March 17, 2009

Ethics in IA/IP management - the Corporate Profile

My exploration in IP and ethics today takes me to IPM strategies that may be associated to the corporate profile. In my last blog post, I touched upon some of the complexities in managing innovation in an ethical manner, which may be seen as layers that are much more focused on technology whereas today’s post will target brand management.

Brand Management Deconstructed
Firstly, it is important to recognize that branding encompasses so much more than trademarking a name / logotype, registering a slogan or claiming a certain design scheme / trade dress as proprietary. Branding is the whole communicative relationship between a company and 1) its customers, 2) its collaborators, 3) its employees, 4) its end-users (if separate from customers) 5) any entity or person that the venture will communicate with.
A “strong” brand is often quoted to;
* attract new customers / retain existing customers
* enable price premiums / drive sale volumes
* decrease sensitivity / volatility of revenue streams
* secure future revenue streams
* enable clear product differentiation and positioning
* reduce marketing costs
This is all true but in knowledge-based business (more?) important aspects are also how the brand is used to 1) block competitors, 2) control value propositions, 3) control relational networks / technology platforms, standardization efforts and markets, 4) control the creation of a strong IA/IP portfolio, 5) establish incentive structures and control human resources, 6) controlling the identity and perception of the venture, 6) extract value (monetary or non-monetary).

Branding and Ethics
It is quite clear from the brand elements above that the “control” that branding enables, there is more than one path to go where there will be more than one opinion about what “the right thing to do” is. Using semantics to describe the identity of the venture or the utilities of a product can create the perception of something that is of far more value than the original object. Below follows some examples where IP and ethics can be tricky;

Functional utility:
The debate whether diagnostic tests are ethical is an interesting example of branding where descriptive terms could be used as a way to inform the patient about the uncertainty of the test or unethically to provide a false comfort. A genetic test may confirm a clinical diagnosis only if the disease is a known, described, monogenic or chromosomal disorder with evidence-based association to a disease causing mutation. Conversely, genetic tests for polygenic complex disorders only assess an individual’s risk of susceptibility slight-moderate-strong to certain diseases, providing for more room for interpretation (and external influence).

Another example of a balancing act in what utilities that are rightly or wrongly claimed is in relation to the placebo effect. If you go to the doctor to cure an ailment, he prescribes a medicine, and you feel better afterwards - you are cured. Would you feel the same in case if it later turns out that the pill he gave you was Cebocap (a known sugar pill) - or would you rather be inclined to sue him for malpractice? I guess the answer he will always be “it depends”, but this is also why it is important as a company to control the communicative relationship.
Product identity: It is often easier to argue that something is unethical when it involves human health, but a similar discussion can be had for consumer goods as well. One of Procter & Gamble’s washing-up liquids (known as Yes, or, Fairy) is rumored to have gotten a boost in sales after the introduction of a minimal addition of eucalyptus, much owing to the success of branding the liquid using the ‘natural’ ingredient.

Corporate identity: We can all relate to how we perceive company brands as having distinct personalities (traditional examples include: Volvo - safety, Apple - design, etc.). Conscious IA/IP strategies have the ability to create these identities. There are many large corporations that have their scientists writing periodical reviews about markets, current technology and future predictions. Product placements in these could be part of the branding strategy to create a demand which may justified in some cases and could be destructive to society in some cases (e.g. tobacco industry denying lung cancer).

Co-branding: A value creating strategy that may both be used for the better or for the worse. Few customers reflect over the moral values in Ferrari lending their logotypes to Acer computers, but what if Walt Disney was to co-brand with Marlboro? In this bizarre example, many would think that it would be easy to point to whom would be the ‘winner’ and to whom that would diminish their brand, but there are examples where the boundaries are more fuzzy.

Claiming ethics to create an advantage: This may not be one of the most common strategies, but I thought that it was an interesting case. In the March issue of Nature Biotech the article “a balancing act” discusses Genentech’s petition for the FDA to immediately pull many of the in vitro diagnostic “home-brew tests” from the market. Genentech’s claim is that there is not adequate “scientific evidence of their validity” and that they pose “potential risk to patient safety”. This is seemingly an altruistic move, but the Nature article states what Genentech would like for the FDA to examine closely are home brew tests to assess patient suitability for Herceptin treatment. Uses, not mentioned in the petition, that erode Genentech’s royalties from sales of ‘official’ companion diagnostic kits, not to mention potential lost sales in the future from Rituxan, Avastin and Tarceva. This could obviously be argued to be immoral, while it could also be considered a win-win situation (tougher regulation of diagnostics + more sales for Genentech) depending on who is the judge.

My exploration in ethics and IP will continue in later posts where I will investigate market considerations, and value extraction among other things.

Tobias Thornblad


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