Bridging the gap between military and commercial markets with IP
Updated: Sep 12, 2019
The link between the defense industry and commercial markets is broken. For decades, the flow of IP between military and commercial markets generated disruptive technologies ranging from microwave ovens to the internet.
However, a string of high profile commercial failures in the early 2000's coupled with recent increases in defense spending have led defense contractors to double down on their core markets.
At the same time, the A&D industry has struggled to incorporate commercial (COTS) technology into its offerings, despite clear interest from the government. The need to tap into commercial markets has manifested in both government projects like the Defense Innovation Unit (DIUx) and corporate strategies (e.g., Lockheed Martin's $200M corporate venture fund).
Despite these efforts, there is still significant room for improvement, and recent developments in the government space create additional urgency:
Demand for commercial technology in major acquisitions: As requirements for COTS technology in defense acquisitions become more common, competition for access to commercial companies and technologies is becoming more intense. This is compounded by global OEMs looking to gain access to US markets
Uncertain defense spending outlook: While the latest budget still projects defense increases, outlook for FY23+ is increasingly uncertain. As long as "peak defense" is a possibility, A&D companies need to find alternative cash-flows to hedge against USG downside
New competitors entering the market: Technology firms like Amazon have sophisticated strategies to manage their own IP and aggressively acquire differentiated IP in the market
Given these circumstances, defense firms need to focus on two key strategies to get unlock the value of their IP.
Better Visibility Leads to Smarter Investment Decisions
First, companies need better visibility into their own IP portfolios and into the external IP landscape. Currently, visibility into a company's IP portfolio is limited to their general counsel's office, if that. And companies have almost no visibility into external IP landscapes.
Imagine a CEO entering a new market with no data on size, competitors, or ROI. And yet, companies are essentially doing this when they make technology investment decisions without understanding the IP landscape.
With the right IP data, a company can make the right investment decision based on their existing technologies, the maturity of competitor's offerings, and the availability of similar technologies in commercial markets.
Commercialization Drives Differentiation
Defense firms have always been hesitant to commercialize technologies, focusing instead on the next major government procurement. However, successful technology commercialization ultimately makes companies more competitive. When done strategically through licensing or joint ventures, commercialization can lead to millions in new cash-flows. While this may not directly impact stock price, it can fund entire new R&D projects or lead to higher margins. On top of this, greater commercial adoption of a technology drives down its unit cost, allowing a company to provide it to the government for less than other contractors.
At Tradespace, we've combined cutting-edge IP analytics with deep knowledge of defense markets to build a SaaS platform that helps defense companies be more competitive and make smarter technology investments. We use machine learning and AI to turn 100M patent documents into actionable intelligence.
Additionally, we provide access to cutting edge technology from over 300 of the top Federal Labs, Universities and FFRDCs. Through our partnerships with accelerators, and innovation hubs, we can also connect companies with disruptive start-ups across every technology vertical.