Value creation is the performance of actions that increase the worth of goods, services and businesses. It benefits customers, who receive improved products and services, as well as shareholders of the company who wish to see their stake appreciate over time.

How does a company create and maintain value?

Through innovation processes that build a portfolio of patented intellectual property.

A company’s value is not only measured by its annual revenue, but also by the worth of its IP portfolio. Intellectual property includes inventions, designs, brands or any other nonphysical assets that add value to a company. Innovation leads to business success, and it is imperative that it is managed and protected. As Attorney Gary Winer has said, “intellectual property law puts a fence around your innovation to keep competitors at bay, so they can’t copy, use, import, or sell it, either accidentally or through reverse engineering.”

In the past few years, Dell has acquired an extensive IP portfolio as it shifted focus from hardware to the tech market. According to the U.S. Securities and Exchange Commission, Dell owns 3,449 patents and another 1,660 patent applications pending as of last year. Virginia-based firm M*CAM, which specializes in valuing corporate intellectual property, states that careful analysis of Dell’s IP portfolio has revealed hidden value in the company. Dell’s US patent portfolio includes fixtures for desktop, notebook and mobile devices, battery and power management technology-related patents, hard drives, storage systems, server technologies and wireless patents. Dell certainly understands the value of intellectual property.

While Dell may not be perceived as one of the top innovators in the tech world, it is apparent the business has created value through its substantial IP portfolio. Some of the biggest banks in the world are vying to buyout Dell as negotiations continue this week. Private equity firms Blackstone Group, Silver Lake Partners and billionaire investor Carl Icahn have submitted preliminary offers. If completed, the Dell deal could lead to a $24 billion dollar takeover, the largest leveraged buyout since 2007!

These investors realize that intellectual property can generate real money for a company, and that there is indeed intrinsic value in a company’s intellectual property. If the Dell buyout isn’t proof enough, a year ago Microsoft paid AOL $1 billion for some of its patents.

When thinking about your own approach to IP protection, remember that the wolves are always at the door. Marketing, prudent business measures, and IP (properly cared for and fed) will help your business grow and succeed.

Here are some questions to ask yourself to stay on track:

• Who handles your organizations patent applications and the “care and feeding” of your IP portfolio?
• When was your last patent, and what was it for?
• Have you experienced any recent product counterfeiting or copycat issues and what was the outcome?
• Does the leadership or Board have Innovation Governance to maximize IP portfolio ROI

Look for creative new way to buy and sell patents through IPXI, a new initiative that offers an IP exchange.

You can learn more about the above points, including how to protect your ideas, by reading  Robert’s Rules of Innovation. Robert Brands is the founder of InnovationCoach.com and the author of “Robert’s Rules of Innovation”: A 10-Step Program for Corporate Survival, with Martin Kleinman, published by Wiley.