Monday, 30 November 2009

Innovation in the "low tech" sectors - Part II (innovation types and practices)

As mentioned previously, current thinking suggests that innovation is a good thing. And since "innovation" is a generic term, with no set criteria around it or no strict formal definition, it can be found in most sectors of activity.
In most sectors, innovation can be driven by:
  • market need or market demand
  • regulatory requirements
  • optimisation of the cost/ profit ratio
Those 3 points, alone or in combinations, can cover most of the innovation one witnesses today. Low tech sectors tend to innovate within those limits (and typically they do so for the shake of market need or because of new legislation), while in the more technology intensive environments, the development or adoption of innovation may also be carried out on a pro-active strategy basis (i.e., so as to be in a position to launch another "innovation" at a later stage).

As - in plain terms - innovation is the realisation of a good idea (or at least of an idea that looked good in the eyes of one or more individuals), it is clear that the biggest threat of innovation developers or adopters feel is the amount that they will benefit in comparison to the others, the me-too ones, who will follow. It is the fate of every idea that looks neat to be copied (and - luckily sometimes - improved). This is especially the case in the low-tech sectors.

Normally, the tool of choice for protecting innovation (or at least some of its types) is one of the available flavours of intellectual property (IP) protection. Filing for a patent is what most people think of but it's not the only alternative. The good thing with patents is that they are tangible assets, which - when properly crafted - facilitate increasing revenues for a successful idea.

However, even the most solid standing patent is useless if the patent holder cannot monitor for patent infringement in the areas where he/ she have the said IP rights. And that is no minor task. A task which needs resources, not only to identify the infringing parties but to also be in a position to effectively negotiate settling deals or pursue legal action, if needed.

In the low-tech sectors, it is - sometimes - the case that the quality of the patent itself is questionable. For instance, in the food industry world (I'm talking about the small company level) there is the common urge to "patent a novel recipe". While not impossible, proving that a novel recipe involves an "invention step" that would be non-obvious to a properly skilled individual (say, a food technologist) is challenging. In such cases, the hassle and cost of IP protection may not be the wisest investment.

In any case, however, IP can also be managed without the use of the patent system. Trade secrets is a kind of such IP management, which relies on the capacity of the IP owner to maintain all vital information concealed. For the food companies, often this is the preferred course of action. Cost-wise it tends to look cheaper than maintaining a patent, but the true cost may vary considerably, depending on what needs to be kept secret and from whom.

Regardless of tools employed in an enterprise, IP can and should be managed. The scale of things does play a role, but the principle remains the same. Every piece of IP has a value and a life cycle. No mater how small, enterprises should keep an eye on that. While "innovation management" sounds complicated jargon (well, ok, it can be complicated) it normally boils down to keeping track of who you give access to what knowledge or  know-how and under which terms you do that. "Sharing" a tasty wholemeal bread recipe is a kind of innovation management, similar to groups sharing knowledge and know-how by joining forces under a common research project. Clearly, managing weakly protected IP involves a risk; but more importantly, it underlines the need for further innovation to ensure staying in business.

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