The knowledge: Ciarán McGinley

When it comes to new ideas, Ciarán McGinley has them in spades. As controller of the European Patent Office, McGinley relies on knowledge-management and risk-management principles to ensure competitiveness and economic growth in Europe through innovation. Here he talks to Sandra Higgison about his interest in KM and his forthcoming keynote presentation at KM Europe 2003.

The European Patent Office (EPO) is a self-financing, governmental body that currently has 27 member states, around 6,500 staff and an annual budget of €1bn. It is the patent-granting authority for Europe, with a mission to support competitiveness and economic growth for the benefit of the citizens of Europe. Each year about one million patent documents are published around the world, with 200,000 in Europe.

People and technology are two critical factors that the EPO needs to function effectively. Seventy-five per cent of its costs are directly related to staff. As the organisation works in three official languages – English, French and German – it draws multi-lingual employees from all corners of Europe. Over 4,000 of its employees are university educated, generally in science, technology or law, and the patent examiners, who account for 55 per cent of staff, have trained for three years for the role. The EPO intellectually classifies around 500,000 new scientific articles and patent publications each year using over 120,000 codes, and has a corresponding database of over 35m documents. It is therefore unsurprising that information technology accounts for 15 per cent of the EPO's budget. The importance placed on such a highly educated workforce and the very nature of the EPO's work make it a good example of, as it calls itself, a ‘pure knowledge organisation’.

Ciarán McGinley joined the EPO in 1982. His career there to date has spanned a spectrum of roles that have helped shape the way he performs his current duties as controller of the EPO and member of the board. McGinley has worked and gained experience as a patent examiner, IT project leader, change manager, operational head of 450 patent administration staff, and project leader of a group set up to define the EPO's operational and economic strategy for the coming years. Today his role is to provide the main operational and strategic support at the EPO. "Aside from the classic management-control responsibilities, the Controlling Department, which reports directly to the president, co-ordinates the development, maintenance and implementation of our business plan," he says. "We also develop management-control systems to ensure congruence of goals and consistency of behaviour towards our overall mission." Within McGinley's responsibilities and the goals of the overall organisation, knowledge management plays a critical role.

As McGinley explains, the EPO has two interests in knowledge management and both relate closely to risk management. The first extends back to what a patent system offers society. "The concept of the patent system, as it originated in 15th century Venice, was that innovators would innovate best in an economy that gave them a temporary, exclusive right to their idea," he says. "The system managed a key risk – that of having one's ideas stolen and copied." Since then, a market in patent rights has developed where the system no longer manages risks just for inventors, but also for investors, competitors, partnerships, licensees, standards bodies, consumers and nation states. "The more effectively the EPO is able to manage patent risks, the more effectively it creates value to the economy," says McGinley. "This is done by accessing technical knowledge and applying patent-legislation knowledge to assess the potential scope of the idea the inventor wishes to protect." In this sense, managing risk is the same as managing knowledge.

The EPO's second interest in knowledge management is an internal one that is closely linked to external success. "As a pure knowledge organisation the vast majority of our expertise cannot be purchased externally; we must manufacture it ourselves," says McGinley. The ability to leverage what the EPO already knows is indispensable to its patent examiners, who must be able to find the most relevant prior work ever published, ensure a strict and consistent level of inventiveness is applied before granting a patent, and guarantee appeal procedures deliver justice. "Finally, from a strict management-control perspective, I would suggest that any activity that costs an organisation more than 1,000 man-years per annum is worth a lot of attention," he says. Alongside the human investment, the EPO has invested €100m in IT.

Just as knowledge management is important to the EPO’s internal activities, McGinley also sees the patenting market as playing its own significant role within the knowledge economy as a whole. He points to the development of trade over the centuries. "In capitalist economies, where there has been a relative scarcity of valuable, economic resources, markets will emerge to enable trade. For these markets to function efficiently and the economic wealth of the society to grow, certain networks are required," he explains. "Societies that have created efficient markets with relatively scarce, valuable economic resources have succeeded globally. Today's scarce resources are good ideas, the knowledge embedded in customers, employees and relationships, and value-added know-how." Networks that exist to enable economies to exchange knowledge include the internet and GSM (global system for mobile communication). As McGuinely says, the face-to-face, trust-based relationships they enable, along with transport networks, are enforced by contractual arrangements that create an intensely interconnected world.

