Intellectual Property (IP) is the primary asset and source of profit for people businesses like consulting.
In a consultancy, IP refers to the knowledge, experience, tools, techniques, case studies, training materials, client lists, relationships and similar assets that belong to your firm. However, in more cases than not, these assets exist in the minds and on the computers of individuals within your firm. Unless IP is securely imbedded internally, this poses risks to your business: if the individual leaves your assets leave too!
There are three main benefits of building IP into your firm:
- Speed up growth
- Increase competitiveness
- Build equity value
Speed up growth
Faster growth is achieved through leverage. Leverage occurs because knowledge can be packaged into consulting tools used in delivery processes. This makes it easier to induct new consultants and reduces reliance on senior consultants by enabling junior consultants to deliver at a repeatable level of high quality to the client, which in turn, delivers higher project profitability.
By utilizing the knowledge and experience from senior consultants, you should produce publications that expose your content to a wider audience and consequently, increase credibility within your space. Additionally, if you package content into consulting delivery tools it will increase client reliance on your IP and make it harder for your competitors to encroach on your relationships. There is something very elegant about increasing client dependency on your firm and reducing your reliance on senior consultants in the process.
Build equity value
If you are considering selling your firm, building IP internally removes growth constraints and induces scale-ability, which results in an increase of equity value. Your buyer can take what you do with 50 consultants and quickly leverage your process to 1000 consultants in new clients and markets. Additionally, by extracting the knowledge from your staff it reduces the fear that buyers may have of your employees leaving your firm following the acquisition, taking clients and methods with them. Losing key staff is less of a threat to the buyer if IP is securely imbedded into the fabric of your firm prior to acquisition.
How can you capitalize on your IP?
Setting up an effective IP development and management process that harnesses knowledge and utilizes it both internally and externally is vital. This could be in the form of case studies for marketing purposes or publications directed at your target audience to build credibility.
The most important driver to capitalizing on your IP however is to package it into consulting delivery tools that provide the leverage discussed earlier.
If standardization isn’t firmly imbedded within your firm, the opportunity for inconsistencies may appear. The goal is to create tools using scale-able technology that results in a more efficient delivery of client projects, which in turn, produces consistent results.
These tools should ideally:
- Combine wisdom of the firm into one set of diagnostic questions
- Act as a knowledge base for supporting content for consultants and clients
- Be easily implemented using online technology
- Link the gap between current performance and potential to a cost or value
IP is one of our 8 Levers of Equity Value. The 8 levers contain 80 of the most important measures that a sophisticated buyer would look at to evaluate the risk in your business. Read our article to find out more.