For service industries, intellectual property issues are not as visible or top of mind as in other industries, such as product design and manufacture. Yet, considerable intellectual property is developed through providing services, and it is rarely scaled or capitalised upon for more than just the job for which it is developed. This is a missed opportunity for commercial growth.
In a tech-based industry there are many formal IP protections available, such as patents and design registrations. These often do not apply to service industries – but it doesn’t mean that there are no other IP assets that service industries can capitalise on.
Developing an IP strategy for service industries has its own set of challenges – some of which are explored below.
Commonality
The provider of a bespoke service is naturally focussed on the client’s particular needs. So much so that they often do not realise that the methodology they use or the tools they develop can be applied to other clients, and such things can also be capitalised on by competing service providers.
In not exploring the value of their IP, service industries often miss out on additional commercialisation opportunities. Further, unnecessary publication of their reports and/or service methodology can give competitors unwitting guidance as to how they can compete with similar service formats.
Scalability
A job is often worth more than what is paid for it. Many of the learnings can potentially be applied (with some tweaking) across different regions and industries.
For example, the outcomes of a report commissioned for one regional council can be templated and adapted with new data for another council – saving considerable time and effort (aka money) to produce the additional report(s).
Another example is to recognise that providing agri-consultancy services to develop a solution on a narrow subject (say an irrigation scheme for kiwifruit) could be readily adapted to provide a similar service to another industry (such as an irrigation scheme for grapes).
Tendering
When competing for a job through a tender process, the service provider wants to put their best foot forward to win. However, this can result in valuable information given away which competitors could get access to. This can be through the party setting up the tender asking if another provider can supply similar services in a tender offering for a cheaper price. Or, through a panel assessing a tender having competitors (or competitor friends) sitting on it.
Overall approach
When looking at what gives an organisation its competitive edge, there are generally four pillars– systems, brand, functionality and design. The last two pillars (often protected with patents and design registrations) are generally not relevant to service industries, leaving systems and brand as key priorities.
Systems
Systems include what Suzanne Harrison, co-author of Einstein in the Boardroom, refers to as i-Stuff. For example, i-Stuff includes information, processes, templates, and customer lists. These valuable (and almost indefinable) assets are problematic in that formal IP protections often do not apply, and other mechanisms need to be considered.
Protection mechanisms for i-Stuff consider how these assets can be controlled and used – and can include things like:
a) Agreements – both internal and external
b) Copyright ownership
c) Confidentiality
d) Security, including restricting access to sensitive information
e) Client onboarding procedures
f) Centralised templates and tools
g) Standardised practices around preparation of tender documents
h) IP warnings on marketing collateral
However, to be effective, protection mechanisms need to be followed, and for that to happen there needs to be an IP culture embedded within the organisation.
When service industries explore the hidden value of their IP, it becomes a powerful way to establish an IP culture, identify and control valuable IP, and scale up beyond single jobs. For the culture to be sustainable, messaging around the importance of IP to an organisation needs to come from the top down. This cannot be achieved with just a single workshop – although that is a great start. It should be part of team catch-ups, on all documentation (internal and external), and part of conversations with clients (for example to be able to re-use some of the findings in future services for other clients). Refresher courses on IP will not only affirm the messaging but also educate new employees.
Having pride in its intellectual property can be a powerful part of a brand’s DNA.
Brand
In the service industry, reputation is everything. Brand value can be readily destroyed by poor service, which is why having good support systems in place is important. Brand value can also be eroded by the actions of others – say a competitor with similar brand elements and a poor reputation.
The best brand elements (for example, trade marks) are distinctive and non-descriptive. This gives an edge in marketing and registrability.
A strong stand-out brand enables scalability. Trade mark rights can be part of a franchise agreement which may also include other licensed IP rights. This gives geographical reach much faster than organically growing a business. One only needs to look at the multi-billion franchise industries to appreciate this. For example, the UPS Store franchises which provide shipping (and other) services returned nearly $US13 billion in income to the parent UPS company in 2021. On a more modest scale, many professional services are franchised, with SBA (Small Business Accounting) being a representative New Zealand example.
If protected through trade mark registrations, a brand can remain distinctive and not have its value eroded by look-a-like organisations.
Therefore, the brand elements of service organisations should be chosen with care and treated as valuable assets. This includes registering trade marks in relation to existing and potential services, and then identifying those trade marks with either the TM or ® symbol as appropriate on marketing collateral.
Why IP strategy matters in the service industry
IP isn’t just for highly technical organisations – business of all types can achieve commercial success by identifying, owning, and controlling their IP assets, and then embedding an IP culture within their team. To develop a strategy that has lasting benefits, the organisation should seek an IP strategist that will understand the internal workings of an organisation, help them to develop better systems and processes, and also help them to reinforce good IP practices with ongoing education.
A savvy service provider understands the IP they create and commercialises that to create scalability and long lasting value.
