By all accounts, the nation is undergoing a sort of innovation jubilation: Patents are rising, best-selling books give how-to advice on intellectual property, companies sell newly created technologies to one another via e-marketplaces, and an entire, multibillion dollar category of software, known as knowledge management, has arisen.

The number of patents filed has climbed significantly in the late 1990s. In 1997, the United States Patent and Trademark Office granted licenses to 124,068 applications. In 1998, it granted 163,147, and in 1999 (the latest year for which figures were available), 169,094. That's a 36% increase in just two years. Business processes are also increasingly targeted for patent applications - items such as one-click e-commerce purchasing. About 2,500 applications now flood the Patent Office annually for "business-method software," reports the Massachusetts Institute of Technology's Technology Review magazine.

Business philosophers have dubbed current times the "idea economy," stemming from the 1995 book of the same name by Roger Hendrix, a management consultant, and Rob Brazell, an Internet entrepreneur whose third start-up, IdeaExchange, is an auction site for intellectual property.

Other best sellers are spouting a similar analysis. How knowledge and collaboration benefit corporations is the subject of "The Social Life of Information," by John Seely Brown, chief scientist at Xerox, and Paul Duguid, a research specialist at the University of California at Berkeley. The marketing of innovation is spelled out in "Rules for Revolutionaries: The Capitalist Manifesto for Creating and Marketing New Products and Services" by Guy Kawasaki, a venture capitalist, and Michele Moreno, Kawasaki's co-author on a previous book. And the list goes on (See Business Masterpieces: 10 books you must read, 2000 Best Issue.)

True to form, this idea economy is leading to its natural capitalist conclusion: e-marketplaces that traffic in patents and intellectual property. Just this November, for example, Eastman Kodak sold a license for a chemical patent to a German-based company via tools from The Patent & License Exchange Web site, at www.pl-x.com.

If intellectual property has become the true product of every business, then where do you, your technical staff and the network fit in? It depends. You can ignore the phenomenon and be relegated to service repair status; you can foster innovation with IT tools that help; or you can seek and drive revenue-generating ideas that put IT at center stage.

Back to school

Old-school thinkers consider IT the guard dog of intellectual property. Its role is to secure the network so no one can steal information. Beyond that, IT folks should stay out of the business strategy.

"Companies need to define what their problems are at a strategic level. This can be done completely without IT," contends David Coleman, managing director of Collaboration Strategies, a knowledge management consultant. "It's much more time-consuming and expensive once IT gets involved."

More progressive thinkers consider IT to be an enabler.

"At Capital One, IT is always included. Just because I'm in IT doesn't mean I can't be a thought leader. The traditional idea that IT only does the plumbing is passe," insists Ann Noles, knowledge champion for credit card giant Capital One Financial Corp., in Falls Church, Va.

The idea of IT as an enabler is seen in the booming genre of knowledge management software. This market will grow from $1.4 billion in 1999 to $5.4 billion in 2004, predicts IDC, a market research firm in Framingham, Mass.

Knowledge management software attempts to tap equally into the knowledge stored in people's heads and that stored through IT (such as in databases, data warehouses and enterprise resource planning applications). Through knowledge management systems, employees relate problem-solving stories, identify in-house experts and find needed tidbits from vast document stores.

As an enabler, protecting intellectual property is still IT's goal, but you accomplish that differently. You protect intellectual assets by giving employees the tools to create and use them.

"It's very difficult to innovate in a silo. Knowledge management connects people across business units," Noles says.

Enablers turn e-mail into intellectual property storehouses; build portals to make navigating back-end data easier; install real-time collaboration tools so remote workers can share ideas as if they're sitting around the same conference table.

What a great idea

A story told by John Old, a focus area leader with Texaco's information management group in Bellair, Texas, showcases this new enabler role.

Texaco loves its e-mail, Old says. "Everyone uses e-mail. Outlook is the first thing they start up in the morning and they stay in it all day," he describes.

