How Do You Achieve Cost Control in Preparation for an Economic Downturn?

At a glance

Heads of IP are asking themselves today how they can prepare for the uncertainty of tomorrow. Konsert Director Thomas Hedberg shares strategies for preparing IP operations for an economic downturn.

Thomas Hedberg is a senior advisor for Konsert. He has extensive experience in the field of IP, for example from 8 years as VP Global IPR at Sony Ericsson/Mobile Communications, and how to lead an IP organization during different phases of the economic cycle. Below he shares some of his thoughts for how IP Heads can prepare for a recession.

Question: What operational challenges are IP organizations facing today?

Thomas Hedberg: Many IP Heads have already started to experience increasing cost pressure and expectations to achieve more with less resources. A bottleneck commonly seen in IP organizations is inefficiencies due to imbalance in the distribution between internal processes and tasks outsourced to external IP firms. Another area where there often is potential for cost improvements is the cost model with external IP firms.

Many times the control of what is actually paid for external services is limited since firms have been selected in an ad hoc manner based on immediate needs and personal relationships, rather than on price and the types of services you need.

“Being prepared is key to success. A holistic control of your costs and cost drivers enables you to develop scenarios for how a budget cut in the end truly would affect your IP operations.”

Thomas Hedberg, Director at Konsert Strategy & IP

Question: In case of recession, how can you prepare for a cost cut in your IP budget?

Thomas Hedberg: Success requires not only bold decision making, but also careful preparation. To achieve this, a pre-condition is cost control. This, in combination with processes for cost forecasting, makes it possible to create scenarios for how a budget cut in the end could affect your IP operations.

Such scenarios could include strategies for reduced number of countries to file in, at what level and for what type of work external agents should be used as well as considerations for optimizing the spending during prosecution. Additionally, it may include pruning strategies (dropping selected patents) based on business’ needs and prioritizations, having not only urgent cost reductions in mind, but also considering long-term competitiveness.

Question: What would be your final piece of advice for minimizing the effect of an economic downturn?

Thomas Hedberg: The IP organizations that successfully have managed to transform from a traditional cost center to a business-oriented organization are much better set up to manoeuvre successfully in a recession. However, even they will inevitably face pressure from executives to cut costs. It is important to always be prepared for the next economic downturn, to enable planned strategic action rather than having to react hastily in response to a crisis.

Be prepared to have various scenarios ready the day you have to cut costs, and make sure such scenarios are based on a solid IP strategy which is in line with the company’s overall business priorities.