The title of this short article represents one of the toughest “sells” in the field of innovation. There are millions of clever ideas out there. The challenge is whether there is a need for these ideas that is strong enough to cause someone to “buy them.” Just because an idea is neat, unique, clever or even useful, doesn’t mean that discriminating buyers will pay for it. (NOTE: I discussed this in my last OPEN FORUM article: “I need that!…”). When you have a problem and someone offers a solution, it’s not too hard to judge whether the two match up well. When you have an unexpected solution, finding the problem(s) it will solve is usually much more challenging.
Matching Ideas with Needs is a Challenge
My friend Mike Fruhling, CEO of BFS Innovations, Inc., finds “orphan ideas” and helps match them up with actual, viable business needs and customers who can bring scale. Said another way, he connects solutions with problems. In the process, he necessarily goes down a lot of “blind alleys” as it’s tough to predict which unsolicited ideas will resonate within companies that receive them. However, now and then, he makes a wonderful connection and a successful new product is born out of a rejected idea. The problem is not too few innovative ideas, but rather, too many, too underdeveloped ideas.
In Mike’s last newsletter BFS Innovations, he offered a wonderful explanation of how this happens, and I’d like to excerpt from it here. Mike does a great job of describing the “why” of large corporations rejecting so many unsolicited submissions.
In Search of the Corporate Sugar Daddy
There is a remarkably consistent pitch that inventors and small business people serve up to me when seeking my new business development services. It goes like this: "I have a great idea for an invention that will make millions. All I need is for a big company to fund the completion of the development, and they can then put millions of dollars behind marketing it and distributing it to Walmart, Target, Kroger and Walgreen’s. We'll all be rich."
In effect, most of these folks are looking for a corporate Sugar Daddy...an entity that knows what it takes to create and implement a business plan and has the resources and distribution strengths to successfully pull it off. The entire premise of the television show American Inventor (the inventor version of American Idol), which aired several years ago was based on the inventor's pursuit of the Sugar Daddy.
The harsh reality is that corporations aren't routinely seeking "ideas". They're far more interested in commercially viable, protected/protectable technologies and products that can be feasibly and profitably manufactured and sold. Some companies, like Kraft in particular, take pains to explain on its "Innovate With Kraft" web portals, what types of innovations they're seeking, and they list examples of these. They even go on to say that they strongly prefer ideas that are near, or are market-ready. Ideally, these products are already being sold. [Note: P&G has a similar process, since it gets flooded with underdeveloped ideas.]
Disciplined companies such as P&G and Kraft seek external innovations that won't require them to assume unnecessary risks. If you had the technical depth and resources these guys do, you would likely approach external innovation precisely the same way. Their (and other companies') confidence in a new initiative grows as the uncertainty around its development and commercialization decreases. …seeking to submit anything short of a functional prototype to a corporation would be a waste of time and energy.
Despite all of this, inventors cling to their beliefs … that they will succeed once a major corporation embraces their vision and will agree to fund the development of their idea (in effect, to assume their risk). Could companies promoting their external innovation initiatives do more to recalibrate innovator expectations? I think so. If they were to do so, there would be isolated instances where potentially worthy innovations are withheld. However, it is far more likely that this recalibration will result in a substantial reduction in corporate time and resources (and inventor false hopes) expended on unworthy and/or "undercooked" submissions.”[1]
The Two-Edged Sword—I’ve Felt Both Edges
I’ve been on both sides of this situation, first as a C-suite corporate executive in charge of R & D and later in charge of entire companies; later as an “inventor” with what I thought were a couple of very clever ideas. (Don’t all inventors think so?) The one difference between me and the thousands (or millions) of inventors with clever ideas was that I understood how the risks a corporation takes in using someone’s clever idea could far outweigh the benefits. Since most inventors have a very high opinion of the value of their ideas, they almost uniformly feel “under-compensated” when a large corporation chooses to accept and commercialize one of them. Then, when the idea is altered—even a little—for practical reasons, they become irate, or worse outraged.
The Stolen Idea—an Ugly Mess
A worse situation is where an inventor’s submission sneaks through the “rejection of unsolicited submissions” process and someone looks at it, or even more commonly, the company independently comes up with a nearly similar idea. Then the inventor is certain it “stole” his idea. When this happens the only ones who will make money from the situation are the opposing lawyers. The result is almost always sad. This is why most companies require inventors to sign a waiver before they submit their ideas.
Protect Your Invention
What can an inventor do? First, insure the idea/invention has legal Intellectual Property (IP) protection: patents, trademarks, copyrights, or whatever combination applies. Next, take the idea at least to a working prototype stage or better yet, to a limited market test. I know. That takes money and most inventors don’t have much money. But somebody has to pass the idea through these steps as part of its commercialization. Who better than the creator, who can modify it to “fix” objections, flaws and unexpected quirks? Intellectual Property protection also costs money, but IF the idea is a real winner, it’s worth its weight in gold. IF the idea is a loser or not all that unique, this can often be found through on-line searches of the U. S. Patent Office web site.
Finding a Home for Good Ideas
Once you have IP protection, you will find more companies willing to look at your idea, especially if you have a working prototype and any valid market test data. There will still be a negotiation about the value of the idea, whether you want a percentage royalty, a prepaid royalty (you sell the rights for lump sum). If you have a company that encompasses the idea, they want to actually buy your company. This is an approach many high tech giants like Microsoft and Cisco have used to grow. Find an upstart, a small company with a good idea and acquire it entirely.
There you have it. Forewarned is forearmed. If you are a creative investor, do your homework, get your IP protection, prove your concept and then go try to sell it. Doing it the other way usually leaves “a bad taste in everyone’s mouth,” except the lawyers who untangle the mess.
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About the Author: John L. Mariotti is President and CEO of The Enterprise Group. He was President of Huffy Bicycles, Group President of Rubbermaid Office Products Group, and now serves as a Director on several corporate boards. He has written eight business books. His electronic newsletter
THE ENTERPRISE is published weekly. His Web site is Mariotti.net.