Old and a co-worker began to ponder the vast amounts of data contained in Texaco's e-mail correspondence. Within those thousands of daily conversations was invaluable problem-solving knowledge, undiscovered experts and project decisions about which others surely should know. "Since e-mail is the natural way people communicate at Texaco, we knew there had to be important things going on in it," he says.

Old wondered how Texaco could mine that data without violating employee privacy. He discussed the idea with David Gilmour, co-founder of Giga Information Group and then its chief research officer. A few weeks later, Gilmour called Old and pronounced, "John, you're the godfather of a start-up." Gilmour left Giga to found Tacit Knowledge Systems, a maker of e-mail mining software that protects privacy.

Essentially, Tacit's KnowledgeMail product does what Old envisioned: It extracts and analyzes noun phrases in e-mail messages, while keeping senders' identities anonymous.

Tacit launched in November 1999, with Texaco among its first users. Texaco has been running KnowledgeMail in pilot mode, with about 500 users, for about a year, Old says. The pilot is proving fruitful, allowing users to find co-workers with the knowledge they need, simply by searching the KnowledgeMail database. For instance, if a drilling crew runs into "differential sticking," workers can search on that term to find others who've dealt with that problem. Texaco plans to go corporatewide with KnowledgeMail, but had not formalized rollout plans by press time.

More common is the story of IT recognizing a grass-roots knowledge management effort, and stepping in to centralize and manage it. That's why Procter & Gamble began an enormous, nine-month project to build a knowledge management portal for its 100,000 employees worldwide.

Employees complained that they couldn't easily find information on their massive intranet, says Dan Gerbus, a project manager with P&G's Internet Applications Group, in Cincinnati. Gerbus's team, the Global Business Services group, is the corporate centralized IT department. The group saw several business units trying to solve this knowledge management problem on their own, and decided to take action.

"We saw that this was a project that made sense to bring central," Gerbus says.

Using Plumtree Corporate Portal from Plumtree Corp., San Francisco, P&G will give employees a single point of access to one million-plus intranet pages, thousands of Lotus Notes databases and documents scattered across various NT file servers. It will equip users with collaboration tools, charts from SAP data, Oracle Sales Analyzer and other data warehousing reports. From a single customized browser window, employees will get an at-a-glance view of the information needed to do their jobs.

An enabler is obliged to help internal users solve knowledge management problems efficiently. For instance, a sudden influx of instant message traffic on the network could be a signal that your people need real-time collaboration.

Still, to perform the enabler role well, IT folks must fully understand the business side. How do people work, where is the knowledge being created and how can IT architect a tool that will fit into employee work habits seamlessly, contends Carl Kerwick, program manager for Enterprise Systems at MimEcom Corp., also a Tacit user.

"IT has to be involved in the architecture requirements. But I caution that the tool is not the process," says Kerwick, an IT person by training who is now a business manager for this e-commerce outsourcer in San Francisco. If the underlying business processes change, the IT person should change the knowledge management application. By doing that, you'll make knowledge worker productivity increase (see The knowledge assessment).

Knowing your own worth

In more avant-garde organizations, IT isn't just the enabler, but is a rich source of intellectual property. For instance, three weeks ago Merrill Lynch launched a $1 billion venture capital fund for seeding technology companies conceived by its employees.

In another example, the IEEE Communications Society initiated a pilot program that makes the society's intellectual property available over the Web. That property is the papers written by its people, who are experts in communications technology. But the program goes a step further by allowing society members to provide live consulting to queries.

The society represents around one-fifth of the IEEE membership at about 59,000 people, says Jack Howell, executive director. It produces an enormous number of white papers, articles, analysis and proposals - all of which have been published in print and online. On the topic of wireless alone, the society published 1,229 documents since 1999 in just three magazines and two journals, Howell says.

Typical search engines weren't all that effective in helping people - normally vendors of communications wares and enterprise users -find the right bit of knowledge from these huge stores. They returned too many irrelevant results. Also a Web search did nothing if the person needed to question an expert.

