How the Neglect of Innovation Nearly Cost Britain the War Against Hitler

One of the many lessons we should remember from Word War II is that England's neglect of innovation nearly cost it the war against Germany. This is a minor but important aspect of a major new book on England's fight to survive in World War II. In Churchill and Orwell: The Fight for Freedom by Pulitzer-prize winning author Thomas E. Ricks (New York: Penguin, 2017), we learn about some of the reasons England struggled to defend itself from Germany. A key weakness discussed by Ricks was England's poor state of preparation with inadequate machinery, feeble industrialization, weak supply chains, etc., that made it hard to fight a serious war and led to embarrassing disasters like the rapid loss of Singapore, their imagined secure fortress in southeast Asia.

Closer to home in Europe, Britain often had a hard time just moving their troops around -- they often had to walk -- and the Brits were amazed at how quickly their American cousins could mobilize when they came to the rescue. Why was England so poorly prepared?

England, of course, was the birthplace of the Industrial Revolution, yet by the time of the War, they were far behind in many of the basic technologies they would need. How could this happen? Ricks provides helpful insight in this passage from pages 203-204:

Managed by family members more interested in reaping dividends than investing in new machinery and other gear, “British firms were unable to adopt modern, best-practice technology,” concluded business historian Alfred D. Chandler Jr. As a consequence, Britain’s brilliant university research generally did not make the transition into factories. Britain had led the first Industrial Revolution of coal and steam power, but generally sat out the “Second Industrial Revolution” of the late nineteenth and early twentieth centuries, built around oil, chemicals, metals, electricity, electronics, and light machinery, such as automobiles. By the end of the 1940s, it would have neither an empire nor an economy capable of competing with those of other major powers. As Correlli Barnett put it, the reality was that by the time World War II ended, the British “had already written the broad scenario for Britain’s postwar descent to the place of fifth in the free world as an industrial power, with manufacturing output only two fifths of West Germany’s.” Interestingly, Barnett was the keeper of the Churchill Archives at Cambridge University from 1977 to 1995.

Something similar happened in China, which once led the world in innovation and GDP, but from the Qing Dynasty until the late 20th Century, in part due to apathetic leaders unwilling to invest in or even open the doors to innovation and technology, China missed out on much of the Industrial Revolution. Only through massive reform and exerted effort in recent decades has China begun its return to a position of global leadership in innovation, IP creation, and economic growth.

In the paper industry, which I've been close to for many years, it's clear that the American paper industry has largely fallen into the same trap that nearly cost Britain its freedom and did cost many lives unnecessarily. The American paper industry has largely failed to invest in new technology and relies heavily on antiquated paper machines and pulp mills that are decades behind what we have in Asia (China and Japan in particular). Their slower, less efficient machines and less efficient plantations put them at a distinct cost disadvantage. Instead of taking steps to compete better, the US industry too often tries to rely on protective legislation to raise tariffs on imported paper and make everyone in the nation pay much more for their paper than they should. The real problem is not Chinese competition, but American businessmen falling into the same pattern that nearly cost Britain the war: focusing on immediate profit and dividends while neglecting the future.

Each industry, whatever it is, needs to build for the future with investment in innovation and a willingness to boldly cope with the threats and opportunities of disruptive innovation. If your industry is dominated with leaders who feel like they can just milk their business as a cache cow with no need to invest in the future, that industry will fail.

Recognizing a Major Chinese Innovator: China's Answer to Gutenberg

For those interested in the contributions of China to innovation throughout history, a significant event will take place in a quiet little Midwest town this month that may interest you. On October 15, 2015, the  Paper Industry International Hall of Fame in Appleton, Wisconsin will induct six people into its Hall of Fame. This unusual industrial hall of fame has around 120 or so honorees at the moment, mostly North American and European business leaders and scientists. This year, though, one of the new inductees is an innovator and leader from ancient China who can be considered as China’s answer to Gutenberg.

Gutenberg is frequently honored as one of the most important inventors ever for giving us the world’s first book printed with movable type. The printing of Gutenberg's Bible was a remarkable achievement from around 1455. As with many inventions long thought to have had European origins, there’s a touch of Eastern flavor in this one, for Gutenberg’s work came 142 years after the world’s first actual mass-produced printed book made with movable type, a Chinese book you probably haven't heard of. It's the large Book of Farming (or the Nong Shu) from China, printed in 1313 by Wang Zhen, as Wikipedia explains.

