How to Make Money From Your Invention (Chapter 2, Part 1-3) – Inventions and Innovation

How to Make Money From Your Invention (Chapter 2, Parts 1-3) - Inventions and Innovation

1. What are Invention and Innovation?

Innovation ConceptThe words invention and innovation are sometimes used interchangeably. If you look up the words in a dictionary, invention is defined as “a device, contrivance or process originated after study and experiment.” Innovation is defined as “the introduction of something new.” It is easy to see that the two terms can overlap in meaning. However, the key words are “originated” for invention and “introduction” for innovation. From your perspective as the inventor, we define the terms as follows:

Invention is the solution to a problem whereas innovation is the commercially successful use of an invention.*

Innovation is, therefore, a process which can be described in simple terms as:

Idea/Invention => Development => Commercialization

*This definition of “invention” is used for the purposes of this paper only and is different from the legal definition of “invention”.

2. Technology Push vs Market Pull

The Licensing Decision 1The commercial sector today is always on the lookout for new opportunities from inventions, either made internally or from outside the company. An important aspect of an invention is whether there is an immediate opportunity in the market place (market pull) or whether a market needs to develop to utilize the invention (technology push). Clearly, market pull is the easiest path to follow since all aspects of the potential opportunity can be evaluated and commercialization decisions can be confidently implemented.

Technology PushThe technology push approach is somewhat more difficult, but still a viable approach. Without an apparent marketplace, the inventor may need to do a great deal more of the development in order to show where and how the new technology can be used before any commercialization opportunities can be realized. However, technology push can lead to commercial success. Some of these “before their time” inventions just need time to be digested. Consider the Post-it note discovery. There was no market for these items with poor adhesion until 3M and others found out how useful they could be. Other successful innovations from a technology push perspective are the internet as a commercial tool, hand held computing devices and LCDs replacing CRT monitors.

The important point to be made is that if your idea or invention is a technical solution to a problem and does not first address a present need in the marketplace, you have to be willing to champion its development until a real market opportunity is identified.

3. Stages of Development

The truth about innovation is that most ideas or inventions never get commercialized. It has been estimated that only about 5% of the active patents are being commercially utilized. Some studies have also shown that only one idea is commercialized out of the 1000 new product ideas generated and that only 1 in 4 products in development get commercialized.

Failure is success in progressWhy are there so many failures? Robert Cooper, a pioneer in new product development processes, investigated the cause of failure of new ideas at many companies. He concluded that the major cause of failure relates to market analysis. That is, the companies did not understand their target markets well enough to know how to market properly or whether they should even have been committed to the commercialization at all.

Successful innovation requires not only strong technology capabilities but a sound background in the commercial and financial realities of today’s marketplace. How do you handle such a daunting task? One way, used by many of the largest and most successful companies, is to divide the innovation process into key steps or stages. This systematic approach, called the Stage/Gate Process, was developed by Robert Cooper (Winning at New Products, 2nd Edition, Addison-Wesley Publishing Company, 1993). He divided the innovation process into stages, ultimately leading to commercialization. Certain preset requirements had to be met to go on to the next stage. In this way, the key elements in the process were considered all along the path to commercialization.

Compass pointing in the direction of innovationThe key steps in a generic innovation process are:

Ideas (Stage I) => Preliminary Market & Technology Assessment (Stage II) => Detailed Study (Stage III) => Development (Stage IV) => Prototype/Trials (Stage V) => Final Business Analysis (Stage VI) = Commercialization (Stage VII)

At each stage, if enough positive information from the markets, technology and business information, the process can proceed down the path to success. The key point here is that doing your homework is the most critical factor in the success of new products.

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Disclaimer

This information is presented for the general education of independent inventors by the Invention Patenting Group. The Invention Patenting Group makes no warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed herein, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer or otherwise, does not necessarily constitute or imply its endorsement, recommendation, or favoring by the Invention Patenting Group.

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