Valuation Services

Ideas, Inventions, Intellectual Property, Products, Venture

Valuation Services
Services
Crafitti’s TRIZ, Decision Engineering and Scenario Planning based Valuation Services for
     Ideas Articulated Scientific/Technological Inventions Intellectual Property (protected as a Patent, Trademark, etc or kept as a Trade Secret) Products (New or Existing ones, Software Products or Non-Software Products) Venture (New or Existing ones)

© Crafitti Consulting Private Limited www.crafitti.com CRAFITTI CONSULTING IS INCUBATED AT NSRCEL @ Indian Institute of Management (IIM) Bangalore

Multi-Dimensional Multi-Perspective (MDMPTM) Valuation Methodology
Valuation of assets has been a well-established field. There are established methodologies for valuation of assets which are being used globally, backed by comprehensively developed theories. With the advent of global innovation economy, the assets have become more and more cerebral, conceptual and contextual. This has created a mismatch between methodologies developed for physical assets valuation and the need of the information, knowledge, innovation and intellectual assets.

Although the existing valuation methods have been adapted and adopted for the valuation of “soft economic assets”, their success has been limited to say the least. The very nature of ideas, inventions, intellectual property, products/brands, ventures, etc, calls for a different approach than adapting the existing methods for valuation. CRAFITTI consulting has established a unique methodology to value intellectual assets based on sound scientific principles on the value of the soft assets. The result is the multi-dimensional valuation

methodology that takes care of, past, present and future possibilities. The multi-dimensional valuation

methodology combines multiple perspectives from financial, legal, utility or functional, complexity and collaboration viewpoints. This results in a more robust and comprehensive valuation methodology for wellinformed consensus decisions. Crafitti Consulting’s MDMPTM valuation methodology has developed on series of methods starting from financial valuation approaches (capitalization approach, cost-based approach, income approach, and market approach), enhancing with a Balanced Score Card perspective, and including a multi-criteria decision-making process such as Analytic Hierarchy Process (AHP). However, we realized the perception of future, although being captured in these enhanced methodologies, don’t take care of multiple futures that may unfold. With these experiences, we enhanced the methodology with Theory of Inventive Problem Solving (TRIZ) and Scenario Planning techniques. The result is a Multi-Dimensional Multi-Perspective (MDMPTM) Valuation methodology. This is a comprehensive methodology grounded in scientific principles and for the first time this is offered in India. © Crafitti Consulting Private Limited www.crafitti.com CRAFITTI CONSULTING IS INCUBATED AT NSRCEL @ Indian Institute of Management (IIM) Bangalore

The MDMPTM is based on following high level dimensions and perspectives  Current State o Evaluating the current state of an asset – Idea, Invention, Patent, Other IP, Product, Product families, venture, etc. What is the protection level, if any? o
Complexity Assessment of a Software Product using System Complexity Estimator based on Coupling and Cohesion

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Evaluating utility, main useful function performed, customer value provided – Functional, Financial, Brand, etc.

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Assessment

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Complexity,

Stability, Risk of design around, and, Competitive market position – How close to ideal is the asset?  Past o o o Cost already spent Cost of Sale Cost of Maintaining, Enhancing and Adapting to the foreseeable immediate future changes o Capital Borrowed to develop and status of all such pending financial debts o  Future o o o o Technological Evolutionary Paths of the Asset based on TRIZ Evolution Laws Possible ways – and probable timeline when asset will be designed around Estimated Remaining Life of the asset Possible scenarios which may emerge in the markets the asset is operating in Partners with existing stakes
crafting innovation together

5 Levels of Inventions
crafting innovation together

Level 5 (<0.3%) Level 4 (< 4%)
Level 3 (19%) Level 2 (45%)

• Pioneering Invention – based on newly discovered phenomenon • Pushing existing technology to a higher level • Revolutionary

• New System Developed • Interdisciplinary solutions • Replacing old technology with New

• Radical change or elimination of one principal system component • One Engineering Discipline • Resolution of a physical contradiction

• Slight Modification of the system • Knowledge from different areas within the industry • Resolution of a technical contradiction

Level 1 (32%)
Confidential

• A simple improvement • Knowledge within the trade • No system conflicts are resolved

© Crafitti Consulting Private Ltd.

March 1, 2009

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© Crafitti Consulting Private Limited www.crafitti.com CRAFITTI CONSULTING IS INCUBATED AT NSRCEL @ Indian Institute of Management (IIM) Bangalore

Multi-Dimensional Multi-Perspective (MDMPTM) Valuation does not produce a single $ number. The methodology gives a sum total of past, current and potential future value that the asset may create in a range of possibilities. Typical output will be
Value of the Product is 2 Million USD with a range of plus-minus 15%. Given the potential of entering a new market using this product the ability to create new, enhanced and/or cutting-edge products will increase by 50% which has an estimated value of 1 Million USD. If the product is not enhanced with sustained customer feedback and/or an effort is made to completely revamp the product, it is estimated that product life will not be more than 3 years. This requires the need to generate the next version or a new version of the product within 18 months. Further, given the very high design and architectural complexity of the product which is currently estimated to be 10 times higher than the ideal design possible, the next version should not be more than 5 time s the ideal design. We propose if the next version is not released in 30 months with cleaner less complex design, the value of the product will be reduced by 25%. Hence in the worst case scenario, the value of the product is equal to 0.75 x (1.7+0.7) = 1.8 M USD. In the best case, the value of the product is estimated to be 3 M USD. In the most likely scenario, this comes out to be 2.4 M USD ±15%.

About Crafitti
Crafitti Consulting is an innovation consulting firm in the business, science and technology space. Crafitti uses a co-crafting approach to facilitate innovation in various enterprise contexts with the help of powerful frameworks, techniques and tools, honed over the years through research, experimentation and grassroots application.

© Crafitti Consulting Private Limited www.crafitti.com CRAFITTI CONSULTING IS INCUBATED AT NSRCEL @ Indian Institute of Management (IIM) Bangalore

How do we work with our co-crafters?
The CRAFITTI engagement includes processes to explore any system through our science based proprietary frameworks developed over a period of almost 2 decades of experimentation, exploration and evaluation. The process steps include mining Patent and web based information in a particular field to provide large number of triggers in multitude of directions for the Inventive minds to come out with large number of ideas for developing products, processes and patents in the chosen technical field. The Co-crafting Innovation methodology results in a large number of possible ideas that can be converted for commercial benefits in very quick time. Starting from the vague information about the technological area to look into, the Co-Crafting Innovation process rapidly penetrates through the barriers of psychological inertia in the minds of experts, to create insights into the problems that have hitherto been not possible. The systematic way to convert the unidirectional thinking along the core competencies of the experts in the fields into multi-dimensional storms of ideas in a limited amount of time is the greatest benefit that the clients have achieved through the Co-Crafting Innovation Engagements.

Contact Details

© Crafitti Consulting Private Limited www.crafitti.com CRAFITTI CONSULTING IS INCUBATED AT NSRCEL @ Indian Institute of Management (IIM) Bangalore

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