From Research to Market Value: Innovation Value Teams

“For IP consultants advising universities or product development companies, providing a supporting infrastructure is critically important to any innovation activity. This infrastructure should include three components: 1) Business, 2) Engineering, and 3) Intellectual Property (BEIP).” a recent article in Harvard Business Review, “Real Innovation Requires More Than an R&D Budget,” Dr. Gina O’Connor makes the case for having three capabilities for any innovation initiative: Discovery, Incubation, and Acceleration (DIA), in which R&D is only a portion of Discovery. In my experience with multiple companies, Discovery was allowed as long as Senior Management didn’t know about it, Incubation had a zero-dollar budget, and Acceleration only happened by chance. But since a few ideas made it out of the so-called “innovation pipeline”, there was the appearance that innovation was working. And I admit, the few ideas that made it into products were pretty good. Ours was a haphazard process at best, however.

O’Connor further attempts to connect R&D to market value, which is admittedly difficult for those that have tried. It is nearly impossible from a third-party perspective, using only publicly available data. She asserts that the best third-party correlation occurs when there are dedicated innovation teams, and when the company goes public with their innovation efforts. But from my experience, connecting R&D to market value is much more complex.

The BEIP Value Team

For IP consultants advising universities or product development companies, providing a supporting infrastructure is critically important to any innovation activity. This infrastructure should include three components: 1) Business, 2) Engineering, and 3) Intellectual Property (BEIP). This group, let’s call it the BEIP Value Team, should be capable of influencing the direction of the R&D (research) activity. This is the litmus test for the team – to influence the research activity. If the team merely follows the research in hopes of identifying a best fit, the research may fail the market in at least one of three ways: The research a) may never find a market; b) may not be manufacturable at a cost the market can bear; and c) any competitive advantage may be lost due to a failure to properly capture intellectual property.

The BEIP Value Team is compatible with O’Connor’s Discovery, Incubation, and Acceleration model, although the make-up of the team may (or should) change with time as the research transitions from Discovery to Incubation to Acceleration.

Of course, the greater the “distance” from the innovation to the market, the more disciplined the process must be for there to be any opportunity to move the needle on market value. For example, fundamental research may start with a curiosity, a data anomaly, or unexpected test results. Although there may be a desire for that research to reach the market, that is not necessarily the objective. In cases involving academic research, the first objectives are to obtain research grants and publish their results. Leveraging academic research early in hopes of creating market value has many challenges but can be done repeatably with the right Value Team and a budget to support the activities provided by the business, engineering, and IP components in parallel with research.

Case Study

Let’s take a new material deposition technology for example. Key challenges for the technology are to bridge the research to one or more product concepts and to properly protect the research and products with high-quality patents. This is expensive early in the research phase, and likely cost-prohibitive to protect all conceivable product concepts. In contrast, any competitive advantage may be lost if done poorly or not at all.

It may be that a cost analysis for each product concept, including the cost of developing a high-quality patent portfolio, is the key driver for influencing the next phase of research. It may be that the material deposition technology was first conceived for a specific industrial market, but a lower-cost development path exists by introducing it first to the consumer market. Other types of analysis may include, for example: a) market analyses (which may have limited credibility if the product is so new there is no established market); b) patent white space analyses (which identifies the greatest opportunity for patent protection), and c) and competitor analyses (which identifies likely competitors and their response to introducing a product to the market).

Don’t Be Afraid of the Pivot

A reasonable outcome for any Value Team may include pivoting away from the fundamental research completely to develop a very different product. That may be completely acceptable with the right Incubation and Acceleration capabilities. For example, if the technology is optimized for the consumer market, it may later be discovered that a pre-existing material deposition technology is just as good with less product development risk. If value for the consumer product has been properly captured, the consumer product technology can be spun-out, sold, or licensed. If desired, the original material deposition technology may then be re-assessed for other market opportunities. The experience gained by the Value Team through a full product analysis cycle will most certainly improve the quality of the next-generation analysis.

In contrast with fundamental research, innovations that are driven by a market need are likely to be much “closer” to the market – unless there are fundamental problems to solve. The innovation may be as simple as a lid for a drinking cup to serve commuters on the go. The innovation may require a unique shape to avoid spills, one-handed installation on a cup, or may be capable of mixing condiments (such as cream or sugar) after the lid has been installed. In this example, the Discovery, Incubation, and Acceleration capabilities may be very compact, happening concurrently with multiple concepts. The Value Team will most likely develop multiple prototypes for field testing, assess each concept for its manufacturing capability, and assess the overall IP position for each concept. The IP position should include a white space analysis and an infringement risk analysis before final product selection.

Patent consultants should thus seek to become embedded with innovation teams as early as possible to ensure that market value can be exploited and to ensure that the value is not inadvertently lost.

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