So the society initiated a pilot using MindStores software from MindCrossing, of Mountain View, Calif. MindCrossing is a Web storefront through which experts can sell documents and advice. For the pilot, the IEEE is using its wireless intellectual property published since 1999. It is sorting these documents into seven main areas that drill down to 52 subareas. Once a MindStore visitor locates authors in the technical area needed, that visitor can contact the expert, if that expert chooses to be reachable via the application.

Although the nonprofit IEEE will not charge for documents retrieved via MindStore at this time, its members, who are volunteers for the society, can charge for the consulting they perform via the system.

Many companies have been equally innovative in applying IT as intellectual property. Some have attempted to set up their crack network departments as outside consultants available for hire when not working on internal projects (see Can your IT department become an outside consultant practice?).

Others started with an IT idea, then bought the technology they needed to make their idea happen. For instance, Aventis Pharmaceuticals, a drug maker, needed to develop its e-business. It wanted to use the Web to build personal relationships with the patients who use its products, without rocking the boat with physicians.

"Physicians are our No. 1, 2 and 3 customers. Everyone else comes way down the list," says Kirk Schueler, senior vice president of e-business for Aventis and CEO of its new IT offshoot, MyDoc Online, Inc.

Aventis thought that if it could help physicians build Web pages for patient scheduling and other administrative tasks, it also could somehow use those pages to reach patients. But it had no expertise as an Internet software manufacturer. So it purchased just such a company: MyDoc Online, a maker of Internet software for doctor's offices that performs scheduling, authorizations and offers drug and health information.

Because Aventis knew a lot about its products, the diseases its drugs appeased, and doctor's business practices, it only needed the technical expertise to turn this intellectual property into a new business unit, Schueler says. With the purchase of MyDoc Online, it launched a new division and began piloting the software. The pilot participant is the Austin Regional Clinic, a group of more than 140 physicians in Austin, Texas.

With MyDoc Online, physicians create Web pages that can schedule appointments, manage patient questions, process insurance authorizations and so on. Patients prescribed Aventis drugs can also create Web pages, Schueler says. They can fill the pages with tools to help them with their condition, from information on the drug to advice on lifestyle changes that can help their disease. Doctor and patient can also communicate directly with Aventis via the Web pages created with MyDoc Online.

A drug company sponsoring a suite of Web applications is "a new model," Schueler says, noting that Aventis hasn't yet worked out details of how that new model will generate revenue. MyDoc Online could become a subscription service or offer fee-based services, such as checking insurance eligibility.

Identify ideas

Still others have spun out start-ups from a database of documents. That was the genesis of MSDS Online, a Web site that manages material safety data sheets for hazardous chemicals. MSDS are required by the Occupational Safety and Health Administration to be available to any business that uses, stores or sells hazardous material, such as paint or chemicals.

Co-founded by a venture capitalist and his network consultant brother, the company began its life as an integrator for building internal MSDS databases, a service it still performs.

As it grew its store of MSDS, it launched a Web site to distribute them, which led the company to create new software products for makers of hazardous materials. This software lets chemical makers write Web-enabled MSDS and distribute them via the Web. This then caused fob.com, makers of procurement software for the chemical industry, to purchase MSDS Online for an undisclosed bundle, says the former venture capitalist brother, Kyle Pope, vice president of data services for MSDS Online in Chicago. It all started with a technology idea.

"IT people are out there every day in the trenches,"s Pope says. They stare at valuable intellectual property constantly, but often fail to recognize it as such, he contends. To spot it and harness its power, "look for something you are doing in-house because you can't find anyone else to do it for you," Pope says. "Look for something that has a mass audience É and something that can be productized."

After that, pipe-up when you've found that great idea, Pope encourages. Or to apply the words of IBM's founding father, Thomas J. Watson, "Follow the path of the unsafe, independent thinker. Expose your ideas to the dangers of controversy. Speak your mind and fear less the label of 'crackpot' than the stigma of conformity. And on issues that seem important to you, stand up and be counted at any cost."