Background

David J. Teece is Professor in Global Business at the University of California, Berkeley’s Haas School of Business. He is also the director of the school’s Institute for Business Innovation.

Gary Pisano is Professor of Business Administration at the Harvard Business School. He has been on the Harvard faculty for 22 years.

They are both authors of many scientific books and articles and they have both been involved in many case studies in the field of innovation.

They have developed a model called “Appropriability regimes”. The model provides an introduction to how a company avoids that its innovation is quickly copied by others.

Appropriability is a composition of the words Property and Replicability. Appropriability is a function both of the ease of replication and the efficacy of intellectual property rights as a barrier to imitation.

About the model

The model has two main divisions

•The first of these is inherent replicability

•The second is intellectual property rights

Each of these two broad divisions have two subcategories

•The first – Inherent replicability – it can be easy or hard to imitate the product or service a company is offering

•The second – Intellectual property rights – they can be loose or tight – it is about the strength of patents, trademark protection, design protection etc.

These two by two categories create a model with four fields:

These are weak, moderate and again moderate And finally strong

The four fields indicate whether we are weak, moderate or strong in protecting of our innovation. 

In the field weak it is easy to imitate your product and your intellectual property rights are loose. If you do nothing or preform incremental innovation and launch new products, services or processes that only involves small adjustments to the existing products or processes - and you have no protection of your brand in accordance with the legislation - you stay in this weak field. You become a producer of standard products or services in a homogeneous market.

In the first of the two moderate fields it is hard to replicate your product or processes and your intellectual property rights are loose. You are doing something unique. In this field there are inherent organizational core competencies, which are not protected by law, but are difficult to replicate. It is generally difficult to copy organizational processes and positions from other companies. Copying and knowledge transfer is difficult between companies with different systems.

Imitation is even more difficult - of course we can hire key employees from a competitor's organization - but the success rate from imitating the culture of others is very small

In the second field called Moderate, it is easy to replicate your products or processes but your intellectual property rights are tight. Firms located in this field are normally  in industries where patents are very strong and protected by law or copyright trademarks are very strong, because they are important for the customers.

The last of the four fields is strong. Here it is hard to replicate your product or organizational processes and the intellectual property rights are tight. It is not only difficult to copy it is also illegal. Companies placed here are normally very innovative. They make use of both incremental innovation as well as radical innovation. 

Theoretically, all companies should strive to get a strong position in their market; and if they are in a strong position; they should strive to maintain the position.

Criticism of the model

It is not defined which conditions must be met to be loose or tight regarding intellectual property rights or when something is easy or hard to replicate and thus the transition between weak, moderate and strong is not an objective assessment

The model gives no recommendation about the competencies the company must acquire or in which direction it should go.

It is clear, however, that to do nothing means a decline and in the end death for any firm

The firm has to have innovation in all three strategic dimensions mentioned in this film.