Getting product managers inside the mind of a professional inventor
Do you have a good idea for a product? As an Everyday Innovator, I’d say the chances are pretty good. Do you try to develop it yourself? What about joining forces with the company you work for? Or, a third, and very profitable option, is to license it. To explore licensing from the perspective of an Everyday Innovator with a good idea or from that of a company being pitched, this is the discussion for you. Even if licensing is not something you see in your future, you’ll find this discussion interesting.
It is with Stephen Key, the world’s leading expert in licensing consumer product ideas. He is a repeat inventor, holder of numerous patents, and coach to people wanting help to license their product ideas.
In addition to licensing, we discuss validating ideas, removing risk, and intellectual property concerns.
Summary of some concepts discussed for product managers
[4:04] What can you tell us about your latest book, Become a Professional Inventor: The Insider’s Guide to Companies Looking for Ideas?
This book reveals the behind-the-scenes elements of licensing. I interviewed twenty-eight different industry experts in seventeen different categories, including product managers, CEOs, and product developers, to learn their perspective on what we, as inventors, are doing right and doing wrong. My goal is to help my audience be better innovators by understanding what’s happening behind the scenes.
[7:47] What is the first step for someone who wants to be a professional inventor?
The traditional process of coming up with an idea, filing a patent, building a prototype, and starting a company is very expensive, time-consuming, and risky. I look at it differently. The first step is to figure out if you have a marketable idea by trying to sell the benefit of your invention. Then once you’ve generated interest, you might build the rest of the invention. This method allows anyone to be creative, regardless of location, finances, or expertise.
You can’t know if your benefit is going to sell unless you test it in the world. Create a one-page sell sheet explaining the benefit concisely. For example, when Steve Jobs launched the iPod, his benefits statement was, “How would you like to have a thousand songs in your pocket?” People loved the idea, so he didn’t have to show how his product worked. All you need is to show a good idea with a strong benefit to the audience who appreciates that product.
[11:02] What information about prospective companies can help us formulate the sell sheet?
Look at a company’s culture, mission statement, products, price points, and product reviews. Read between the lines to understand their mission, which is often not obvious. Companies appreciate it when you know who they are, what they do, and where they’re going. The only way to invent for the future is knowing where they’ve been in the past.
Don’t show them new markets they should go to. That asks them to take more risks. Instead, show them how to improve their existing products or expand their product line, which they already have a market for. You might think you’re telling the company what they already know, but outside inventors bring a fresh perspective and encourage innovation. On the other hand, if you’re within a company, embracing outside thought and open innovation will give you new insights.
[18:04] How do you prevent companies from stealing your intellectual property?
I estimate that 95% of the ideas licensed do not have intellectual property protection. Instead, successful companies sell first and sell fast. It’s hard to own an idea, even with a patent, because patents are just words that can be interpreted by a court or patent examiner. The market is moving so quickly, and there are so many different ways of selling products, that it’s really hard to protect anything. The companies that have embraced open innovation know that they need ideas, and if they steal the ideas of outside inventors, the inventors won’t work with them anymore. Instead of worrying that your intellectual property might be stolen, focus on good customer service and tell good stories about what you’re doing. It sounds too good to be true, but I see people just being nice every day.
[23:10] How do you negotiate a licensing deal?
Don’t do it by yourself. However, don’t bring an attorney in at first, because the other party will feel defensive. Learn as much as you can about licensing agreements and find someone with experience to help you. Once you have an agreement, always have a licensing attorney review it before you sign. Understanding market demand and costs and having a one-line benefit statement before you have the agreement will give you strength and leverage.
[29:43] Bonus Question: When you’re approaching a company interested in a licensing deal, where should you watch out for problems?
Number one, you need a good attitude. There will always be obstacles, but let the company know that you’re confident that you can work through problems. When a company reviews your product, they are also reviewing you. When you show them that you’re on their team, and that they can count on you, they will offer you more opportunities. The person, not the product, is the key asset.
Cost can cause these deals to fall apart. No matter how great your idea is, if it doesn’t fit a certain price point, they won’t accept it. Understand how your idea would be manufactured, so that you can be sure you can hit the price point. If you don’t understand the industry, hire someone to help you. Your job is to take away risk.
“Treat everyone with respect. No one reaches the top without having the support of people beneath them.” -Stephen Key
“In order to create great wealth, you need to find something that does not require your hands, your presence, and has a multiplying affect.” – Stephen’s Father
Thank you for being an Everyday Innovator and learning with me from the successes and failures of product innovators, managers, and developers. If you enjoyed the discussion, help out a fellow product manager by sharing it using the social media buttons you see below.