Developing a Strategy
Developing a strategy
To be a successful inventor, you will need:
The order in which you do things will vary according to the nature of your invention and your personal circumstances. Some authorities recommend getting your IP protection (patent or registered design) into place as soon as possible. Whilst others recommend first investigating the economic potential of your invention and thinking about your strategy for protecting and then developing the invention. Either way, it is important that you keep your information out of the public domain. Remember, a patent cannot protect information that is already out there. The more people you tell your ideas to before you have a patent, the more likely it will be that your patent can be successfully challenged. In some cases, you may even jeopardise your chances of getting a patent. If it is necessary to disclose any details, we recommend you do it only under an agreement of confidentiality, and that this agreement drafted by an expert.
You will need to review your progress regularly as information on the development problems and costs, production cost estimates and evolving market conditions becomes available, so that you can stop if it begins to appear unviable or the market changes. If it has been done before, consider what advantages your invention offers over the previous product.
Having decided on your intellectual property protection requirements and made the appropriate applications, you will need to:
This article is a synopsis of newsletter produced by John Jacob of Wallingup Research.
There are five common strategic reasons why an invention might not succeed. These are not the 10,000 things that you must do correctly to avoid failure, ranging from bookkeeping to patenting to marketing. Those multitudes of things are the Tactics of success. The difference between Tactics and Strategy is this:
"Tactics means doing things right. Strategy is doing the right things."
The Zeroth mistake (coming before or underpinning all the others) is putting Tactics before Strategy. In that case, you run around doing all sorts of things. Some of them you do extremely well, but few of them are the things you should actually be doing. Can we all agree, please, to put Strategy first?
The first major strategic mistake in innovation is failure to thoroughly evaluate the idea. Inventors fear to do this above everything because of what they might find out. This is the most important phase of your invention. Follow these steps meticulously:
Mistake #2 is an inability to develop the idea before running out of time, money, ideas, resources etc. When this happens, and it frequently does, it is especially tragic because the idea itself is often a good one. And, this particular mistake is such an easy one to avoid:
Mistake #3 is the failure to develop the individual. Does this surprise you? It is widely recognised that an invention's success or failure rests mainly on the personal effectiveness, leadership qualities, salesmanship, intellect, and energy of the inventor! So, if you really want your invention to succeed, reinvent yourself into the sort of person who succeeds.
I personally recommend the following: www.breakthroughtosuccess.com.au.
Mistake #4 is a failure to obtain adequate financial backing. Inventions fail when the developer tries to do it on the cheap or tries to retain control of the company. You need at least $100,000 just to obtain adequate intellectual property protection. If someone says they can do it for $10,000, put your wallet away. You'll be $10,000 poorer and have nothing of value to show for it. A patent is worthless unless you have plenty of lawyers and money with which to chase down infringers globally. The government does not enforce patents; the courts do.
Technical development and production design also cost money. If it's worth doing, it's worth doing all the way. So go out and get the $3,000,000 or so you really need to do it right.
Mistake #5 is failure to plan your exit. The main reason this causes inventions to fail is that as a general rule, inventors make terrible managers or company executives (see Mistake #3). There are notable exceptions to this rule, and you might be one. In any case, if you are not doing something totally different in five years' time, you have probably failed. So plan your exit: a trade sale, management or employee buy-out, an IPO, licensing the IP, etc. The options are numerous, so consult with a business development expert, for example:www.provenstrategies.com.au.
There is no better time than right now to start innovating. New needs are emerging all the time, resources are abundant and new ideas are everywhere. Good luck!
The basic steps include the following (from IP Toolbox):
Legal confidentiality is a body of law developed by the courts to protect relationships of confidence and the information disclosed in such relationships. The information is protected for as long as it is remains publicly undisclosed. For confidentiality to be recognised by the courts, the information needs to be imparted as confidential (or told as a secret) in a "relationship of confidence" (eg non-disclosure or confidentiality agreement, employer-employee relationship) and there is actual or potential for real damage to the person imparting the information resulting from unauthorised use or dissemination of the confidential information. Trivial breaches of confidence are unlikely to invoke the protection of the courts. Confidential information will not be protected against misuse if it is disclosed in the product it self by analysis of a product (reverse engineering) to determine its composition and method of manufacture. Protection of a formula under a legal confidentiality agreement could be very difficult if people are able 'discover' the key ingredients of a product by taste or smell, chemical tests or microscope examination etc, without access to the formula that the manufacturer considers to be confidential.
