What happens when one size doesn’t fit all?

For most, the road forward centers on offering the lowest cost product, or providing exceptional and/or unique service, or being at the cutting edge of technological innovation. Most would probably agree the migration toward Asia originated with, and has prospered from, the pursuit of the low-cost business model. Exceptional service is ever evolving and often specific to end-market or geographically driven needs. Companies the globe over tailor their unique interpretation of service to the needs of targeted customers and markets. Many believe technological innovation, the backbone of our “high-tech” industry, to be the last bastion of strength for (higher-cost) Western companies. Offering cutting-, if not bleeding-, edge technology for demanding, R&D-focused OEM engineers working on the next-generation “wow” is continually mentioned as the hallmark of the remaining Western companies.

The problem is, maybe that paradigm is shifting.

Much has been said and written about the evolving electronics industry, its migration, and the cost drivers that have left as carnage once big-name and proud industry pioneers. What has emerged from those ashes are smaller, more technically “niche” focused companies that are lean and mean (read: minimally staffed) and evolving process and technical advancements (read: do it on the fly). These smaller companies think about intellectual property more as something linked to software they use rather than their expertise in providing product. Equally, technological advances are often, but not always, gauged via the rearview mirror of what it took to get an order out, rather than what might lie ahead if that new technology is applied to new applications.

What goes unacknowledged is where technology is being developed and with whose IP. Technology development is made public in several ways. Sometimes it takes the form of white papers presented at technology associations. Sometimes dramatic press releases reveal the latest, greatest product and refer to the IP developed to make it happen. Another, more easily understood method is to track the number of patents issued – in particular US patents. In this sense, the number of US patents issued related to printed circuit boards rapidly is being controlled by non-American companies. In particular, measured by patent applications, Chinese companies seem to be more technologically innovative and IP-creating than all North American companies combined!

What does this mean? One observation is that maybe some of the smaller companies – companies historically not staffed with R&D departments, not known for generating IP, and less worldly about the process of protecting the same – are now the de facto drivers of technological innovation. The message for all companies – large OEMs to circuit board fabricators to small design bureaus – is that with the demise of some of the larger R&D-driven fabricators, the offloading of PWB R&D by major OEMs to suppliers, and the need for everyone to become more focused on technology vs. just offering “me-too” capacity, the paradigm is shifting as to who and how technology may be developed. Smaller companies need to better understand IP and large companies need to better understand the emerging new supply base.

Understanding IP is very different from developing new technology. Designers understand well the importance of their ability to create IP. Fabricators, on the other hand, don’t. Most fabricators work on getting the job done – developing processes and capability to satisfy the immediate order – and don’t fully understand that those efforts are their IP. Many of those efforts are cutting edge and very patentable. All efforts to develop technology must be looked at equally as IP – not just the pain and suffering expended satisfying an order.

For smaller companies without formalized R&D initiatives, how they satisfy customer requirements needs to be reconsidered. Documentation needs to be developed to capture what is done, why, and with what end-result in a way that explains the R&D that went into creating the IP that led to higher technology. Any run-and-gun environment hates slowing to commit pen to paper, but the rewards can be huge. Short-term, R&D credits are available.

Longer-term, the technology library is created so technologically savvy customers can see your company has the ability to provide value-add R&D to assist their ascendency. And finally, out of some efforts may be patentable, groundbreaking technology that profoundly differentiates your company from the pack. This may be the greatest opportunity: creating long-term value by applying what you already do to a more formal R&D process that yields global recognition in the form of patents.

For larger companies, the shift is to embrace smaller companies that offer needed unique niche technology, and are in the best position to further develop that technology. This requires much more active involvement and commitment to working with a greater number of companies, many of smaller size. The benefits, besides attaining the desired technological development, are to broaden the supplier base with companies that are equally committed to an OEM’s technological needs and servicing that company as a valued customer. Larger companies may find there are more committed suppliers in their backyard than they thought, and those companies are best able to satisfy technological development.

For all companies, the need to understand technology and IP needs revisiting. How technology is approached – how we view IP – will determine who in the future is in a leadership position. Our industry is once again at a fork in the road. Following the route focused on rethinking IP may well be the best path forward.

Peter Bigelow is president and CEO of IMI (imipcb.com); This email address is being protected from spambots. You need JavaScript enabled to view it.. His column runs monthly.

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