Wang Zhen was an official in central China in a difficult economic era in which famine was a serious risk. He recognized that vast amounts of agricultural technology scattered across the nation needed to be preserved to help all of China reduce famine and be more agriculturally productive. To achieve his quest of broadly spreading and archiving information, he took a Chinese invention, movable type, and improved it to create a practical way of organizing and selecting individual characters to print an entire book.

He used carved wooden blocks for each character, and developed a sophisticated way of arranging them on two rotating tables to allow typesetters to quickly find needed characters to place them in his press. The Nong Shu was printed and preserved many notable inventions in China, including an early form of a practical blast furnace for making molten iron driven with a reciprocating piston attached to water works, something long that to be a later European invention.

Recognizing Wang Zhen in the Paper Industry International Hall of Fame (PaperHall.org) for his important role in the advance of printing and, indirectly, the growth of the paper industry, is a significant step.  I look forward to many more Asian inventors, scientists, and business leaders being recognized in the Hall of Fame in future years. The historical contributions of China in numerous fields have received far too little attention, and I’m delighted to see folks in Appleton taking the lead in rectifying this problem. Kudos to the Paper Industry International Hall of Fame!

Open Innovation and Intellectual Property Trends in China

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China is undergoing a revolution in the realm of IP and innovation. In just 3 decades, China has gone from no IP law to leading the world in patents filed and litigation to enforce patents. The level of innovation in China may well be the next big surprise for many in the West.

“Open innovation” is often used to describe collaboration with outside partners to accelerate innovation. Dialog about open innovation frequently assumes that it is recent and Western, but successful open innovation is not unique to the West. Innovation via cooperation between unlikely partners has been a characteristic of China for centuries. Relevant terms are guanxi (often translated as “relationships”) and yuanfen (fate that brings partners together). In China, guanxi and yuanfen have allowed proximity and chance to bring business partners together when there was a basis of trust, resulting in innovative alliances. The fusion of skillsets in China’s manufacturing economy often stems from collaborative innovation, though the results are often decried as merely the machinery of copying.

Accelerated innovation in China, including advanced systems for responding to market feedback, is the subject of a report from the MIT Sloan Management Review, where Peter Williamson and Eden Yin survey China’s innovation in rapid manufacturing and parallel engineering. A key element is obtaining feedback and innovation concepts from outside partners or customers. The cited example of Mindray Medical International, China’s largest medical equipment maker, shows how R&D fueled by rapid response to outside feedback enables advanced new products to launch four times as fast as foreign competitors. This is not old-school copying, but the impressive fruit of aggressive open innovation.

Many more examples could be cited, such as Lenovo’s rapid acquisition of foreign patents to fuel entry into new areas, or Wuxi Pharma Tech (NYSE: WX) and their collaboration with Germany’s Targos Molecular Pathology to support WuXi's bioanalytical work for pharmaceutical customers.

The global IP community was surprised in 2014 to learn that a Chinese paper company had secured 8 billion RMB in funding (over US$1 billion) backed by its intellectual property. The story was reported in a Chinese paper-industry publication in March 2014, and a few days later we had the privilege of reporting this story to the Western world on the Innovation Fatigue blog, which was in turn quickly picked up by Intellectual Asset Management (IAM) magazine. IAM’s blog noted that this deal is one of the biggest IP-backed loans in history.

The company, Tralin Paper (Quanlin in Chinese, or Tranlin in recent US stories), has a modest portfolio with around 100 Chinese patents, several internationally-filed patents and a few trademarks. Their technical strength is in creating paper with natural characteristics from waste paper and straw. Even if guanxi rather than IP was behind the financing, the fact that IP was used as publicized basis for the deal underscores the increasing importance of IP in China and the diverse ways in which Chinese IP can generate value. For Tralin, even if the IP were window dressing, its role even as a prop at a minimum provided PR value and strengthened Tralin’s position as thought leader in its niche. The most reasonable assumption is that IP also provided direct financial benefits, not just window dressing.

In the US, where Chinese innovation and IP is often deprecated, the impact of this deal is being felt strongly as Tralin/Tranlin is investing $2 billion in Virginia and creating 2,000 jobs with the technology they are bringing to US shores. News stories so far have missed the connection between US jobs and Tranlin’s ability to get capital based on Chinese IP, but we hope that Americans might recognize that innovation and IP from China is at least partly responsible for this welcome job growth.

