MODULE 2 · LESSON 3 / 5
Competitive Openness™ (Openness Score™) — HHI explained
⏱ 14 min
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What is the HHI?
The HHI (Herfindahl-Hirschman Index) is the standard tool for analyzing market concentration. It has been used in industrial economics for decades. In Stratensight, it is applied to the patent space.
HHI formula
HHI = 0
Perfect competition — no dominant player
HHI = 10,000
Total monopoly — a single player controls everything
Top-5 > 20%
CONCENTRATED threshold or lower likely
Inversion Stratensight: high HHI = strong concentration = low Openness Score™. The more concentrated the space, the closer the Openness Score™ is to 0.
The 4 labels — strategic reading
The 4 Openness Score™ labels each carry a distinct strategic implication. The weight of the Openness Score™ in the Decision Score formula is 0.15 (15%).
Open space. Few barriers to entry. Strong competition.
Direct entry viable — many competitors but no dominance
A few players are emerging but no dominance. Viable entry window.
Partnership or solo entry — assess the new-entrant ratio
3-5 players control the space. Partnership recommended.
Acquisition or strategic partnership with a key player
1-2 players dominate. Direct entry = high risk of opposition.
Avoid solo entry — consider an acquisition or a pivot
FORBIDDEN labels — why?
Three labels were explicitly rejected from the Stratensight system because they create false impressions or dangerous analytical ambiguities.
Forbidden labels in Stratensight
Implications by verdict — the blocking guards
The Openness Score™ interacts directly with the Decision Engine™. Here is the key blocking guard involving the Openness Score™:
Blocking guard
openness < 20 AND verdict == INVEST→INVEST → MONITORAn Openness Score™ below 20 means a hyper-dominated space. Even with a high Decision Score, INVEST is overridden to MONITOR to protect the user.
DOMINATED implication
A DOMINATED space (0–29) does not mean "never enter". It means do not enter solo — the recommended path is a strategic partnership or an acquisition of an existing player.
Solid-State Batteries case — concentrated space
The Solid-State Batteries case illustrates the CONCENTRATED Openness Score™. 499 patents, acceleration phase, score around 46 — in the CONCENTRATED band (30–54).
Solid-State Batteries
Case study — CONCENTRATED space
Dataset
499 patents
Lifecycle
acceleration
Openness Score™
~46 → CONCENTRATED (30–54)
Dominant players
LG Energy, Samsung SDI
Strategic implication: Since the space is CONCENTRATED, solo entry is risky. The recommended path is a partnership or an acquisition with LG Energy or Samsung SDI, which control a significant share of the IP.
Key takeaways from this lesson
- 4 labels: OPEN(80–100) · CONTESTED(55–79) · CONCENTRATED(30–54) · DOMINATED(0–29)
- FORBIDDEN labels: FRAGMENTED, MONOPOLISTIC, OPEN MARKET
- Blocking guard: openness < 20 + INVEST → overridden to MONITOR
- DOMINATED ≠ don't enter — it means don't enter solo
QUIZ DE VALIDATION
1. An Openness Score™ of 62 maps to which label?
2. Which Openness Score™ label is forbidden in Stratensight?
3. Openness Score™ of 15 with verdict INVEST — what happens?