The most reliable factors in determining what returns a disruptive IP generates are the costs at the starting point.

Specifically, the price paid for an IP and the cost of assets to energize it are the most reliable means of determining forward value.

Picking the right IP at the starting point can make all the difference.

Two IP classes currently coexist, each embodying divergent risk/reward metrics.

The first — and most abundant — is the “incremental” IP, serving to improve, upgrade or streamline that which already exists. Risk is usually low as outcomes are largely predictable. Rewards — in turn — usually offer modest to good returns.

The second IP class is the “disruptive” IP, serving to replace an existing paradigm yielding orders of magnitude value creation. Risk factor varies as a function of the value proposition. Rewards — assuming prudent execution — can be stellar.