Organizational Know-How

by Ryan P. O'Connor

Patents represent fairly specific legal property rights. Another form of intellectual assets that are not often discussed is “know-how.” Know-how can be defined as confidential and closely-held information in the form of unpatented inventions, formulas, designs, drawings, procedures, and methods, together with accumulated skills and experience. Know-how can also include expert knowledge on the operation, maintenance, and use of a product. The proprietary value of know-how lies embedded in the legal protection afforded to trade secrets.

There are famous examples of trade secrets, such as the formula (composition) of Coca-Cola, which are essentially retained by lock-and-key and very limited employee access. It should be noted that trade secrets do not typically last over a century, which has been realized by The Coca-Cola Company, and in fact usually do not even last a decade.

We are here talking specifically about know-how: intellectual “property” or “assets” that cannot so easily be written up in tangible form. At successful technology companies, IP portfolios usually include patents, trade secrets, plus a huge amount of such know-how. This know-how is indeed a web of information and inventions. More importantly, organizational know-how creates a sustainable capability to innovate. If you want to know where an organization’s intellectual property is headed, then you want to understand its know-how.

Unlike key trade secrets, organizational know-how should emphatically not be locked up in a vault! Rather, know-how needs to be very accessible to everyone. Employees (and consultants) should be able to use it and build upon it to create even better IP. When new employees are hired, the transfer of relevant know-how to them is critical to the enterprise. When key employees leave, significant know-how can literally walk out the door, never to return unless the know-how has been effectively deployed throughout the organization. There are examples in small companies where the loss of a single engineer essentially destroys the technical capabilities of the entire company. Don’t let this happen to your organization!