Ways to Retain Value from Innovation
Many of us might not know that Xerox was responsible for the inception of the quintessential office computer. The small icons and mouse created quite a flutter in the market those days. In the meanwhile, Apple had introduced the Macintosh computers, and many people associated with Xerox claimed that their innovation was utilized by Apple. Earlier Xerox could not fathom that their new products can influence other firms to take innovation to a new level which can result in the development of better products.
Through this article, we will take a look at the ways with the aid of which organizations can avoid the mishap which transpired with Xerox. Mainly there are few factors which need to be mulled over before crafting a strategy for capturing the new ideas that are put forth by an innovator.
The actual value of your innovation
As an innovator, if you want to find out the exact value of your innovation, then you need to have a look at the legal system in your country that deals in the area of intellectual property rights. In some of the countries, intellectual property rights are not given the private status that it deserves and this can pose as a problem, because other firms can easily copy the new ideas, as they do not have any legal barriers to tie them down. For example, both the beverage giants, Pepsi and Coca Cola introduced diet soft drinks almost during the same time. In cases where legal protection prevails, one has very little time to attract the attention of consumers with your new products as other firms can work with their research and development team, in order to tweak the products so that the patent law does not get violated. If we have a look at the history of Bowmer, then it becomes evident that it was the first company to introduce pocket computers. But despite such great innovation, they could not survive in the market due to the stiff competition from companies such as HP.
Ways to position your firm for the complementary assets
In order to reap the benefits of innovation for the new products, you need to possess a certain degree of bargaining power with the people who deal with complementary assets. It is imperative to demand the right prices for important resources, so that the innovation can earn you good profits. Be it your relationship with the supplier or the maintenance companies, at the end of the day the deal should be viable to herald the new products developed through innovation. For example, McDonald’s have inculcated such a relationship with all the suppliers for the important resources, that it has a strong demanding power in the market.
By analyzing the above mentioned features, you can figure out the actual value of your innovation with the help of the following categorization.
- Potential Winner
In this group, your firm is the sole owner of the intellectual rights but it would result in the decrease of market powers when it comes to striking a profitable deal for the complementary assets. Imitating your new ideas does not prove to be a problem in this case as the competitor capitalizes on the market power to garner value for their new ideas. In order to tackle this problem, you need to create a contract wherein you can earn more profit. With the introduction of new products, there is often a demand for the same and therefore as an innovator you have the power over the complementary asset owners, and you should utilize this factor to the hilt.
This group is quire rare but they have the capacity to capture a large portion of the market share with their innovation. A firm which does not have to depend on other agencies to strengthen their technological competence is a perfect fit for this category. Searle is an appropriate example of this category, as they do not rely on a host of suppliers for their artificial sweetener products because they have the full rights over aspartame. The chemical formula of aspartame still remains closely guarded as the potential leakage of trade secret decreases in this case, as Searle does not depend on many suppliers.
This category is detested by every firm as one cannot fully utilize their intellectual rights. It is better to start developing fruitful relations with the suppliers of the crucial assets that are necessary for your new products, so that the production of the product can be continued smoothly even after its official launch in the market.
- Potential winner through innovation
In this category, one does not have a high degree of intellectual property rights for protection but they tend to compensate for the same through considerable market power for the complementary assets. Integration is the best option, if one wants to capitalize on their strengths. Methods such as acquisition or partnership can help you to have a lot of control on the important assets during the launch of new products.
This article has described four unique ways through which one can capture value for their new ideas and innovation. One of the main factors that can be assessed from the article is that a firm should evaluate the scope of complementary assets and intellectual property rights, especially before the launch of new products. Do you feel that if Xerox had remained cautious about the value of intellectual property rights and complementary assets then we might have been using Xerox computers than the eponymous Apple computers? Comment on the article.