Indeed, patenting seems to be in a 'pro-patent era', a term coined by Ove Granstrand, IP Professor at Chalmers University in Sweden. "The explosion in patent-licensing revenues, the greater importance given to intangible assets, the increased use of patenting for managing business risk and the new actors emerging all demonstrate that this 15th century concept is a crucial network to the economy, even six centuries later," says McGinley. In short, the patenting system can be seen as a network in the knowledge economy that can help in the creation of an efficient market in ideas.

Yet while he sees patenting and the knowledge economy going hand in hand, McGinley recognises that KM means different things to different people and businesses. Unlike many commentators, he does not criticise the term and does not have his own, unique definition for it. "I believe KM is a tool to fit a specific business objective," he says. "Since these objectives change, so too does the tool and its definition." Within the IP environment, McGinley believes that there are three key KM questions to be answered: Does the patent system better manage the economic risks for the various actors involved? Is the investment in KM measurably effective? Can a relationship be identified and established between the efficiency of KM and its effectiveness? "It seems to me that if the EPO had a better understanding of the way in which KM produced value within the intellectual-property world, then it would create greater value to the European economy," he says.

McGinley also feels there are KM issues that companies are failing to address. In particular he describes the unclear link between investment efficiency and effectiveness of KM. "Companies seem to be asked to make a leap of faith of almost religious proportions when it comes to investing in, for example, data warehousing or intranet tools for KM," he says. "Somehow, intuitively, one feels that if knowledge workers have faster access to the most relevant – and hopefully documented – know-how, then they should work more efficiently and/or effectively." But persuasive consultants and a 'me-too' attitude often lead companies to invest somewhat blindly. Indeed for some companies, their IT budgets are so small when compared to total expenditure that the decision is simply taken on the basis of marginal costs. As McGinley says, the resultant outcomes are entirely predictable.

Another aspect of KM that has been widely neglected, according to McGinley, is the ability to visualise information so that the knowledge worker can convert it into insight and applicable knowledge. "The EPO has masses of information in its databases. The trick is to present it in a visual form that gives insights that aren't available from simply studying the raw data," he says. "In many ways, visualisation is power in KM."

The final area McGinley believes requires further attention is the impact of organisational behaviour on KM. "The development of the knowledge economy changes the paradigm that information is power," he says. "Information sharing holds the real key." This statement is given weight by the open-source movement and patent-licensing pools. However, McGinley questions whether organisations are behaving according to the new paradigm or if there are still elements of their behaviour that remain embedded in the 'information is power' logic. "The clue is in the reward system between the staff and units within an organisation," he says. "In theory, one should reward the sharing of knowledge but many employees – and this may be a generational issue – continue to perceive that their psychological employment contract involves rewarding the information they keep to themselves." McGinley cites Sonera and Xerox's R&D centres in Palo Alto, in the US, and Grenoble, France, as good example of institutions with successful knowledge-sharing cultures.

These three problems are applicable worldwide, although having recently conducted research with Shell, EDF and the UK Health and Safety Board on society's attitude toward risk and how it will develop by the year 2020, McGinley has noticed significant differences between countries and regions. "Since in IP risk management and knowledge management are closely related, one key difference between Europe and the US is that Europe tends to operate on the principle that risk is bad, a threat and something to be avoided," he says. "Whereas the US tends to accept that risk happens, it creates opportunities and is something to be managed." McGinley gives an example from the pharmaceutical and biotechnology industries where Europe is moving towards the adoption of a precautionary principle while the US, for now, rejects this as unreasonable. "The implication for KM in Europe is that the company takes the risk, while in the US society takes the risk of a product having no side effects," he says. "For Europe the prime-mover advantage is removed and imposes a KM approach that goes beyond analysing the direct impact, pre-launch and post-launch of a product within the hitherto normal statistically significant samples."

This will form one of the subjects McGinley will examine in his keynote address at KM Europe in Amsterdam later this year. His presentation will highlight a few main themes and will outline how risk management is knowledge management in IP; the importance of IT and the power of visualisation; and scenarios for the future of risk management. He welcomes the event as a forum for practitioners to learn about and share different viewpoints. "Participants can extract what they think is relevant for their businesses and then see whether the products or services on offer in the exhibition fit their perception of how KM should be applied within their company," says McGinley. "The combined exhibition and conference format works well, as it combines KM thinking and application." As knowledge management will remain a top priority for the EPO, McGinley’s contribution to KM Europe and the knowledge economy as a whole will be invaluable.

Ciarán McGinley will be giving one of six keynote presentations at KM Europe 2003, 10-12 November 2003, Amsterdam. For more information visit www.kmeurope.com