In a sharp interview with Sankei News, Yamada Taro, Secretary General of the LDP’s Intellectual Property Strategy Research Committee, pointed out: “Japan has strong content, but its system for making money from it is fragile.”
These words raise a fundamental question for SME governance design. The issue isn’t the technology or the work itself, but the lack of a system to manage it as a “business asset” and turn it into revenue.
The Essence of “Technology Alone Isn’t Enough”
Yamada stated that Japan’s winning path requires more than just technology. This isn’t simply a matter of technical skill. It’s a structural challenge: the governance design needed to recognize technology and content as “assets” and maximize their value is missing.
As an SME owner, have you ever experienced this? “We made a great product, but it just doesn’t sell.” “We got a patent, but there’s almost no licensing income.” The reason is that governance that positions technology and content as “assets to be managed” isn’t functioning.
Three Reasons IP Governance Fails
In many SMEs, IP is seen as “the legal department’s job” or “the engineer’s output.” But it should be a “business asset” that management is responsible for.
First, there’s no culture of recognizing IP as an “asset.” Intangible assets that don’t appear on the balance sheet tend to have low management priority.
Second, IP “valuation” isn’t being done. Few companies quantitatively track how much revenue their patents or brands generate.
Third, there’s no system for “leveraging” IP. It’s created and left there, with no process to connect it to licensing or alliances.
IP Management as Governance Design
The key here is to reframe IP management not as a “legal issue” but as a “governance issue.”
Governance is a “high-level management design concept” that arranges rules from an overall optimization perspective to achieve business goals. IP should be seen as part of this design.
Specifically, management needs to discuss the following three questions.
Define IP as a “Business Asset”
First, clearly define your company’s IP as “assets.” This includes not just patents and trademarks, but also know-how, brands, customer data, and trade secrets.
Once defined, list them in a “management ledger.” Record when, by whom, and for what purpose each was created, and its current value.
This process itself is the first step in recognizing IP as an “asset.” Many SMEs don’t even have such a ledger.
Conduct Regular IP Valuation
The value of IP changes with market conditions and competition. Create a system to evaluate the “current value” of each IP asset at least once a year.
The evaluation method can be simple. Quantify it from perspectives like “How much annual revenue does this patent generate?” or “How much would sales drop without this brand?”
Report these evaluation results at management meetings and reflect them in business strategy. IP with declining value should be considered for sale or licensing.
Design a Process to “Leverage” IP
Design a process to actively leverage created IP instead of leaving it idle. For example, set rules like these:
“Within three months of filing a new patent, list at least three potential licensees.” “For trademarks with a certain brand value, consider licensing to other companies.”
Document this process as an “internal rule” and have the management department track progress. This is the implementation of governance.
Three Actions SMEs Should Start Now
Here are specific actions you can take. You don’t need a large-scale system like a big company. Starting small and expanding gradually is realistic.
Create an IP Ledger
First, create an “IP ledger” in Excel listing all your company’s IP. At a minimum, include the following items:
・IP name (patent number, trademark name, etc.)
・Acquisition date
・Person in charge
・Current value (simple evaluation is fine)
・Usage status (unused, licensed, planned for sale, etc.)
Set up a system where management regularly reviews and updates this ledger. Even 10 minutes once a month is enough.
Establish an IP Evaluation Meeting
Hold an “IP evaluation meeting” once a quarter to discuss IP valuation and usage status. Participants should include the president, business unit heads, and the head of the management department.
The meeting should cover the following agenda items:
・Evaluation of newly created IP
・Changes in value of existing IP
・Decisions on disposing of underutilized IP
・Exploring new licensing opportunities
Keep minutes of this meeting as evidence of governance.
Document “IP Usage Rules”
Finally, document internal rules for leveraging IP. For example:
“Within one month of developing new technology, decide whether to file a patent application.” “Within three months of obtaining a patent, list at least five potential licensees.” “For trademarks with high brand value, consider licensing to other companies.”
Position these rules as internal regulations and communicate them to all employees.
Governance Creates a “System for Making Money”
Yamada’s observation may be hard for SME owners to hear. But on the flip side, it’s an opportunity: “If you design governance, you can create a system for making money.”
Reframe IP not as a “cost to manage” but as an “asset to leverage.” Then, design the rules and processes to maximize that asset. This is a realistic strategy for SMEs to compete with larger companies.
Open your company’s IP ledger right now. How many of the IP assets listed there are actually generating revenue? That answer is the current state of your company’s governance.
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