Lean IP: How do you combine Lean Innovation with your IP strategy? (part 2)
More and more companies are discovering this Lean innovation either Lean startup can help them better streamline their innovation processes. Especially for totally new product development, the application of Lean innovation principles results in a more efficient and successful innovation pipeline.
In this blog series, Francis-Paul Janssen from AOMB Intellectual Property and Joyce Oomen from Pimcy Innovation & Portfolio Management answer these and other questions. We thank Jenk de Jong of the Chamber of Commerce for his feedback and revisions.
In part 1, we introduced our blog series, the writers and structure of the blog series. In this section we will discuss the basic principles of Lean Innovation and IP Strategy.
Innovation / Lean Startup / Lean innovation
Innovation is the successful realization of innovation. In our view, an innovation is only successful if the new product meets (sales) expectations. The moment an innovative idea is actually put on the market, there is therefore not immediately successful innovation. After all, when nobody is waiting for the product, a lot of resources are wasted, but the innovation does not contribute to the growth of the organization.
The term 'Lean Startup'is misleading. Most people know the term “Lean" well. Lean is “a management philosophy aimed at creating maximum value for the customer by reducing waste as much as possible”. (source sixsigma.nl). When using the term “startup”, people like to think that the method is aimed at start-ups. However, existing companies can benefit enormously from the Lean Startup approach. To avoid this confusion, we also call this method Lean innovation.
Lean Innovation is a method to systematically test and successfully market truly innovative ideas within a company.
By making Lean Innovation part of business operations, you bring new élan and an entrepreneurial spirit to the company. It helps to break through resistance to change. And change is needed to survive in the long run.
Lean innovation has the following advantages:
Lean Innovation is aimed at finding out as quickly as possible whether the idea you have is relevant for the customer. If this is the case, you will also start building your product in small steps. You determine what you think (based on customer conversations, among other things) how the customer will respond to a particular promotion or product feature, you test this in practice and you learn from the outcome. You do not go through this cycle once, but sometimes daily. The result is that you learn faster and faster and you know better and better what works and what doesn't. This allows you to significantly shorten the development time for new products and services.
Lean Innovation is aimed at testing whether your assumptions are true as quickly as possible. If your assumption is not true, it is not seen as failure, but as learning. You may be completely on the wrong track. It is then time to take a new approach, or perhaps to stop completely. Innovation becomes cheaper because projects that are not promising are stopped faster. The further you are in the development process, the higher the costs. So you avoid the high future costs by testing as soon as possible.
Innovate more successfully
Unfortunately, most products still fail or at least fail to live up to expectations. Often after going through the full development cycle, there have been many marketing and sales costs and an entire distribution apparatus set up. With Lean Innovation you only start up scaling when you have established that a product market is fit. You have been able to prove to management or investors that there is actual demand for your product or service. This significantly increases the chance of success.
Intellectual Property (IP) is a collective term for exclusive rights that individuals may own to the results of their intellect and creativity. With such an exclusive right you can prevent others from earning money with your result. IP thus offers protection against counterfeiting by third parties.
Patents, trademarks, designs
The most important IP rights are patents, designs, and trademarks. A patent is used to protect technology, functionality is then really looked at. This technology is often hidden in the product, and is less visible to the consumer. Right away Model you protect the appearance and design of a product. This is really about the aesthetic character of the product. Right away merk you can distinguish your product from other products, so that consumers recognize that product better.
Consider, for example, the Apple IPhone: The technology is inside, the product has a characteristic (recognizable) design, and the consumer will recognize the Apple brand (and have a certain positive - or negative - association with it).
Capturing IP does not happen automatically and costs time and money. Traditionally, procedures for recording IP have been regulated by country. In addition, when establishing a right in a first country, you will be given 12 months to protect the same right abroad. So you don't have to incur a lot of costs in one go. But: a year can be over in no time, and then you want to know where you stand from a commercial point of view. Applying too early is therefore not wise.
Because IP is regulated nationally, this also means in principle that you have to go through a grant procedure for every country where you want protection. That also takes time and money. Over time, many countries have agreed in mutual treaties that a single grant procedure is sufficient. For example, there is the European Patent Convention, which offers access to patent protection in almost 40 countries with a single grant procedure - also in non-EU Member States.
Value from IP
IP remains an investment that you have to deal with strategically. The most important consideration is of course: what do you want to achieve with IP, what value should it have for you? You can use IP as follows:
1. Market protection: You want to use IP to gain a large market share for your own product. You keep comparable products from competitors off the market, you actively detect infringement and take action against it.
2. Freedom of action: You use IP to ensure that you are free to market your product. Here you prevent that others can hold you accountable for infringement. This can be done by using older (no longer protected) techniques, or by ensuring that the rights of third parties are invalidated or not granted.
3. Increase company value: You want to use IP to increase the value of your company. For example, you will need money from investors in the future. For investors, having IP is usually a prerequisite for obtaining financing. You can also use IP to increase the brand value of your company, because consumers see your company as innovative. IP is then mainly used as a marketing tool.
4. Earning money:
You want IP use to make money. You have developed a certain technology that is of interest to third parties. Or you have a strong brand name that is of interest to third parties. By means of licenses, third parties may use your technology or brand, and you earn from your IP.
Important decision moments
For most IP rights, the creation must not have been announced before the day of application for the right - not even by yourself. That does reveal a field of tension: because how do you test your product with your customers, without losing the opportunity to register a patent? And on the other hand: how do you prevent unnecessary investment in a patent, because afterwards it turns out that your customer is not waiting for your product?
As we will see later, it is quite possible to get information from your customer anyway, without revealing your creation. This way you obtain information from your customer and prevent capital destruction. In other words: get started with Lean IP.
We, Francis and Joyce, have long cherished the dream of developing toys for children. And while brainstorming for this blog, we got a great idea!
But how do you turn that idea into a successful business? In the next part, we move to the first stage: Discover!