Entrepreneurs with inquisitive and lively minds often come up with ideas for inventions, but they don’t always know whether the concept is worth developing — or how to develop it.
One option is to submit the idea to a so-called “inventor service firm,” many of which promise to help develop, patent, pitch, and even market the invention. However, what most inventors don’t realize is that, like vanity publishers, these inventor service firms rarely reject an idea, and expect the inventor to pay in advance, even though many of them provide few (if any) actual services that will help the inventor realize income from their brainchild.
To help fledgling inventors understand who best to pitch with their invention, and what course a successful invention should take to the market, the Intuit Small Business Blog spoke with Alan Lish, a clinical assistant professor at the University of Houston, who works to commercialize the university’s technology advances and also consults with outside inventors.
Understanding Complementary Assets
According to Lish, once you’ve developed your idea for an invention, your first task is to decide what you are selling: Are you going to license your invention to others or make the product yourself? To make this decision intelligently, it’s important to know who controls the “complementary assets” related to your invention. Basically, these are all the resources you will need to bring your invention to market: design, production, marketing, sales, distribution, and so forth.
For example, if you are working on a new item for the auto parts industry, you’ll be happy to discover that there is no centralized control over the complementary assets. There are thousands of stores and thousands of manufacturers in that industry. On the other hand, if your invention targets the golf industry, you’ll have to contend with very tight control of the complementary assets by the sport’s few major manufacturers.
“Depending on the nature of your invention,” Lish says, “you sometimes need a lot of complementary assets, sometimes far fewer. Sometimes they’re controlled by the incumbents in the market, sometimes they’re not. Understanding this situation is central to identifying the right person or [people] to pitch.
“When the complementary assets are tightly controlled, it’s almost impossible for a newcomer to break into the market,” he says. “In such situations, you’ll often find more receptivity, and fewer obstacles to overcome by licensing your invention to one or more of the big players already in control of that industry.”
When the complementary assets are not tightly and centrally controlled, there may be sufficient room for a newcomer to begin manufacturing and distributing a worthwhile new invention. “That’s relatively easy to do,” says Lish, “because all you need is money, which you’ll have if yours is a good idea.”
Protecting Your Invention
Once you have analyzed this basic situation, you can start looking for the best places and people to pitch your invention.
Lish suggests you start by thinking about your invention in terms of intellectual property. Whether or not you can protect your IP from unwanted infringement should greatly influence who you pitch, and how you expect them to bring your invention to market. (Remember that a patent is not a guarantee of IP protection; it’s only a license to sue those who infringe on your rights.)
Whether you’re looking for potential licensing partners or for customers who will buy the product that you manufacture, you should identify the companies that can benefit most from your invention. Examine their specific value chains — or what these companies do that makes them money.
Look for the places where your invention best fits into each of these value chains, where it adds the most value. Lish recommends the people who control that element of the value chain as most likely to be receptive to your pitch.
Help Your Business Thrive
Get our Newsletter
Sign up for our newsletter to receive your free 30-day trial of QuickBooks