Intellectual Property & IP protection is not an end in itself. In this contribution, John Jacob cannot stress this enough; IP protection should be a means to achieving your commercial aims.
Questions that one needs to ask:
These questions should be addressed as part of a business plan. It is essential that IP is considered when drawing up your business plan. This will ensure that all the IP in your business is properly identified and decisions made as to what kind of IP strategies should be followed to protect your commercial assets.
This article is a synopsis of a talk by John Jacob of Wallingup Research.
John suggested a few do's and don'ts in relation to IP. Firstly, there's the issue of disclosure. Disclosing or publicising your idea to others before lodging an application with IP Australia could destroy any potential for gaining a registered right. This is particularly so with patents and designs. Obtaining a registered design or patent grant is predicated on the basis that your invention or design is new. Disclosing to others before you lodge an application and obtaining a priority date runs the risk that your idea will be regarded as part of the prior art base. So keep it secret at least until you've obtained a priority date from IP Australia. If you do have to disclose your idea to someone, make sure you have a confidentiality agreement drawn up first.
Secondly, and this follows on from the previous point, is the issue of timing. For any of the 4 registered rights, a clock starts ticking, once you lodge your first application with IP Australia. Your application will go through different stages of processing and you have to be ready to proceed to the next stage. If you are not ready then you'll either be up for extension fees or at worse your application might lapse. Therefore, it's crucial before lodging your first application you understand the process thoroughly and are ready to advance your application when it is required.
Thirdly, searching relevant databases before you lodge will help identify any prior art in your area of technology, what IP is owned and by whom. In relation to a patent, a prior art search will also help in the drafting of your patent specification to ensure your patent is worded differently to the prior art.
John likened lodging an application without conducting at least a preliminary search beforehand is like setting up a tent at night, without any light – you are going in blind!
There are a number of steps involved in putting together a good business plan. It does take time and a lot of work to put a plan together. While a business plan is not a guarantee of success, it is one of the best mechanisms available to plan for changes, to address any need for additional finance and as a way of avoiding possible pitfalls.
In your business plan, you will need to consider your invention from the following points of view:
Follow you planned procedure with determination, but keep an eye out for changes in your market and competitors. Abort if your invention is superseded or becomes unprofitable.
The planning process also puts you in a better position to ask the right questions of advisers and other interested parties. The following is a quick checklist of how to approach your business planning and what should be included:
Implement strategies to monitor progress and achievements in relation to the plan, and; Always keep the planning process alive in response to product and market changes.
See also www.iptoolbox.com.au
To develop your invention into a business, the invention development process involves moving through the following phases.
Each phase requires careful consideration and there may be impacts on subsequent phases that will require revisiting some of the earlier phases. Further, there may be emergent conditions that require a re-think of the basic assumptions, direction and conclusions.
Cameron Gibbs supplied the following information from www.openii.com.au. Openii supplies Innovation Development Services. The information is supplied without guarantee or warranty of any kind and is only permitted to be reproduced by the Inventors Association of Australia (Federal) Inc.
For inventors to be successful they will have to develop an understanding of each of these phases. There is a lot to learn here and some areas are more involved than the average inventor would imagine. For example, many inventors consider themselves to have great concepts but without having gone through structured Research and Evaluation and Concept Refinement stages, their concepts are often lacking. They move out into the world trying to get attention and often they encounter a front of apathetic listeners. Concepts must not only be refined but also their concept communication needs to be structured for maximum effect. An inventor's concepts need to connect with real people in the real world and be useful.
Research and Evaluation involves assessing the invention for its feasibility but also for its commercial potential. There is a lot to this. Here I recommend getting help from your local Inventors Association. It is never a good idea to assess your own inventions or to get advice from friends, family or those with a vested interest in telling you that your idea is great. Some businesses will charge a lot of money to tell you that your idea is fantastic but not deliver any real benefit.
When getting an assessment you may be directed to consider things like "Why hasn't this been done before." There are many possible reasons to consider here and some of the answers to this question surprise many inventors. It is rarely because nobody has thought of it. Few inventions are completely novel. Most are adaptations, modifications or coincidental inventions. In other words, someone HAS thought of it before. This is one reason why I encourage inventors not to worry too much about novelty and securing Intellectual Property (IP) protection. Instead, think more about delivering a product or a service to a ready market. Having a market is more important than having a completely unique idea. Do not disregard novelty and IP protection but be mindful that the value of IP protection must be viewed in context. IP protection is a tool of business that is used to secure a commercial advantage. There are sometimes other ways to secure this advantage. This should be discussed as a part of the Business Planning stage.
