies that EverEdge Global has worked with do not own their own brand. Brand ownership is not limited to just owning a trademark. There are many different types of trademarks, wordmarks and image marks and there is a need for enterprises to know which is which and have the right mark in the right category. Seek professional help if needed to manage this properly.

5) Freedom to Operate (FTO) risks - threatened or actual IP litigation risk

As an enterprise becomes more successful and competition intensifies, the likelihood of bigger industry players looking to bring down the company increases as well. Global companies like IMB, Apple or Microsoft have hundreds of patents as they want to own the market and keep competitors out. To keep up with them, you will need to have a good business and intangible asset strategy in place.

Read also: Keeping Your IP Out Of Trouble

Knowing what intangible assets you own and how to use them innovatively is key to making a successful pivot in challenging times. Whether you choose to pivot with your intangible assets or collaborate with others, care must be taken to manage risks properly to capture new opportunities in the market.



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