Brain drain
- Article 55 of 77
- Information Age, November 2002
What's to stop IT staff leaving to turn their innovative project work into a commercial venture?
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Patenting, because of its limited application to software in Europe and the UK, is something few CIOs in the region consider for bespoke software developed by in-house project teams. But that is changing, according to Wendi Bukowitz of management consultancy company PricewaterhouseCooper's intellectual asset management practice. She advises companies to set up processes to investigate whether it is possible to patent their IP and where to dissuade IP theft - even if a UK patent is not possible, she says, a patent in the far larger US market might be applied for.
However, it is within the powers of an insider that wants to leave the organisation to undermine a patent application - and organisations need to guard against this where possible. “Any type of disclosure [wherein the innovation enters the public domain], whether by word of mouth, demonstration, advertisement, email or article in a journal, could prevent the applicant from getting the patent,” explains Brocklehurst. “It could also be a reason for having the patent revoked if one was obtained.” By revealing details of the technology to the outside world before leaving, the insider can compromise the patent and leave himself free to produce identical technology - although this is a rather unlikely outcome - “the stuff of James Bond”, according to Brocklehurst.
Fortunately, few employees plan to leave with the company's 'crown jewels', says CIO Connect's Handby. “In normal times, a good reward structure works very well. My perception is that [IP theft] not a big problem at the moment. During the dot-com era, it was a real worry trying to keep key people. If an idea wasn't being developed, people would go to someone who would develop it or set up on their own. Nowadays, any start-up has got to have a very good business proposition and it's going to take a lot of coding and hard work to make fly.” Most employees are not going to strike out by themselves in uncertain times, he says.
Equally, not all splits are unfriendly and can even be of benefit to the employer. Business intelligence and integration specialist Kalido, for example, started out as a division of petroleum company Shell, developing a solution to integration problems between Shell's 46 installations of enterprise applications from German software giant SAP and between different divisions. In 2001, Kalido was spun off from Shell as a company with $8.6 million in yearly sales, after selling the software it had developed to other companies for five years - much to the benefit of Shell, which had taken a share of the profits during that period.
Likewise, Stephen Streater, CEO of streaming video company Forbidden Technology, was one of the original founders of Eidos, now famed as the creator of Lara Croft PC game series. Eidos had a following in the video editing market for a number of years before it decided to discontinue that side of its business.
“When Eidos closed down the division, [the company's management] realised it would lose the benefit of all their investment in the technology,” says Streater. He persuaded them to allow his new company, Forbidden Technology, to license the technology from them. “It's free money for Eidos. They get all the benefits of the IP but with none of the overheads,” he says. In turn, Forbidden Technology got a head start in the market using Eidos' IP.
As such illustrations suggest, there are many simple measures companies can take to impede employees who want to leave to work on similar projects. In some cases, though, it can be easier just to help them - and get the rewards of their enthusiasm.
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