Concept Refinement involves taking all of the feedback that has been given to you during the Research and Evaluation stages and using it to modify the invention. Modify the invention to improve features and function, to improve the ease of manufacture and to include features and functions that would be valued by an end user. Remove any feature or function that would not be valued. Here you may need to repeat the Research and Evaluation stage and again Refine until you get it right.
Business Planning is a whole area of study that is well covered by a number of government departments supporting small business so I will not go into detail here. I will only say that Intellectual Property (IP) protection is something that needs to be considered strategically as a part of a business plan. AGAIN, IP protection may not be necessary in some cases if there is a better way to achieve a commercial advantage. To learn more about business planning, in WA the Small Business Development Corporation can help. In other states there should be an equivalent small business centre offering free advice.
Project Finance may involve self-funding, borrowing, finding partners with money, finding partners to invest services and materials, venture capital, starting a company and selling shares etc. The types of finance required should be considered as a part of the business plan. Each form of capital raising requires a different business strategy but always you want to look at how the investment is going to be returned. Whenever you are looking at using someone else's money to develop your invention, there are rules that govern how you can raise that money and how you can use it. You may want to consult a professional to find out what these rules are. For some free advice, please consult the Australian Securities and Investments Commission. Please note that there are rules about asking for investors in an advert or by soliciting members of the public. There are legal dangers here that you must navigate.
Raising capital is often about creating a good pitch. In other words, you have to sell the business concept to an investor (as mentioned above, please keep in mind the laws governing how and when you can do this). A good investor pitch will cover all areas of a business plan, be aesthetic, entertaining and it will build confidence in the project and in the team that is assembled to develop it. There are specialists who can help you to create a good pitch.
Prototyping: Here you want to learn things that you could not otherwise have predicted during the design stages. Prototyping is not just about making one that instantly works. Expect to build at least 3 versions of your invention. Here you should learn about Research and Development (R&D) methods.
Manufacturing: Issues of machining, tooling, process manufacturing etc. all need to be considered. These issues actually need to be considered during the Prototyping stage. One stage leads into the other. Get advice from some qualified and enthusiastic Engineers.
Distribution is about the delivery of the product to the end buyer. You may wish to sell the product yourself, use a website, get your product into a mail-out catalogue or build a distribution network. Remember that all involved in the delivery of your product will want to make money out of doing so and it is only fair that they do. Things to consider here when building a distribution network are Recommended Retail Price, Wholesale Price and the Manufacturers Price. With each price, you will have to work into it the costs and a fair profit margin for each. Remember that your Recommended Retail Price has to be one that your customers are willing to pay. So you will have to keep the cost of manufacture and wholesale down to ensure that it all fits into what your customers will pay.
Sales involve considering issues at the point of sale. These issues may be worked out by the distribution method selected but there may be some surprises to come. As an example, people like to hold onto their money and so making a sale can involve a bit of psychology.
Something that a lot of inventors do not consider is after sales support. If your product has defects and needs to be returned, how will you manage repair or replacement? In Australia, you are required to offer this support. The Department of Consumer and Employment Protection can guide you on the laws required.
There is a lot more to write here but as I think you can see, inventing is a whole lot more involved than most inventors suspect. But the good news is that there is a structured path of learning here and it can be navigated successfully. I have seen many successes. In fact, they are all around us. Everything you bought has come to you because of people who have got this right.
For more information, please consult the committee members at your local Inventors Association.
Based on a talk given by Andrew ...... Centre for Innovation SA
You should put as much effort into marketing as you have to develop the product. Unfortunately, many, or most inventors don't follow this rule.
What is the market?
What is the product?
What is the price?
Most professionals would say that marketing is the same for all products, but you do have to change style and focus to suit different products.
(Presented with the assumption that our Members are at an early stage of developing their product.)
