Spring 11 MASTER.indd - Thunderbird Magazine

faculty focus
ment of six dynamic organizational
and managerial
actions including stakeholder
alignment with the
aim of increasing complexity
to such a point that not
one single breach could
create a threatening IP leakage
situation — we call this
keep it complex (KICX).
Our IP protection framework
(see illustration) is
characterized by a dynamic
combination of simple and
complex, static and flexible
activities and practices. It
should be read from the bottom
up.
For effective IP protection
in China, companies
must have context-relevant
corporate and business
strategies; they must have
identified the critical IP that
is required to execute these
strategies; they must identify
the right people (internally
and externally); they must
explicitly formulate effective
operational, management
and contingency processes;
and they must develop an
explicit awareness of timing
and its impact on the other
factors mentioned.
While these practices seem
simple, more often than not,
companies rush into China
without considering these
measures. We collected overwhelmingly
rich evidence
that this negligence usually
leads to significant IP leakage.
Incorporating IP protection
tools and practices during
the development of the
business strategy provides
the critical foundation upon
which companies can build a
robust IP protection strategy
(KISS — keep it simple).
Once companies have
established this foundation,
the focus shifts to a variety
of managerial activities
(KICX — keep it complex)
A DYNAMIC MITIGATION AND ADAPTION FRAMEWORK FOR IP
KICX
KISS
INTEREST
ALIGNMENT
that introduce on one side
complexity and ambiguity —
they can’t understand how
you do what you do — and
on the other internal and external
stakeholder alignment
as dynamic elements of IP
protection. We identified six
effective activities:
1. Proactive interest alignment
with regulatory institutions
and individual
government officials in
the localities where the
company operates.
2. Disaggregation of IP components
and core processes
through organizational
and physical separation
of activities, vendors and
know-how.
3. Dynamism through
continuously improving
products and processes, in
order to stay at the leading
edge.
4. Controls discipline that rests
on a strong organizational
culture.
5. Strategic human resources
management/talent management
that makes the
company a “great place to
work.”
6. Focused corporate social
responsibility activity that
makes the company a
valuable, integral part of
the local community.
DISAGGREGATION
PROTECTION
DYNAMISM
CONTROLS
DISCIPLINE
LEGAL FUNDEMENTAL
KNOW YOUR CONTEXT: BUSINESS INTELLEGENCE
CHINA STRATEGY CLARITY
The key driver here is the
complexity that results from
combining these multilayered
activities. The effect is a
significant slowing down of
both opportunistic would-be
IP thieves (including departing
employees, suppliers and
customers) and organized IP
theft through espionage.
The use of socially complex
processes, like talent
management, extends the
reduction of knowledge theft
to the employee level, which
is the most common conduit
for IP leakage. Protection activities
embedded in socially
complex processes create
ambiguity that provides
a temporarily sustainable
advantage.
Finally, the more onerous
challenge for multinational
corporations operating in
China is to remain dynamic
by configuring and reconfiguring
the elements of the
framework as the context
evolves, devolves or shifts.
BEST IP PRACTICES
In China, IP protection
that goes beyond patenting
and legal litigation is potentially
the most important
organizational capability
for ensuring long-term performance
in high-tech and
SHRM-TALENT
MANAGEMENT
FOCUSED CSR
service firms. This requires
that companies employ
three sets of best practices:
• Get the fundamentals
right, including strategy,
deep contextual understanding
and the use of
appropriate legal fundamentals.
• Develop and reinforce
the six activities that are
catalysts for dynamic IP
protection.
• Build a control-based culture,
processes anchored
in social complexity, and
do this with speed.
Andreas Schotter, Ph.D., is
a Thunderbird professor of
strategic management. Before
embarking on an academic
career, he was a senior executive
with several multinational
corporations. He has lived and
worked in Europe, Asia and
Canada.
Mary Teagarden, Ph.D.,
is a Thunderbird professor
of global strategy and editor
of Thunderbird International
Business Review. She
has lived and worked in 11
Latin American countries, five
European countries and eight
Asian countries — in addition
to the United States and
Canada.
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