Most innovative businesses are initially based on one single, big idea. Whether they operate in tech, healthcare, fintech, or other industries, the main priority for any business is to focus on bringing this idea to market and ultimately making the innovation a success. This innovation is loved: carefully nurtured, protected (through patents, for example), and hopefully commercialised.
Businesses that continually innovate are like football teams on a winning streak, gaining momentum and breeding more and more success. Innovators, like footballers, are spurred on by success, and a great degree of swagger emanates from successful businesses that continually innovate. It attracts the best people, engages customers and raises the profile of the business. This sense of pride is a real catalyst for stimulating new ideas. Think Dyson. Many businesses simply lose their innovation mojo, only to be frustratingly superseded by disrupters. Think BlackBerry.
Once success has been achieved, challenges often follow including scaling up a business operationally. This can shift the focus away from innovation, which was at the very heart of their organisation. The business then reacts to market changes or competitor movement thereafter. Others simply lose their motivation or even their confidence to keep producing breakthrough, rather than incremental, ideas.
One fairly typical scenario is a VC funded business based on one big idea. The focus is always on getting to market, but often the agility and creativity level is high and the product definition pivots to achieve true success. While IP protection is appropriate for these types of businesses, many don’t actually go through the process unless it’s required by the investors.
For larger businesses, the innovation problems they face are very different. They need to innovate in order to keep up with their competitors and disrupters, but struggle to do so. As businesses grow, they get stuck in tedious and elongated product development processes. which means that their innovations take much longer to bring to market and often have relatively automated IP protection processes that don’t recognise the gold from the coal.
How to maintain innovation strategy in a rapidly growing business
The first step to maintain innovation is to have a strategy. It may seem obvious, but in practice very few businesses actually have them for innovation itself. In some instances, using the goal of building an IP portfolio (not just patents, by the way) can capture where the next big ideas are coming from and stimulate an innovation culture as well as providing useful metrics that send a strong message to customers, staff and investors.
Indeed, it also sends out a signal that you are serious about protecting and even defending your position if required. It’s important to note that it’s not easy to develop such a strategy as an afterthought; innovation strategy should be an integral part of the overall business plan from the start.
Businesses that continually innovate are like football teams on a winning streak, gaining momentum and breeding more and more success.
By determining the most valuable innovative assets you have and where you want to go in the next two years you can both build a strategy and put a dedicated and perhaps modest budget behind it. Protection is a vital part of this process so the investment in patents and trademarks is strongly advised. Even though IP is typically expensive to register, it is prudent to strike a balance between protecting and monetising your key assets - it shouldn't be a choice of either/or.
Many innovating businesses make false assumptions about the uniqueness of their work, which can be very dangerous. Best practice is to carry out extensive research for businesses in such positions, to verify how unique their approach really is, and its true market potential. Patent data when combined with targeted market research can provide real insight into the true disruptive nature of the new ‘idea’.
Where innovation strategy can go wrong
Most businesses with a foundation in innovation are continually trying to innovate, but there are moments when things go wrong.
Many mistakes, even little ones, are often discovered during due diligence activities and can prove problematic to securing funding from VCs. An IP audit uncovers these potential problems, for example where the IP is not actually owned by the company, but instead owned separately by individuals or a license agreement for some foundational IP does not remain in force on change of control, hampering potential future exits.
In the IT market, problems may arise when the software development includes open source code. It may be hard within the final product, to determine which code is proprietary, which is owned by the community and also what, if any, license obligations the company has to comply with. Considering code development approaches within the innovation strategy is a good idea!
After funding, many businesses rightly focus on sales, brand awareness and all the other typical activities to drive sales and value. Imagine their surprise, at the point they’ve gained significant market traction that they then get notification they are being sued for an IP infringement of some kind. This leads to major disruption, especially for startups, it can be very unnerving and time consuming.
Though innovation may come from the wider management team it often comes from the founder who initially created the big idea. While the team around this individual may vary, in my opinion having a strong mix of experience and skills works best for businesses that truly want to be continuous innovators. In fact, the wider team often have to carry the burden of scaling the business, while the founder entrepreneur is afforded freedom to dream up the next wave of innovation.
From an IP perspective, businesses need to constantly monitor significant patent holder’s behaviour and form contingency plans to address any nasty surprises. This also informs investors of the levels of managed risk involved in businesses that rely on innovation.
These days, innovation is at the core of economic growth. Even businesses that weren’t in the innovation game are being pulled into it – because in this fast-moving world, it's demanded by customers, staff, investors and shareholders. Plans must be put in place, because while success can come quickly, it can also be rapidly taken away.