Innovation Management in Times of Crisis: Budgets, Acquisitions, or Alternative Options? Insights from Patent Analytics
by Carsten Guderian, on Jun 29, 2021 8:50:51 AM
When COVID-19 came into our lives last year, it placed a burden on all of us in our business and private lives. Whilst we face consequences from the pandemic every day as we begin our days working from home, watch the news or read the newspaper, various consequences resulting from the crisis are currently studied by scholars worldwide. Recent research, for example, Arribas-Ibar et al. (2021), Bloom et al. (2021), and Brem et al. (2021) analyzed technologies experiencing a boost through the crisis. Other scholars focused on the effects of the crisis on research, academia, and businesses (Craven et al., 2020; Donthu and Gustafsson, 2020; Krishnamurthy 2020), particularly small businesses (Bartik et al., 2020) or business model shifts (Seetharaman, 2020). Some publishers even decided to provide open access to all resources related to the pandemic. All provide extremely important insights into their specific areas of research.
To overcome the crisis, scholars suggested various options such as crowdsourcing, frugal innovations, or technological exaptation (Ardito et al., 2021; Corsini et al., 2021; Di Minin et al., 2021; Vermicelli et al., 2021). Inline, we do not focus on revolutionizing the outlook beyond the pandemic, neither analyze its development via case count statistics nor provide guidance on improving vaccination efforts. We focus on economic crisis in general, as, unfortunately, COVID-19 will not be the last economic crises, and what businesses and managerial decision-makers can do to overcome them.
In essence, COVID-19 is a health crisis, with huge implications for the business world and managerial decisions. Experiencing an economic downturn, a key behavior in managerial decision-making is to cut short on R&D budgets in trying to preserve the status quo when faced with reduced demands and financial failure risk. By cutting R&D budgets, managers may save money in the short-term, but risk their firms’ long-term future and longevity. Conversely, the rise of firms like Airbnb or Uber during the 2008 financial crises demonstrate that crises even serve as changes to emerge stronger than before, like “phoenix from the ashes”.
Returning to crisis responses, these decisions must be made fast – ad hoc – and almost always without blueprint plans or data to guide decisions. Hence, business decisions with wide-ranging effects are based on mere chance or decision-makers’ gut feelings only, rendering them suboptimal, imprecise, and potentially even ineffective or inefficient.
But is there a better way? Could surveys or isolated expert opinions help out? Or can decision-makers access comprehensive, objective, and reliable data? We believe the answer is: YES.
In our recent, peer-reviewed paper titled “Innovation management in crisis: patent analytics as a response to the COVID‐19 pandemic”, which was published in the R&D Management Special Issue on “Providing Solutions in Emergencies: R&D and Innovation Management during COVID-19”, we suggest relying on patent data. As Di Minin et al. (2021) described precisely, our paper “emphasi[zed] the role of patent analytics as a tool to pursue different R&D strategies [through a series of cases]. It can be used to increase revenues (via sales and licensing deals) and also to determine cost‐savings, by abandoning patents that are not used. Further to these known management practices, the authors also discuss[ed] how patent analytics can be used to detect key biotechnology firms that are likely to be successful in developing new treatments.”
The use of patent data has a long history in innovation management-related decisions (Conley et al., 2013; Di Minin and Faems, 2013; Candelin-Palmqvist et al., 2012). Firms with strong IP positions tend to perform better, for example via additional revenue streams that can be generated from technology leveraging opportunities. In the same vein, a few early attempts to relate intellectual property and particularly patents to crisis responses exist (Machuca-Martinez et al., 2020; Tietze et al., 2020). Moreover, law firms such as Kilburn & Strode LLP recently analyzed the effects of current crises on patenting (Roberts, 2020; 2021). In our paper, we bridge the gap between crises, innovation management, and patent analytics and complement the legal with a business and decision-making focus.
The reason for this is that patent data is – unlike alternatives – available for all firms that choose to patent-protect their inventions – including small- and medium-sized firms and startups. This is the case regardless of firms’ industrial backgrounds, geographical locations, or reporting and documentation requirements. Moreover, patent data is truly global, objectively collected and – when prepared for analyses, timely available in a systematic and documented manner. Thus, we render it advantageous compared to subjective expert opinions or other forms of data collection such as surveys that may be subject to limited generalizability and require a lead time to obtain – something that crises do not allow given the fast responses that are required.
In our publication, we demonstrate the use of patent data and patent analytics on a set of case studies related to COVID-19. We demonstrate that firms struck by reduced demand and tightened budgets may identify patents that do not contribute to their portfolio and are unused by abandoning them or offering them for licensing or sales. All that is required are patent value indicators, where we rely on derivative measures of the scientifically proven, peer-reviewed Patent Asset methodology. This allows firms to free budgets that can be used to sustain and even grow their innovation activities despite the crisis-induced challenges. As mentioned by Professor James G. Conley from the Kellogg School of Management at Northwestern University: “Relying on patent data to make innovation management decisions in complex and challenging situations– like crises – proves to be valuable, reducing bias and inaccuracy. In their R&D Management paper, Carsten, Peter, Frederik, and Sarbani indicate that the PatentSight data and analytics options, yield valuable insights.”
Further, we demonstrate in additional case studies that insights about firms may be gained by looking into their patent portfolios, as we did for CureVac N.V. that had been in the news in May 2020 for a potential relocation offer to the United States by the Trump Administration. Additionally, we relied on cross-disciplinary research to detect firms likely of providing cures – treatment or vaccination – to COVID-19 based on their SARS- and MERS-related experience.
These findings complement other appliances of patent analytics, for example, analyses of collaborations to the manufacturing of face masks and medical gowns (Chattopadhyay, 2020a) or medical ventilators (Chattopadhyay, 2020b). Future research may also focus on financial returns or investment decisions based on patent analytics incorporating value and portfolio strength differences. Stay tuned – and healthy!
Our study can be accessed free of charge via: https://onlinelibrary.wiley.com/doi/10.1111/radm.12447