Tralin/Tranlin’s story is part of a landscape in China where entrepreneurs and creative leaders are discovering the many positive uses of IP, including its ability to secure capital and build partnerships. But many Western companies wishing to build partnerships with their technology fear China and the risk of misappropriated IP. This lack of trust is being addressed gradually as China strengthens its IP laws and IP enforcement systems. Lawsuits, no matter how fair, are a last resort. Successful joint innovation requires trust directly between parties, and both sides need more successful examples for inspiration. Fortunately, a powerful role model of the technical, cultural, and political bridge-building that can occur in a healthy relationship rooted in carefully-maintained trust can be seen in a remarkable experiment in technology transfer and international cooperation: the Utah-Qinghai EcoPartnership, a unique collaborative effort that is using IP from the United States to solve major environmental problems in China.

To read more about the Utah-Qinghai EcoPartnership, with some interesting photos showing the fruits of this unique collaboration based on respect for IP rights and mutual trust, see the article I published with two co-authors (Edgar Gomez, and Alan Smurthwaite) in the Diplomatic Courier, "Open Innovation and IP Trends in China: Insights from the Utah-Qinghai EcoPartnership."

The Tralin/Tranlin Paper Story from Shandong, China: An Example of Chinese Intellectual Property Creating Jobs--in the US!

In a previous post, I reported that a huge loan had been given to a Chinese paper company backed by its Chinese IP as collateral. The 8 billion RMB obtained by China's Tralin Paper (Quanlin Paper in Chinese, though they use www.tralin.com for their website), one of the biggest IP-backed loans in history, not only shows that Chinese intellectual property is coming of age, but is now being used to bring Chinese technology to the US where it will help create over 2,000 US jobs. Tralin Paper, renaming themselves as Tranlin Paper, has just signed a deal with the State of Virginia, obtaining state support as Tralin/Tranlin/Quanlin invests $2 billion to create a new environmentally friendly paper mill and create over 2,000 US jobs. Recent news  from the office of Governor Terry McAuliffe of Virginia proudly announces the plans of "Tranlin Paper." Also see reports at TAPPI.org and MFRTech.com.

As the West continues to decry Chinese IP and innovation, always viewing China as a source of IP theft and job loss for the US, this story may come as a pleasant surprise. Here is an innovative Chinese company that has created and protected their own IP in a green technology, used innovative financial tools (and plenty of solid Chinese guanxi) to obtain massive financing based on that IP, and then brought their money and their technology to the US to create many jobs. At least some parts of this story are going to be repeated in many ways in days to come. The old paradigm of China lacking IP or lacking valuable IP is fading.

After the announcement at ChinaPaper.net, the first report on this story to the English-speaking world, as far as I know, was my original March 6, 2014 report here at InnovationFatigue.com followed by an update here on the Shake Well blog that gave a translation of the Chinese story. It was picked up by Intellectual Asset Magazine and by World Trademark Review, but is still a generally unrecognized but important story.

China still has a long ways to go in overcoming its problems and strengthening innovation and IP, but the trends here are remarkable and should not be discounted. Meanwhile, we should welcome stories like Tranlin's, and watch for many more to come. But for some US companies, this will mean even tougher competition that won't be easily avoided with restrictive, protective tariffs or antidumping legislation.

(Similar account cross-posted on the Shake Well Blog.)

Chinese Paper Company Relies on IP to Gain 7.9 Billion RMB Loan

March 6, 2014: I recently learned of important news from the Province of Shandong in northern China. A Chinese paper company, Quanlin Paper (also known as "Tralin Paper") has used its portfolio of patents and trademarks to secure a loan of 7.9 billion RMB (about $1.3 billion). The story was reported on March 3, 2014 on the website for the Chinese magazine, China Paper. This deal may be a record for China in terms of how much value IP brought in seeking financing. To emphasize the significance of this development, the normally dry China Paper publication begins with a somewhat flowery statement based on an interview with the Chairman, who expresses surprise and delight at how much money they were able to obtain with their IP. Here's my loose translation, followed by the actual Chinese:

"I never thought that intellectual property could have such a big effect in obtaining this loan. IP was a big part of it," according to Quanlin Paper Company's Chairman of the Board, President Li Hongfa, speaking today to a reporter about the 7.9 billion yuan from bank lenders that began this week. He said that this money will help them rapidly expand and seize market opportunities. Money has been tight for business, and this new addition is welcomed just as the mist-covered earth rejoices in the spring rains from the night before. 

