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Innovation--Some Thoughts

Posted on 8/13/2014 10:46:37 AM By Jeff Timm
  

It seems like the word innovation has replaced words like synergy, stakeholder, transparency, partnership, and voice-of-the-customer as the most commonly used business buzz word.  Everybody wants to innovate and be seen as an innovator.  Webster's dictionary defines innovation as “a new product or process.”  Having worked in new market and product development, deeply involved in the innovation process, I find this definition a little lacking and I find the use of “innovation” in many trade magazines/web portals and company marketing literature overused and misleading.  Of course something must be created for innovation to occur, however the Webster definition lacks a timeline and no mention of the magnitude of the creation, the level of the "wow" factor.  One should get more points for creating a larger “wow” factor through creation of a disruptive technology product, process or end-use rather than simply a next generation model change improvement.

This is why two recent announcements in two different industries peaked my attention.  As I read the press releases associated with each announcement, they caused me to think of the different components of the innovation process.  The first was an announcement from Elon Musk, CEO of Tesla Motors and SpaceX Corporation.  In June 2014, Musk announced he was going to make the portfolio of patents Tesla has created to guard its intellectual property around the development of electric vehicle technology as part of the "open source" movement available to all.  

The second was an announcement from Tom van Aken, CEO of Avantium, announcing a developmental update on their new class of biopolymer polyester polyethylene-furanoate (PEF), which is an analogue of polyethylene-terephthalate (PET) for plastic bottles.  The first addresses a fairly new way to begin and encourage the innovation process.  The second addresses the sometimes long and tedious process that often has to occur for a new exciting innovative class of product in a very technical and sophisticated market to come to fruition.

I discussed innovation with Richard Chylla, PhD, Executive Director, Michigan State University (MSU) Technologies, East Lansing, MI.  He believes innovation “must include the creation of a different experience for whoever is using the product or process.”  He also said a common occurrence in innovation is an “identifiable change in the existing value chain.”  Chylla believes simply changing the color or extending a product into another obvious market does not qualify as an innovation.  Chylla’s organization, MSU Technologies, works with existing companies to commercialize MSU inventions.  The organization also works with entrepreneurs and investors interested in starting new businesses that will develop MSU inventions into products or services.

Mike Dalton, Managing Director & Chief Growth Coach at the Guided Innovation Group, LLC and author of the book, Simplifying Innovation: Doubling speed to market and new product profits - with your existing resources, defines innovating as “finding and profitably serving unmet market and customer needs.”  His definition implies the ‘wow’ factor—if an unmet need is met, it will inevitably have the ‘wow’ factor present.  His definition also pretty much trounces the Webster definition as that definition makes no reference to unmet needs, but simply states ‘new’ as a qualifier.  There are many new products introduced daily that do not meet unmet needs and I struggle, as I suspect Dalton would, when someone refers to these products as innovative.

Both Chylla and Dalton discussed the creation of new intellectual property as part of the innovation process. Patents are a logical outgrowth of this kind of creative process.  Dr. Chylla summarized the reasons for and the reasons not to patent a product/process/end-use—

Strategic Reasons for Patenting a Product/process/end-use:

  • Protect the money and time invested in a technology by getting up to a 20 year from the date of filing limited monopoly to make, sell, distribute, and use the technology covered by the patent claims.  This is especially important if the technology could easily be reverse engineered, independently discovered, or copied by competitors.
  • Ability to license the rights to the technology to companies of your choosing while keeping others out.
  • Ensure that only your customers can benefit from the technology by buying your product/process/end-use.
    • Block a competitor from patenting the invention, which could cause harm to your position.
    • Increase the positive image of a business or market position by having a strong patent portfolio.

Strategic Reasons Not to Patent a Product/process/end-use:

  • Complete disclosure of all details of the invention; the best mode of the invention in the patent application is a requirement of the patent process.  If the technology is very difficult to reverse engineer, copy, or independently discover, then keeping the technology a trade secret may be more advantageous.  Trade secrets don't expire as long as they are kept a secret.  This is a critical point, as someone else could patent if the secret is revealed.
  • If it is difficult/impossible to detect if the invention is being used by someone else, then it may be impossible to enforce the patent and all the details of the invention may be given away without having the ability to police the patent rights.
  • If the business success is based on the technology being used/incorporated as an industry standard (e.g. a wireless communication protocol), then patenting could slow the adoption of the technology.
  • If the cost of obtaining, maintaining and enforcing the patent costs more than the monetary gain of having the patent.

In understanding the reasons for and against supporting the creation of patents, it is apparent that Tesla’s Musk is taking a calculated risk that he can grow electric battery and drive-train innovation improvements by spreading his company intellectual property patents amongst a much larger base of tangential interested parties. His end goal is obviously lowering overall costs per car.  But, for an innovative person like Musk, he wants to achieve the breakthrough ‘wow’ factor necessary to achieve battery technology applicable to industries outside of automotive (like space exploration?).  Could a similar event occur in the adhesive industry where some adhesive technical innovation could be shared and spread over the assembly world that would replace the use of all assembly nuts and bolts with adhesives?

Let’s now turn to the development of PEF by Avantium.  In order to do so, some background is in order.  Avantium is a leading player in the field of renewable chemistry, with expertise backed by a strong portfolio of patents, patent applications and extensive knowledge on chemical synthesis, catalytic processes and product applications.  In 2011, Avantium announced the development of the YXY technology platform, which can produce novel materials and products—all 100% biobased—by converting plant-based sugars into chemical building blocks, like Furanics and Levulinics, for plastic packaging and other applications.  Avantium’s market thrust with YXY technology is to develop products with superior environmental footprints from renewable sources that compete on price and performance with their petrochemical based incumbent materials.  In this case the main target is PET beverage bottles, fiber and films.

Avantium, Innovation

Two things are apparent so far.  Both companies started with a strong patent position.  One (Tesla) elected to share their patent intellectual property with others in the industry to create a larger technology base and larger application potential, which will bring with it larger economies of scale with more technology and lower costs.  The second (Avantium) elected to hold and guard its technology closely, but also recognized it could not develop the economies of scale necessary to pull off the market introduction of a new family of plastic material on its own.  Thus, a partnership agreement with the Coca-Cola Company, the largest global user of plastic PET beverage bottles, and others was a very necessary step in achieving critical mass and a funding source for the continued innovation development necessary to bring this new technology to market.  For more background on this collaboration, reference my blog post from July 2012.

Interestingly in this Coke/Avantium collaboration, Coke—the collaboration initiator—has engaged companies representing other end-use markets that do not compete with Coke bottles as partners of the biobased PET/PEF technology, thus growing the critical mass for the technology across automotive-Ford Motor, athletic shoes-Nike, food packaging-Heinz, etc.  Hopefully, this will ensure a quicker acceptance of bioplastics in the marketplace.

As mentioned earlier, another aspect that is lacking when one discusses innovation is a timeline associated with the innovation process.  An old mentor once told me, “You can’t schedule an invention.”  Both of these innovations will and are taking time.  Avantium’s timeline is displayed below:

Avantium

In this short attention span, sound bite world, a 14 year development timeline sounds almost implausible.  I don’t know how long before it was introduced that work began on the Sony Walkman™ or the Apple iPod™, but I am sure it was many years before they were first introduced to the public on July 1979 and October 2001 respectively.

The bottom line is that to have an impactful ‘wow’ factor associated with your innovation, it needs a strong technology base and a lot of development time associated with process and end-use development, most effectively involving multiple collaborative efforts to achieve critical mass necessary for success.

What are your views on innovation and how has your take on innovation and collaboration generated the “wow” factor in your product or process?



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