Innovation’s not easy…and there’s other ways to get value from it

According to a couple of intellectual property commercialisation experts doing a mini road trip late last year; a) we’re doing it completely wrong, and b) realise that patents can be sold and/or licensed.

Paul Adams of Auckland-based EverEdge IP says while New Zealand has no shortage of incredible ideas for a world that has a huge demand for innovative products and technology, there’s a commercialisation gap in this country. It’s not so much what people commercialise but how it is done that matters most.

And the way most Kiwi companies (and others around the world too, so we shouldn’t feel we’re alone on this) are set up, innovation and commercialisation is almost doomed to failure right from the get go.

Among his observations are:

  • Having too many ideas can be worse than having too few
  • Commercialisation is expensive (for every $1 spent on innovation, typically $7-$15 needs to be spent on commercialisation) and starving ideas does not succeed
  • Selecting the wrong ideas creates major long term problems
  • There are obstacles to innovation inside corporate structures
  • Incentives and compensation for innovation is back to front
  • Decisions are driven by a desire for solid data – but high growth innovations have little available data (hence the tendency to choose ‘safe’ innovations
  • Talented managers are rapidly promoted – with no time to understand areas well enough to commercialise, plus a tendency to concentrate on the short term payoff ideas

“If a manager promotes an idea that is wildly successful, they often receive little or no direct reward,” says Adams. “If they promote an idea that fails, then they’re often punished with a loss of career prospects. Such an all risk, no reward situation tends to the promotion of safe, well-known ideas that are rarely high growth.”

Adams says it effectively means that organisational pressures kill innovation; and it isn’t that managers are stupid, they are simply responding rationally to their environment. On this premise, “unless we change the environment and the way innovation and commercialisation are treated, managers will continue to make decisions that retard or ignore the highest potential innovations,” he says.

He suggests a number of ways around this rationale yet destructive outcome, contending that the number one factor in success in innovation and commercialisation is CAPABILITY. From Adams point of view, companies must build an internal commercialisation capability while working with an external capability to help deliver immediate projects and build management capability he says.

The corporate and commercialisation skill sets are almost completely different he says.

Whereas the classic corporate skill set is structured decision making processes which looks to reduce risk, a commercialisation mentality is flexible, responsive and even ad hoc in its decision making, while being able to accept and work with risk.

While corporates favour specialists, avoid failure and work with reliable, solid data, commercialisation favours generalists, finds that failure is frequent and data is often unreliable and irrelevant.

The corporates target large, well known markets with quick certain paybacks while preferring certainty and known facts, commercialising companies’ initial markets are often small and unknown, payback is often distant and uncertain, at the same time being comfortable working with uncertainty.

Adams’ presentation segued into Chicago’s Global IP Law Group managing director Steven Steger who contends that NZ businesses are almost totally ignoring the option of selling and licensing patents overseas.

This is a legitimate way to extract extra value from R&D, and the sale of IP is a means to make more money beyond the physical shipping of a tangible product he says. Patents should therefore be seen as something separate from the actual business, and there is increasing recognition that it is a separate asset.

“A company may pursue a particular line of R&D, but if this doesn’t result in a particular product or service, a return can be obtained from selling the patents,” he says.


About sticknz

sticK is by Peter Kerr, a writer for hire. I have a broad science and technology background and interest, with an original degree in agricultural science. My writing speciality is making the complex understandable. I am available for outside consultancy work, and for general discussions of converting a good idea into something positive
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8 Responses to Innovation’s not easy…and there’s other ways to get value from it

  1. Neal says:

    Excellent post. I agree totally that NZ has no clue how to commercialize. From my perspective, the universities, owners of most of the IP, think they know how to do it all. There are many egos interested in setting up and running paper companies so they can say they were directors or CEOs of BS companies. The other challenge is the TT offices overvalue their IP. the result is overseas companies have no interest due to overvaluations, encumberances or clueless TT offices that are impossible to deal with. The key to improving our lot is to get the IP out there into the hands of companies that can actually do something with it.

  2. Pingback: » Innovation’s not easy…and there’s other ways to get value

  3. Great post. Paul is right that commercialisation seems to be the hardest part of innovation for New Zealand companies. I’ve often found that it’s a version of the tall poppy syndrome. We want our ideas to speak for themselves. It’s great to see NZ moving towards more confidence in innovation and the commercialisation of R&D.

  4. Doug Calhoun says:

    Paul Adams comments dovetail nicely with a 2010 Uniservices report at:

    The authors of that report did a survey of how well businesses understood and managed their IP. Their conclusion was that while there was a general awareness of IP that awareness was not matched by an understanding of how the system worked or how it might be managed. It also reported that from their literature survey, tech transfer was important in advancing innovation and patents are the currency of tech transfer.

    But, as you can see from the above link, MED has disowned the report and ignored its recommendation that the government should put policies in place to lift our IP game.

    Another area for Minister Joyce sort out!

  5. Pingback: Do Patents Really Have Nothing to do With Innovation? | sticK – science, technology, innovation & commercialisation KNOWLEDGE

  6. Pingback: Web 3.0 + Kiwi IP = connection to the world | sticK – science, technology, innovation & commercialisation KNOWLEDGE

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