In this special edition of IIoT Talks, we look inside for inspiration: We talk with Alicia Moore, Echelon’s Senior Vice President, General Counsel and Secretary to the Board.
Throughout her career, Alicia has provided strategic legal advice to both public and private technology companies across a variety of industries. She has a distinctive perspective on how legal issues can be important for companies following any technology business path in general, and for navigating the Industrial Internet of Things (IIoT) space in particular.
Wendy Toth: You often talk about the ‘positive’ aspect of legal decisions. What do you mean by that distinction?
Alicia Moore: Many people seek legal counsel once they realize that they are in trouble, or to document a deal long after the negotiations have been underway and the parties’ respective positions have been hardened. While that’s certainly one aspect of legal advice, it misses out on broader, more strategic and positive benefits that timely counsel can bring.
For example, if counsel is involved at the front end of discussions, it’s possible that the transaction can be structured to bring additional benefits to one or both parties on matters outside of the discussions, such as tax implications, ease of enforcing provisions or limiting unnecessary liabilities. I’m especially passionate about the potential for legal considerations to positively affect relations between the parties, and to enhance a company’s overall business success.
TOTH: Can you make the connection for us between the law and the IIoT?
MOORE: The IIoT includes the convergence of billions of existing industrial devices—long-lived, ultra-reliable, pre-Internet operational technology (OT)—with the latest information technology (IT) advances in the areas of networking, cloud computing, big data and more. As the OT and IT converge, it raises many issues, including those around privacy, security of information generated and shared, allocation of responsibility for protecting and maintaining information, liability allocation across the supply chain and a variety of suppliers, and ensuring that the end result conforms to all applicable laws and regulations.
Legal strategies should be a key aspect of discussions about how to propagate, maintain and control the increasing interconnectedness of devices, in both industrial and consumer settings; and how to bridge the dynamic features and functions offered by large companies and small startups.
TOTH: How does the technology convergence affect the convergence of legal issues?
MOORE: In the hyperconnected and interconnected world of the IIoT, achieving the fastest possible time to volume, securely and reliably, means carefully sorting out the complex legal agreements involved among all the various types of devices, technologies, connections, supply chains and distribution channels involved.
There are a number of legal issues that many companies might not be considering as the world becomes more interconnected, but to which I believe they should be paying attention—and those companies that think through the alternatives and consequences in advance will be at a competitive advantage.
TOTH: Can you give an example?
MOORE: Sure. Companies need to explore how their go-to-market strategy affects their choice of partners. It is unlikely that any business can address all of its prospective customer needs with its own internal solution. Devices and services are deployed in larger systems, disruptive features can be created by niche players, and sales can take place through various channels.
Legal considerations affect and may ultimately determine with whom you choose to partner, which sales and distribution channels you will use, whether you own or license your offerings, how you plan to capture and grow your market, how you manage your ROI, and even what your key value proposition is. I believe that taking these and other factors into account as you plan and execute your attack on the marketplace is imperative.
TOTH: How does legal strategy affect business strategic planning?
MOORE: Decisions made today might restrict the decisions you can make in the future. For instance, a decision to offer software as open-source might facilitate market adoption, but it might also eliminate the ability to block future competitors or control the evolution of your products. Entering into strategic arrangements with one party might elevate your company’s profile and revenues, but it could also prevent relationships with others. A company that builds its service business on the advantage of having no upfront capital expenditures might have difficulty later shifting to a model requiring significant hardware purchases for add-on services. A business that builds its core value proposition on designing and building all its products in-house can find it challenging to later outsource production to save costs.
And all these considerations become more complex as companies rely on other companies for critical aspects of their development, manufacturing, sales and service.
TOTH: We automatically think of legal issues when dealing with patents, but you take a broader view of intellectual property issues, don’t you?
MOORE: Yes. The goodwill you can generate as you build your brand assets results from your choices about how you define what you want to retain as your intellectual property across the landscape of not only patents, but also trademarks, designs, copyrights and trade secrets, as well what you are willing to ‘give’ to the market to proliferate a standard or expand market share.
How you build your intellectual property assets also matters: What do you create yourself and what do you outsource? How much control do you retain over the exclusivity of which parts of your offering? What do you patent, and what do you publish? What is the best balance for your particular company between protecting intellectual property assets and accelerating your market footprint or adoption of your technology or products?
Decisions around intellectual property assets also affect the parameters of the relationships you can create. And again, the decisions made here cannot always be reversed easily, if at all. Once your inventions become public, it may be difficult to control derivative developments and retain your competitive differentiation. Once you’ve chosen a particular partner, it may be difficult to form strategic relationships with that partner’s competitors.
TOTH: For startups in particular, how do legal strategies affect exit strategies?
MOORE: Startup companies usually assume that their exit strategy options are to go public or to be bought. But in between the two, there are steps about how you position your growth in the marketplace, how you define your value proposition, how you establish your intellectual property and key differentiation, and how you capture and maintain your market position—all of which enhance the likelihood of successful business growth (and exit).
Tactics related to strategic partnerships, such as augmenting feature sets through joint development opportunities; channel strategies; how you approach your financial backing and manage your financial position, all support the success of your strategy. In a dynamic and converged market such as the IIoT, with a few big players and many niche companies, how you identify your exit strategy will affect the key steps you can and should take along that path.
TOTH: What else do you suggest that companies keep in mind about partners?
MOORE: Remember, you will be affected by the fortunes of your partners. You can’t predict the future, of course, but one of the most important aspects of strategic legal thinking is to extrapolate possible future scenarios based on current conditions and characteristics. At the very least, good strategic legal thinking can help you refine your decisions about whether a particular company might make a good partner for your company, and to structure the agreement for the best chance of success for both entities.
In this interconnected world, no one can make it alone. Understanding when, how and with whom to partner, contemplating the legal ramifications of the deal, and documenting the relationship in clear terms, might make the clear difference to your future.
IIoT Talks is a conversation between industry luminaries and Echelon Corporation about the opportunities of the Industrial Internet of Things (IIoT) market. Echelon's Chief Marketing Officer, Wendy Toth, will share highlights of these conversations via the company blog. If you are interested in participating, please send an email to email@example.com.