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Starter Yeast for Commercializing Innovations
By Dan Templeton

All innovation is good innovation. It doesn’t matter whether it’s invented in a think tank or a shower stall. What matters is the willingness of the innovator to try to make it a commercial hit. Trying to make a commercial success generally requires the need to offer something to buy shares in. The technology by itself, no matter how well presented is not investment-worthy. Worse yet are the odds of getting an investment in an idea. Precious few are the people who want to invest in an idea and ride it all the way through. Almost no one will invest in something that is an incremental improvement.

The innovator says, "I’m just a little fish. I have to keep my day job. How can I take this great idea forward."

Put the ideas down on paper. First, put the original innovation in writing. Include sketches or flow charts. Then, have a person that understands what the innovation includes read it over. Have that person sign and date the page. Keep the pages in a folder or, even better, start in a bound journal.

Take some time to stretch out the idea. Ask, "who would use it and why?" "How many of those users are there?" Why would they use it and what’s wrong with what’s being used now?" Try some quick TRIZ exercises:

• How can the product be made in two sections, instead of one? For example, there have been single doors for a long time. People developed two panel doors like French patio doors and/or folding doors for cupboards. Segmenting again, they produced room dividing folding doors, store-front roll-up doors, and sectioned garage doors. After segmenting, try to make it continuously like the plastic doors that roll-up and down in factories to allow trucks to pass through or the roll screen door made popular by Pella. And, finally, try to make door using a continuous system or using a field like a magnetic or an electric field. So far, those are only found on Star Trek and Roddenberry didn’t file a patent.
  
  
• Can the product be made to function in a different direction? A door swings on hinges. Change directions of motion and the door can be a revolving door, a pocket door sliding into or along the wall, and/or it can roll-up, roll side ways, or even disappear into the ground.

There well over 40 different TRIZ design screens to play with.

Ask "if today I received a patent, what would I do tomorrow?" Most people with a day job say, "Sell it to [Insert name of World Famous Brand company]. Let them make a big profit and give me a little piece." This is a great idea. Unfortunately, it isn’t reality. Imagine calling a new person every day for 10 years before someone answers the phone. Data gathered by a licensing trade group show your chances are better for getting the person to answer the phone than selling to a famous firm.

If this is the path, then think about who sells to World Famous Brand. Those are likely to be Large Brands who still ask, "What’s your name again?" Well, who supplies Large Brands? Maybe the seller is Little Brands. Where does Little Brands get its raw materials? They may get them from a firm down the street, or one that the sister-in-law knows one of the supervisors there. HERE YOU MAY HAVE SOME CREDIBILITY or you can find someone who does.

What will you ask for? The second part of this is the part about receiving money. Generally, the requests are for a lump sum upfront, a royalty paid on each item sold, or a combination of both. Data from the licensing trade group of which Aptimise is a member, suggests that lump sum payments occur when the buyer is collecting technologies or wants an exclusive arrangement. The risk is foisted on the buyer. Lump-sum-only arrangements happen only one time in ten. Royalties are often used when the success of the product is unknown and it may take significant effort to commercialize. Royalties shift the risk to the innovator. Still, royalties only happen in about 20% of agreements. The bulk of arrangements include both a lump sum and a royalty. It is obvious that strength in negotiating position determines the split.

Longer term planning for entrepreneurs. Successful entrepreneurs most often are not weekend wonders. They have spent years developing a network of contacts and scheduling opportunities to touch base with members of their network monthly or at least quarterly. Having the weekend flash of brilliance puts you at a disadvantage. Typically, without an entrepreneur’s network preparation, it may take 12-24 months to make the effective contacts.

Then comes financing. Even if you are just marketing the rights to the product, there will be samples to be made, trade show opportunities to showcase the product, phone calls, etc. Just like developing a network, knowing a commercial lending officer at a bank benefits you. Keep the officer posted on the project. Start with once a quarter, then progress to once a month as the project accelerates. Then, when you need to borrow, the bank at least knows you and has an idea about your business plans. Surprises lead to "No" or higher interest rates to cover the bank’s extra risk. The banker may be able to advise you on successful financing approaches and can be your advocate inside the bank.

Aptimise stands ready to assist in all aspects of commercializing the product, including product ideas, marketing, design, process engineering, equipment procurement, licensing, patents, brokering financing, sales, distribution and increasing profitability through lean sigma and other tools. Call us with your needs at 877-258-3255.