Report 103
A weekly newsletter on creativity, ideas, innovation and invention.
Tuesday, 15 November 2004
Issue 42
Hello and welcome to another issue of Report 103, your weekly newsletter on Creativity, ideas, innovation and invention.
As always, if you have news about creativity, idea innovation or invention please feel free to forward it to me for potential inclusion in Report103. Your comments and feedback are also always welcome.
SELLING RAW IDEAS
Every creative thinker has probably thought what a wonderful thing it would be if there were a market for ideas. Would it not be terrific if we could just dream up ideas and sell them to companies that could implement them? It seems such a win-win situation. The creative thinker provides an idea for a few thousand Euro, the company implements it and makes millions.
In spite of the apparent seductiveness of ideas, few are being sold at the raw stage. Here I define raw ideas as fresh ideas that have been evaluated to some degree, but have not been developed. A developed idea would be an idea that has been developed into a business plan, a prototype or similar.
In fact there is something of a market for developed ideas. There are many research companies which devise, develop and patent ideas, but then license the ideas to other companies to implement. Sometimes developed ideas are sold outright. More often they are licensed and the research company receives a royalty on each sale. Over the long term, this is generally a far more attractive option than selling an idea for a set fee and saying goodbye to it.
Alternatively, in America there is an unfortunate trend where company A has an idea, develops it, patents it and waits for another company (call it company B) to implement a similar idea. As soon as this happens, company A sues company B for patent infringement. Company B can either pay a settlement immediately or pay their lawyers to fight it out in court. Sadly, for many companies the second option is cheaper than the first - even if company B can prove that company A's patent is not applicable. This is a particularly American trend thanks to the relative ease of getting a patent, the relative ease of taking legal action and the huge rewards often given as a result of legal action.
If, on the other hand, you want to sell raw ideas, then there is a big problem about showing an idea to a client in a way that protects both sides from fraud.
Imagine you have an idea to produce colour coordinated tyres for cars. You try to sell the idea to a tyre manufacturer. They say they are not interested. Then, a year later, you see that the same manufacturer is selling colour coordinated tyres to all the car manufacturers and the idea is a sensational hit.
You contact the car company, inform them that they have taken your idea without paying for it and have made millions from it. They tell you that they actually had the idea six months before you presented it to them and they were already building prototypes when you visited their headquarters.
Who is telling the truth? You could, of course, try to sue the tyre manufacturer. This is particularly easy in America. But that would be very expensive.
Indeed, it is for this very reason that most large companies are not interested in buying ideas and are unlikely to speak to an inventor or an ideas salesperson unless the idea being sold is patented – so that the idea originator can PROVE ownership – or the idea originator signs an agreement that prevents her from taking any legal action against the company with respect to the idea. Clearly the latter is not an attractive option for someone trying to sell an idea.
So, if you want to sell ideas, the most effective approach would be to put together a creative team to work on the ideas, a researcher to confirm the ideas are original, a lawyer to file for patents in the key markets where you want to sell your idea and a sales person to sell the ideas. As you have ideas, patent them and then try to sell them. It is certainly doable. But you would need a team of at least five people and capital investment to operate for at least two or three years before income started coming in.
An alternative is to sell idea generation rather than finished ideas. Here you – or more likely a team – offer to brainstorm ideas on a particular issue for a company.
Let's go back to the tyre company. This time, they decide they need some new ideas to make their tyres stand out from the competition's. They hire your team to brainstorm ideas for them for a set fee.
You and your team come up with a half dozen interesting ideas, one of which is colour coordinated tyres. In this scenario, the company has paid you for generating ideas and the right to use the ideas you generate rather than pay for an idea itself.
Brainstorming services like this comprise a very small market. I know of a couple companies offering such services and all of them are contractually obligated to keep quiet about what they have done for whom.
Perhaps, however, as outsourcing becomes more and more commonplace, companies will begin also to outsource more of their creativity and we will see some real growth in the brainstorming market.
ACTING ON INTUITION WILL COME BACK INTO FASHION
According to Fast Company magazine article “What Next” (http://www.fastcompany.com/magazine/88/fast-forward-index.html) which looks “ at the surprising people, ideas, and trends that will change how we work and live in 2005,” acting on intuition will be one of the hot trends of next year. Indeed, it is the very first of 101 trends they list.
The article starts: “Focus groups. Data analysis. Gut-wrenching rationalizations. All of these tools -- and for what? To come to the same conclusion you probably reached unconsciously within the first few seconds of thinking about the problem?” and goes on to cite Malcolm Gladwell's soon to be published book on intuitive decision making: “Blink: The Power of Thinking Without Thinking” (Little, Brown and Co., January 2005).