核心提示：“没想到知识产权能在这次贷款中起这么大作用,占这么大比重!”泉林纸业有限责任公司董事长、总经理李洪法今天对记者说,79亿元的银团贷款本周已开始放款,这笔资金对正在快速扩张、抢抓市场机遇但一直资金紧绷的企业来说,就像雾霾重重的大地喜迎昨夜的春雨。

That may be overly flowery for some tastes, but again, this is big news for China and things get flowery when big news is good. This development shows that IP in China can be valuable (though the portfolio includes some international patents, it is mostly Chinese IP). It also shows that Chinese companies, even in seemingly dull industries like the paper industry, can be innovative and create valuable IP. I haven't reviewed their IP to assess its value, but I understand they have over 100 Chinese patents in areas such as technology for using straw and other renewable or recycled materials for making paper, with alleged benefits of enhanced environmental friendliness and cost effectiveness. Shandong Province's IP Office has also created some publicity about Quanlin's IP estate (see the Chinese article here), though this was before the news of the massive loan secured with the help of IP. Expect more publicity from them shortly.

Further background comes from Baidu's wiki-like entry on Quanlin Paper.

When nations develop strong IP systems, companies can use their IP to protect their innovations. This also motivates them to take the risk and spend the money need to drive further innovation, and gives investors courage to fund growth and innovation. In this case, it helped give a lending partner (a Chinese financial organization) the courage to loan a giant sum of money to help Tralin grow. Tralin has been pursuing IP not just for tax breaks it seems but also for strategic purposes, and information coming out about this story shows that they have been developing expertise in their staff to develop their IP estate. Sure looks like that has paid off for them.

This is one of many signs that China is becoming serious about IP and innovation, and not just low quality IP, but IP that can provide significant value. For IP to apparently be a crucial part of such a large loan in this challenging economic times is a remarkably positive sign for China, in my opinion.
On the other hand, the loan may be due to politics and guanxi with officials, and the IP is just window dressing. That's possible. But to even choose IP as the window dressing for publicity and hype is a remarkable thing in it's own right, and still a sign of China's rapid transformation in valuing and pursuing intellectual property.

Here is my loose translation of the China Paper article:

泉林纸业知识产权质押融资创国内最高
Quanlin Paper Crafts the Nation's Largest IP-Backed Financing 

泉林公司以110件专利、34件注册商标等质押获得的这笔贷款,2月21日在国家知识产权局完成备案。经省知识产权局核实,这是迄今为止国内融资金额最大的一笔知识产权质押贷款。 

On Feb. 21, 2014, Quanlin Paper secured a loan using a pledge of intellectual property. The pledge, recorded with the State Intellectual Property Office (SIPO), includes 110 patents and 34 registered trademarks. The Shandong Province Intellectual Property Office has verified that this is the largest amount ever financed in China using intellectual property. 

“这笔资金到位,我们的大项目就能加快推进,市场机遇不等人啊!”李洪法说的大项目,是一个年处理150万吨秸秆的制浆造纸综合利用项目。泉林公司总部位于聊城市高唐县,是一家以浆纸业为核心的大型企业,利用秸秆制造“本色”纸品,变废为宝、环保健康,改写了人们对造纸业的既有印象,也在改变着人们的消费习惯。企业提出这个大项目后,很快得到环保部、国家发改委认可、立项,是全国资源综合利用和循环经济示范工程,也是2013年省重点建设项目。目前,项目基本建设已经全面展开,计划年底前建成,投产后,预计年可实现销售收入81.65亿元,销售税金4.89亿元,利润12.4亿元。 

"With this funding obtained, we will be able to accelerate our large projects. Market opportunities wait for nobody!” said Chairman Li Hongfa. The primary project Li refers to is a straw-based pulp manufacturing complex for papermaking that will process 1.5 million tons per year of straw. Quanlin company is headquartered in Liaocheng City, Gaotang County (Shandong Province). Quanlin’s core business among their large-scale enterprises is pulp and paper manufacturing using straw to create “natural color” paper. Quanlin turns waste into treasure and promotes a healthy environment, transforming both the impression that people have (of the industry) and their habits of consumption. 

After the enterprise brought this large project forward, it rapidly gained approval from the Environmental Bureau and the National Development and Reform Commission. The project is an important program for the nationwide comprehensive utilization of resources and a model project for China’s recycling economy. It was also considered a provincial key construction project in 2013. Currently, capital construction is fully underway and should be complete by year-end. Once production begins, the expected annual sales revenue will be 8.165 billion RMB, with anticipated sales taxes of 489 million RMB and annual profit of 1.24 billion RMB. 