Regarding Intellectual Property, a lot of attention is paid to patents. Patents are usually extremely expensive and are only as good as the money you have to defend them (A personal sticking point of Andrew's). Generally, a patent is seen as a useful marketing tool when selling to investors. Know how (secret knowledge) in a product is very important, yet often under-rated. Most successful organisations Andrew has worked in have sold their products on know-how. Venture Capitalists ask, "Do you own the IP? What if somebody infringes on your patent?" Therefore, you, the inventor, have to be willing to take that risk. So, when developing your invention it is very important to keep it clean and simple as possible; and the ownership straightforward, to avoid messy situations. Google is his favourite tool by far, his "best friend" where he can find information about any product, for example, anything existing that is similar; and this can also lead into marketing.
It can be surprisingly simple to do a "desk assessment" to find out if it is commercially viable. Try to determine how many you can sell; Adelaide makes quite a good proxy world market. Start with the approximate Adelaide numbers, then multiply by 13 to get the Australian market, and multiply by 50 to get the estimated world market. Entrepreneurs ask for this kind of information. Assess the price compared to its value in the market.
Factor in the competition and what percentage of the market you think they will take. Know them inside out. Talk to the users. Identify the most sophisticated companies that are likely to use the product – they most likely will know all of the products on the market. Over a couple of hundred such interviews, Andrew has found they would all see him if they thought he had something of interest or was very good. By talking to the usersundefinedwho are often happy to talk about the product and bring up problemsundefinedyou will come to know what people want.
A business plan is essential; Andrew has seen business plans that make the 2 – 3% success rate actually happen. You need to be ready when the chances arise.
How much can one trust the confidentiality of government departments? Andrew is happy to sign confidentiality agreements; but usually adds a time limit, of two years. Howard Schulze mentioned that it was recently judged illegal not to have a time limit; it became "unlimited restriction of trade". The Centre for Innovation and potential investors get confidential information most days, and must be conscious of their own ethical standing.
Andrew has noticed that a lot of success stories are down to technique and applying brains to a topic. Two local uni chaps had an idea for a new way of looking at websites. That developed into an international company called www.maximine.com, which can manage your website in a management assessment type of role. Sometimes there's a flourishing product with interests held by a group of people who sometimes split up, resulting in a very uncomfortable situation, often bad enough to destroy the product. So it is best to start with a proper partnership agreement; that helps make the situation more manageable.
NETWORKING WORKS – people get to learn things and make new contacts. Try to get together with different people, who between them will cover the skills you don't have. Tony Rossiter's setup for "BackAssist Technologies" is a good example of such a structure. When an idea is obvious, its success depends on your implementation skills, such as getting it to market quickly. Howard Schulze gave 2 examples to show that it's surprising how often the important breakthroughs come from someone who is "outside the trade". One is a simple device for watering trees is the "Waterwell". Secondly, a radiographer who stepped out of his own area of expertise to invent the best energy-saving device in the last 100 years. It is very difficult for aficionados to think broadly. A major characteristic of entrepreneurs is a quality of "unreasonable persistence" – remember the 2% inspiration, 98% perspiration parable.
Andrew said, "It takes about 10 years to be an overnight success."
What are the essential elements that an inventor needs to be successful? Have you got what it takes?
Firstly you must have the idea for a device (or the device itself) that will serve a useful purpose and is better than the existing devices.
Then you need...
Vision to see where your device will fit in to our lives, its potential to improve the way we do things.
Extraordinary determination and tenacity to see your idea develop into a marketable product.
Enthusiasm, optimism and communication skills to enthuse and motivate the people around you - your team of helpers or co-workers, and your potential clients.
The "nous" or intuitive judgement to make timely sound decisions.
And all the while you need a wide range of skills "jack-of-all-trades", engineering, manufacturing, marketing, managing and more.
So ... Have you got what it takes?
Not many of us have got it all, but with help we can get there. Don't be afraid to seek help. Or even take a leap and release control of your product – a small slice of a big pie might be better than big slice of a small pie.
Take full advantage of the benefits of your membership –We can't give you the idea but we could help you see another useful purpose, suggest an improvement, or notice the shortcomings. Newcomers are encouraged to ask for a confidential assessment of their ideas and to continue contact with the committee as their ideas develop.
Our guest speakers have an amazing range experience and skills to provide you with advice and encouragement, as well as where, when and how to get help in those areas where you need it.
Are you a jack of all trades?
Very few inventors are. Almost all successful inventors have recognised their limitation and have built at team around them with complementary skills.
Your developing strategy should consider the available skills you and your team have and the skills you need to cultivate or outsource to develop your invention.
Then you need a strategy to develop of acquire team members with the rights skills and at the right times.