Burning the Ships: Transforming Your Company’s Culture Through Intellectual Property Strategy
Authors: Marshall Phelps and David Kline
Publisher: Wiley, 2009 (186 pages)
What it’s about
Marshall Phelps’s reputation as a leader in the field of IP strategy is well-established, most notably as the man behind IBM’s billion dollar patent licensing program. In this book, he recounts his experience as VP of intellectual property at Microsoft and provides a captivating first-hand account of a company using new IP strategies in an attempt to transform itself.
The book is about Phelps, as he tackles perceptions about his new role and internal resistance to change, but it’s mostly a book about Microsoft, a powerful tech company facing many difficulties and looking to IP for its much needed reinvention. For most of the book, the authors follow a chronological progression of events to tell the story of how Phelps put his plan in motion to help Microsoft. In the last chapter, IP is discussed more broadly as the authors discuss the evolving role of patents in economic development and some of the challenges, such as cloud computing and free content models, that will confront current IP regimes.
Phelps joined Microsoft in 2003, at a time where Microsoft was still reeling from both antitrust and patent litigation. The company’s reputation for monopolistic behavior and its defensive attitude towards IP was doing it no favors, especially as interaction with the rest of the industry was becoming more important than ever. First, Phelps sets out to build up the patent portfolio, so as to create more opportunities to exploit the value of the IP owned by Microsoft. Then, he starts to reach out externally: to other companies to collaborate on development and to gain access to their technologies, but also to small businesses and startups, and to the open source community.
Licensing of intellectual property, of patents specifically, is at the core of Phelps’s strategy, and is much emphasized in the book. As Microsoft begins to recognize the “collaboration imperative”, the company starts adopting an open innovation approach in opening its patent portfolio to other companies. In addition to developing a strong licensing program to encourage new partnerships, Phelps’s goal becomes to use cross-licensing agreements to replace the non-assertion of patents (NAP) clause the company had being relying on. The reaction of the industry, and the ensuing interactions with large Japanese companies in particular, make for an interesting read.
What I like about it
The book is unique in offering contrasting examples of IP strategy at IBM and Microsoft. Because Phelps was behind both, and because “IP strategy” has become an unfortunate short-hand for “patent monetization”, it’s easy to assume that the strategy was the same. The authors are careful to point out the distinct goals that the two companies set for IP: licensing revenue for IBM, relationships and collaboration for Microsoft. This juxtaposition underlines the important fact that the IP strategy should be connected to the business model, it is not something to be undertaken without a clear understanding of the business needs.
At a time of heated debates about software patents, I found it interesting to be able to peek behind the scenes of a large technology company, just as it begins to fully realize the power of patents, and as it looks for new ways to exploit them. Phelps has some interesting thoughts about bridging the differences between proprietary software models and open source. Microsoft’s approach with Novell and Red Hat may be controversial, but there are lessons to be learned from its experience. The driving forces that made Microsoft realize that it couldn’t ignore the open source movement, and the challenges in navigating not just philosophical differences but conflicting business models are still relevant for many technology companies.
Should you read it?
This is by no means an “academic book”, or a handbook on how to get value from IP. Practitioners won’t find a detailed strategy blueprint to emulate, but the book does highlight some of the practical challenges of implementing new IP strategies, including the difficulties of getting other people on board with licensing out company technologies. The insider perspective on the back and forth of complex IP negotiations between Microsoft and other companies will be especially appreciated by those who have had to put IP deals together.
Executives from all industries will find good advice on supporting the IP function as part of the business strategy. Chapter 5 stresses the importance of companies’ leadership understanding and prioritizing IP, rather than leaving the management of IP to the legal department. Chief Information Officers and IT executives may also be interested in reading about how IP played a role in Microsoft’s interactions with the rest of the software ecosystem.
Books of this nature are by definition a bit biased, with examples carefully selected to present the company in a good light. Nevertheless, the level of detail on certain issues and the unique perspectives of the authors make this book a must-read for anyone interested in the history of Microsoft. Burning the Ships certainly adds an interesting angle to the portrait of an already complex and fascinating company.