知识产权获资金市场高度认可,对科技型企业无疑是巨大的利好。尽管泉林公司本身的发展就是受益于在知识产权、核心技术上的不断投入——即使在企业资金最困难的时候,这上面也从来没有“短”过,李洪法这次还是被深深地触动了:在这次贷款中,企业拥有的专利评估价值达到了60亿元,对贷款顺利达成起到了关键作用。这意味着,专利等知识产权不仅能垄断市场、为企业创造长期利润;质押融来真金白银,更是能够解决科技型企业成长中最头疼的资金饥渴,释放发展潜力,及时把握市场机遇,让企业“长大”。 

For intellectual property to receive this high level of approval from the market is without doubt a giant benefit for technological enterprises in general. Although Quanlin company's own development has now benefited from their intellectual property, they continue to invest steadily in their core technology—continuing even during the times when investment is most difficult. This is an area where the company has never gone “short.” The result has made a deep impression on Li Hongfa: in the process of obtaining these loans, the appraised value of Quanlin’s patents reached 6 billion RMB and played a key role in successfully obtaining the financing. This means that patents and other IP rights are not just about obtaining a monopoly in the market, but can be used to creating long-term profit for the enterprise. They can be used as collateral for significant financing to resolve one the biggest headaches for high-tech businesses, the hunger for funds to grow, to capture hidden potential, grasp favorable market opportunities, and to let the company “grow up.” 

这一融资方式也让银行对科技型企业增添了兴趣。不仅国家开发银行牵头银团,为泉林公司发放了这笔79亿元的贷款,交通银行甚至还与省科技厅签署专门的战略合作文件,并推出了专门的知识产权融资产品。交行山东省分行零售信贷部总经理姜鲁荣说,知识产权看似无形,却体现了企业价值创造和持续经营的能力,银行业务风险没有增加,却有可能抢占一批优质客户,改善银行客户结构,“就像泉林公司这样”。 

This financing will stir the interest of banks other technology enterprises. Not only did the China Development Bank and their affiliates issue Quanlin a loan of 7.9 billion RMB, but the Bank of Communications also signed a strategic cooperation document with the Provincial Science and Technology Department, and launched a specialized intellectual property financing product. Jiang Lurong, General Manager of the Retail Credit Department of Shandong Branch Bank, said that while intellectual property seems invisible, it reflects value creation and the ability to continue operations without increasing banking risk, and can help obtain more high-quality customers, improve the system for customers of the bank such as companies like Quanlin.

Kudos, by the way, to Dr. Ian Feng of Goldeast Paper in Zhenjiang, China for alerting me to the story in China Paper.

Note: IAM Magazine issued a blog post on the use of IP in lending in China: "Chinese companies have secured over $10 billion in patent-backed loans since 2008" by Jeff Wild, March 4, 2014. The news I share below (cross-posted at InnovationFatigue.com) definitely supports their article. Great timing! Further, responding to the news that I first broke to English speakers on the Innovation Fatigue Blog, IAM Magazine has written a blog post about this story (kindly citing my announcement), wherein they observe just how big of a deal this is. I agree, though I also think it's fair to wonder how much of the transaction actually depended on IP and how much was due to guanxi and other factors. I have not yet evaluated the IP and if I do look at it in more detail, do not plan on sharing my analysis publicly, but may still offer further updates on this story here. IAM's post includes a translation of the Chinese article behind this story. My independent translation above was prepared before I saw the IAM translation. If there are significant differences in meaning, I'll defer to them since my Chinese is still rough.

Cross-posted on the Shake Well Blog.

Changes in China: Moving from Copied in China to Invented in China--Seriously

My two years in China have overturned many previous paradigms that I held, including the stereotype of China as merely an IP copier and not an IP generator. While the West clings to that view, largely discounting the patents and innovation capability of China, a rapid transformation is occurring in which China has taken the global lead in national patent filings and is about to tie with Germany as the #3 international patent filer (expensive, generally high-quality PCT filings). China is now #2 internationally in scientific publications, behind the US but ahead of England and everywhere else. In hot areas like graphene, the two-dimensional carbon nanomaterial that is opening whole new vistas of nano-possibilities, China has a clear global lead in the number of patents filed so far.

In my own innovation-related experiences, I have seen that teams of Chinese college graduates, though often seemingly shy and unresponsive at first when challenged to contribute in ideation and innovation sessions, can, with the right guidance and framework, become as energetic and innovative as any Western team I've worked with. One must understand Chinese culture a little and take some steps like removing the boss from the room and setting up rules and guidelines that make it clear they won't lose face by participating and might lose face (or delay lunch and bathroom breaks) if they don't. Once we get past the initial shyness, it can be hard to get them to turn off the innovation juice.