Gladwell's argument is that we intuitively make decisions within seconds of thinking about a problem and that further research and analysis is often designed to confirm our intuition.
I would further argue that excessive research and analysis stifles innovation. Focus groups and data analysis tend to focus on past behaviour and the results from these activities tend to encourage reusing past solutions. Intuition powered by inspiration is the way to come up with really innovative ideas.
Imagine you run a company which produces ready-prepared food. You can review past buying behaviour to determine which products sell best. You can put together a focus group which will talk about various ready-prepared meals they have had, what they have like and what they have not liked. In the end, you will have some product ideas based on existing products. You might add mushy peas to your microwave steak and kidney pie and reduce cooking time on your veggies to make the broccoli crispier. But focus groups and analysis of purchasing patters are unlikely to give you any radical new ideas.
Alternatively, you might come to my house for dinner when my wife isn't around (because if she was around, you'd want her stunning Thai cooking). I might serve you my vegetarian linguine with a tomato, broccoli, tofu and Sambal Oelek (an Indonesian spicy pepper purée) sauce seasoned with a variety of Eastern and Western herbs. You might well say: “Wow! This fusion between Italian and Southeast Asian food is really interesting. I bet there's a huge market for it!”
You might then decide to produce a range of Italian-Asian fusion foods featuring Linguine Baumgartner (which you kindly named after me). Obviously, launching a whole new range of products carries a much bigger risk than making minor improvements in existing products. But with increased risk comes the possibility of substantially increased rewards.
So, if Fast Company is correct, we can expect to see some really innovative new product, service and marketing ideas over the next few years.
In the meantime, give the article a read. Whether or not you agree with their trends (which are very American oriented), they are certainly thought provoking.
THE END OF TEXTILE QUOTAS – THE DAWN OF TEXTILE INNOVATION?
You may not be aware of it, but something really, really big is happening in the global textile market: the end of textile quotas.
For those of you who do not follow the international textile market, textile quotas are a collection of bilateral agreements between countries in which countries are given fixed quotas of how much textile products they can send to other countries. This system has been in effect since 1974 and was designed to protect the textile business in developed countries from low cost producers in developing countries. In 2005, it will cease.
The problem is, for most textile products, China can produce quality goods at unbeatable prices. Moreover, with over a billion people, there is no shortage of textile workers. Finally, China is competitive in every aspect of the textile business, from weaving, to dying to manufacturing finished products.
For China, this is great. For any other country with a textile industry, it is worrying. Unless new last minute legislation is adopted to control international trade in textiles – and several countries including the USA are threatening to do this – the non-Chinese textile industry will have to innovate or die.
That's because the only way to beat a competitor who can beat you on price is to beat them on other factors such as quality or the innovativeness of your products. And the Chinese are rather good at quality.
That leaves innovation. Innovation in the textile business can come from several areas. One area, of course, is innovative new designs. But this really requires being at the high end of the market and presenting work in fashion shows in Paris and Milan. This is the top end of the market where prices are high and the number of buyers are limited.
People who buy their clothes from Marks and Spencers, C&A or Macy's generally want rather conservative looking stuff they can wear to work and school and the odd high fashion frock for special occasions.
That leaves a handful of areas for textile innovation such as: developing new textile materials with special properties; the fusion of technology and textiles such as clothes; and finding new uses for textiles.
Clothes which monitor the vital signs of the elderly, for example, could send alerts via an SMS message should vital signs veer from safe levels. Children's clothes that repel dirt, mud, food and paint would sell like hotcakes. Fabric that could become stiff or soft at the press of a button would offer all kinds of possibilities. Fabric that changes colour or behaves like a computer monitor could find many, many uses.
So, over the next five years, we should either see some really exciting new ideas in the textile and clothing industry – or massive bankruptcy in the textile industry across the world. I am hoping for the former.
For more information on the international textile trade, tariffs, etc, visit the World Trade Organisation's web site pages on textiles at http://www.wto.org/english/tratop_e/texti_e/texti_e.htm.
AUSTRALIAN PARTNER FOR IDEA MANAGEMENT
We've been seeing a lot of interest from Australia in idea management and corporate innovation. In order that we can provide a respectable level of service for clients, we've formed a partnership with Inform Consulting – which is based just outside Sydney. Inform Consulting will work with us to develop market share in Australia and New Zealand as well as to provide support to clients in both countries.
Like all our partners, Inform Consulting is a small, dynamic company that firmly believes in providing top quality service.
Contact info: Inform Consulting Australia Pty Ltd,
Cottage 3, 1 Barrack Lane, Parramatta NSW 2150, Tel: 02 8844 1400,
Fax: 02 8844 1499, Web: www.informc.com,
e-mail: info@informc.com
Happy thinking
Jeffrey Baumgartner
