Reinventing the company
Friday, April 10th, 2009
Patents reveal the most innovative places to do it
IMAGINE you are the research director of a high-tech colossus, given the task of transforming your company by devising some game-changing new products. Where in the world would you locate a skunk works to foster the radical thinking needed? In short, where are the most productive centres of innovation?
The simplest way to measure a region’s potential for innovation is to look at the number of patents granted to its residents. Over the past decade, a great deal of progress has been made in harmonising the rules of patenting in different jurisdictions, making it easier to compare one country with another.
Even so, using patents as a proxy for innovation remains fraught with difficulty. For one thing, there is the sheer number of applications filed by cranks, visionaries and amateur inventors who play fast and loose with the laws of physics. Such applications may meet the fundamental requirements of patents everywhere—namely, that they are novel, potentially useful and non-obvious. Yet a perpetual-motion machine is nonsense, whether patented or not.
The best way to count patents is to take into account only those that are actually granted rather than simply applied for, and to consider only those awarded internationally rather than solely in the applicant’s home country. Being expensive to acquire and maintain, international patents tend to exclude the loony fringe. As such, they present a more accurate reflection of a nation’s innovative prowess.
The correlation between such patenting and innovation is remarkably robust, according to various studies. More intriguing still, the correlation holds true not only at the national level, but also at the level of the firm. Hence the fascination among economists for devising league-tables of the most innovative countries and companies around the world based on the numbers of patents they acquire each year.
The latest of these rankings comes from IP Solutions, part of Thomson Reuters, a provider of news and information. The firm’s 2008 Global Innovation Study focuses on where the ten most innovative companies (measured by patents applied for or issued in America, Europe, China, Japan and South Korea) hail from.
Only three of the top ten patenters in America (IBM, Microsoft and General Electric) were American companies. The rest were from Japan, South Korea and Taiwan. Samsung topped the list with over 7,400 patents granted, nearly 1,000 more than IBM, which was second. Intel and Hewlett-Packard were nowhere to be seen.
Elsewhere, the situation was quite different. Only one outside firm (Samsung) made it into the top ten in Europe, while none at all did so in China, Japan or South Korea. Meanwhile, Chinese firms accounted for a third of the 967,000 patents tracked by the study.
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