New Zealand: How to hone New Zealand’s competitive edge

Last Updated: 1 September 2011
Article by Kate Wilson

"If you don't have a competitive edge – then don't compete" Jack Welch CEO General Electric

Businesses need to be clear about what constitutes their competitive edge.  Kiwi businesses, in particular, need to be more astute than their international competitors as New Zealand often cannot compete by being bigger, cheaper or closer to our markets. 

What usually gives us our edge is our cleverness - our intellectual property (IP). But that edge can be quickly eroded if steps are not taken to protect it.  Opportunities are often lost because we haven't chosen to define what makes us distinctive, capture it and then use that to leverage a position internationally.

It is crucial to know how to identify distinctiveness, how to capture, then leverage it - so  Kiwi businesses can maximise their true potential in a competitive market. 

First we need to step back and analyse what makes us competitive: Why do consumers prefer our products or service to others? What internal systems do we have that enable us to deliver more effectively? Where do we spend our time?

And, how does this all relate to potential revenue streams - whether spare parts, consumables, different countries or different industries?

Capture the edge

Sometimes your competitive edge just arises from your in-house knowledge.  So capture it.  Look after your special people, keep good records of what they know, and have systems and agreements which control dissemination and ownership of your valuable IP. 

I know a research institution which lost a whole department because a head researcher left with all his notes and solicited the remaining staff to follow him. The organisation did not have clauses in their employment contract and systems in place to prevent this.

Often your product is preferred because it works better than your competitor's.  But in most cases, unless you file for patent protection before you commercialise your product (or go public) then your competitors can copy your functional advantage.  To add insult to injury, they can often sell it cheaper than you. They do not need to recover research and development costs - you have already done the hard work for them. 

Many people do not realise that patent protection can be gained for all sorts of subject matter, not just widgets.  For example, you can patent a new manufacturing process, inventive software and new combinations and uses of existing products. 

Usually the key to patentability is that it is new and gives you an edge.

A product may sell just because it looks good. A good example is designer glasses.  If you have a design you consider could become a classic (as opposed to short-lived) then protect it with a design registration. We did this for international designer Oakley.

Design registration is critical for exporters as most countries do not have the strong copyright laws New Zealand has.  For example, a product can be copied exactly in Australia without infringing copyright laws.  However, a registered design there can stop copying. 

It is generally understood that a sustainable business has a recognised and reputable brand.  This can be valuable intellectual property - the Apple brand alone is estimated to be worth US$153 billion.

Any branding strategy needs to include choosing a distinctive, non descriptive trade mark that would work across multicultural markets.  Distinctive because you do not wish your business to be confused with poorer quality competitors, and non descriptive because that helps you maintain distinctiveness.  These qualities also make your trade mark more registrable.  Multicultural considerations are likewise important as you do not want to re-brand because you have chosen an inappropriate word in another culture. I have some stories I could tell...

Leverage

Capturing the elements that give you an edge is only a first step.  The real value comes from leveraging them. 

Leveraging can include the prosaic act of using your IP rights to deter others until you gain a foothold in the market.

More exciting is that IP rights can be used to generate additional revenue streams by gaining access to new markets or increasing market penetration.

For example, you might not have the resource or distribution channels to explore a particular market - but someone else has. 

IP rights can form the basis of an agreement with a collaborator or investor who can help.  It should be noted that most investors need to know there is solid IP protection in place - otherwise, why spend money supporting a business with no competitive edge?

James & Wells Intellectual Property has helped a number of Kiwi businesses secure outside investment by ensuring their IP portfolio could not only withstand due diligence from large multinationals but showcase their potential. 

Our client Bomac - New Zealand's largest privately owned animal healthcare company - was sold to German healthcare giant Bayer last year. But only after Bayer carried out a rigorous examination of Bomac's IP portfolio.

Clever thinking around alternate revenue streams, and preparing IP strategy accordingly, can lead to brand new industries being exploited.  The veterinary and medical industries are typical examples.  Appropriate IP protection enables innovative companies to licence or sell rights around their innovations.

To compete internationally, New Zealand needs to identify, capture and use its edge in a way which carves our own global market niches.

New Zealand's edge is our cleverness, our intellectual property and the strategies we build around it.  We just need to apply clever thinking to achieve this. 

This article first appeared in Her Magazine, and was written by Kate Wilson, a partner in the Hamilton office. To contact Kate please email her on katew@jaws.co.nz or phone 07 957 5660.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

James and Wells is the 2010 New Zealand Law Awards winner of the Intellectual Property Law Award for excellence in client service.

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