For some, the biggest challenge in China has been the IP system, which many have felt was too weak and lacked adequate means for enforcement. This is being addressed, and the new 4th Amendment to Chinese patent law looks like it will bring some major steps forward, including opportunities for discovery of evidence and stronger penalties. The trend is clear, though, that China is working to strengthen its systems and is treating foreign IP holders as fairly as Chinese companies in general.

Do not ignore the rising tide of IP and innovation in China. Some extremely importance advances in technology and business models are emerging here. The nations and companies that can respect China and its IP are the ones that will benefit most. The opportunities are staggering.

My Presentation at IP Counsel 2013: Shenzhen Station

March 19-20 was the 5th IP Counsel Congress held at Shenzhen, one of 3 2013 IP Counsel events in China managed by JFPS Group. This was their first year in Shenzhen, and I think it was highly successful. I think about 150 delegates from China and other nations were present, including IP leaders and influencers from Hungary, Germany, South Africa, Korea, Japan, and other nations.

I was especially pleased to learn from IP leaders from some of the world's leading IP generators such as ZTE, the top international filer recently.

 I had the pleasure of chairing day one of the two-conference, and being the lead speaker with my presentation on IP, China, and innovation. I briefly retraced some of the monumental achievements in the history of China, including some major inventions that the West originally thought came from the West but actually started in China. I began with the example of the printed book, and quizzed the audience about who invented the world's first mass-produced book printed with movable type? Gutenberg is a pretty good answer and his Bible was a remarkable achievement, one that came just 142 years after the world's first mass-produced book printed with movable type was created in China by Wang Zhen. Had some fun with that bit of history, and caught a lot of the Chinese people by surprise. Many don't realize how rich China's tradition of innovation actually is.

 Today, many people think of China as a great copier, but China is rapidly and deliberately moving from a copier to an inventor and a leading source of IP. There are still barriers and inertia to overcome, but the goal is being realized and by the time the West understands the significance of this transformation, many players will have missed the opportunity of a lifetime and some will be completely disrupted. Those who recognize what is happening here may more wisely prepare for the opportunities and risks that will be created, and adapt.

China as a source of innovation and IP must not be ignored. But tapping its potential requires a deeper understanding of Chinese culture and business, which is much different that what the West is used to. I gave some basic tips and reviewed the importance of Chinese concepts such as guanxi, yuanfen (destiny in chance encounters), and hexie (harmony).

Speaking at China IP Focus 2012, Shanghai, Sept. 20-21, 2012

One of my favorite recent IP conferences was just held in Shanghai. It was the China Intellectual Property Focus 2012 held at the Doubletree Hotel in PuDong. We got to hear extensively from a recently retired Supreme Court Justice, Judge Jiang Zhipei, who shared much about the development of IP law in China and the bold path China is pursuing. We also heard from Ben Wang, R&D leader for Unilever in China, and from many other authorities from Europe, the US, and especially China.

On the second day, I shared my perspectives about the role of IP strategy in dealing with disruptive innovation, and including some of my thoughts about Chinese companies and the lack of respect they get from the West when it comes to innovation and IP. My main point, though, was that large companies need to have aggressive IP-generators who help mitigate future risks by building low-cost but aggressive IP estates in emerging areas and in potentially disruptive areas. Risk aversion is the battle cry, but the "hidden agenda" is actually to help the company prepare for future opportunities in those areas. With proactive IP filed early, when the business units of the company later recognize the importance of market trends and see or feel the need to pursue areas that once looked a little too non-standard/disruptive for comfort, well, when that happens, it won't be too late as is usually the case with disruptive innovation, but the company will find that they are actually prepared with a foundation of IP that can help them survive and move forward more easily.

The application of "disruptive IP strategy" involves some risk and cost, but the costs can be contained and the potential benefits can be huge. A handful of visionary people can help create future-looking IP much more easily than they can convince the company to change directions and make massive investments in new areas. But that IP can later help save the day when the significance of a disruptive threat or opportunity is recognized, often several years down the road.

There were some excellent questions on this topic, including one about the difference in resources and skills between Western companies and Chinese companies. There was a perception, though, that Western companies must be really good at dealing with disruptive innovation and being proactive with their IP. Not so! They are as clumsy and short-sighted as ever, and the opportunity for Chinese companies to seize the future with disruptive innovation and disruptive IP is great. In fact, it's already happening in some quarters. The need for all of us to be more aware and more proactive with out IP is serious.