How can an invention be monetized?

Many organizations and companies prefer to let ideas and patents disappear into a drawer rather than develop them into products. Often because they fear adding a product to their portfolio that would not really fit in with their core business. But wouldn't it be better instead to think about a business model including a platform for the product in order to earn money without getting in the way of the core business?

However, there are several factors to consider when developing such a concept, above all

• the cradle of innovation (university, research and development department of a company or both?),
• the form of monetization (startup, spin-off or business unit?),
• the professional background of those responsible (scientist, entrepreneur or both?) and
• the skills mix of the employees (are all the necessary skills already represented?).

Depending on the situation, individual factors will be more important, others less so. In any case, there is no silver bullet for monetizing research results. Moreover, before implementing a strategy for commercialization, you need to take a deep breath. After all, it takes a long time to reach market maturity and launch: at least two years, and depending on the industry and product, significantly longer.

The path from idea to launch should therefore be planned in detail and thoroughly.

I would proceed as follows:

1. Evaluate the market opportunities for your invention.

The first thing you should try to do is soberly and honestly assess whether your invention has a chance on the market. Your invention is of course interesting from an engineering or scientific point of view. But that alone does not make it a candidate for a commercially promising product. It only becomes one if it also has these three characteristics:

• Patents protect your invention from being exploited by third parties.
• You have already developed your idea to the point where it could be turned into a product.
• The product would satisfy a real and widespread need.

Only if your invention has these three characteristics should you go ahead with monetization. Anything else would be a waste of time and money.

2. Make sure you have the resources you need for implementation.

It is a myth that most projects fail due to a bad business idea. On the contrary: Implementation is crucial. Ideas are easy, execution is everything. The implementation of a business idea requires more than just operational know-how. At least as important are the resources required to implement the technology transfer, namely capital and competent people.

So make sure you have access to the necessary capital. What "necessary" means depends on what you want to sell. Production is more capital-intensive than a service. And make sure that you could put together a team of people who are firstly competent and secondly enthusiastic about your idea.

3. Decide on a strategy.

When you start to develop your monetization strategy, you should ask yourself two questions:

1. Who should the founders be?
2. In what form do you want to monetize your invention?

Can you also be a businessman?

The first thing you should clarify is who should be the founders of the new company or business unit. If you are the engineer or scientist who developed the idea, does that mean you also want to act as a company? Or would a tandem solution with a commercially oriented counterpart be more suitable?

The answer to this also influences the second question about the form of monetization:

Innovation or sale?

With the innovation strategy, you use the invention, the latent values, as the driver of an innovation that touches all areas in all phases of the company: from the restructuring to the growth strategy.

The divestment strategy is about: Do you want to sell the invention? Should the patent or the brands be incorporated profitably in the financing and transaction of the company? Both approaches have advantages and disadvantages that cannot be weighed against each other across the board. At this point, one can only say that every situation is different.

4. Identify the right platform for technology transfer.

Technology transfer means nothing more than successfully exploiting technological knowledge. The challenge here lies in the following dilemma:

Research results should be transferred into new business models as quickly and effectively as possible, but without tying up personnel resources that would be lacking in the operational business of an existing company. Basically, you have three options to solve this dilemma:

1. the founding of a new start-up
2. the spin-off in the form of a spin-off certain areas from an existing company
3. the establishment of a business unit in an existing company

Each of these platforms has advantages and disadvantages, and so much depends on the situation.

1. The start-up

As a new company, a start-up does not yet have any structures and processes that you can rely on. The team of a start-up therefore plays a much more important role than in a spin-off or when setting up a business unit. When putting together the team, you should pay particular attention to three aspects:

1. The skills mix. A mix of all skills is important when building a team. A stable company needs people for general management, for commercial management, for marketing, sales and so on. Are all of these skills equally present in the team?
2. The personalities of individual employees. As start-ups have a small number of employees, the personality of each individual has a major impact, both positive and negative. For this reason, you should pay attention to personality types when building a team. How would these people and personalities work in a group? Would they have a positive influence on the group dynamic?
3. The commitment of your colleagues. When creating new structures and processes, a pioneering spirit with a hands-on mentality and perseverance are required. Are employees passionate about the idea? Or will they leave the company at the first test?

2. The spin-off

Like the start-up, the spin-off also has to create new structures and processes. When putting together the team, you should therefore consider the same aspects as with the start-up, especially with regard to the pioneering spirit and hands-on mentality.

However, the spin-off can score over the start-up in terms of financing. A spin-off is backed by an established company, which makes it easier for investors to gain confidence in the respective business model. On the other hand, a spin-off is not created on a greenfield site, but in a more or less complex spin-off process. Part of this will therefore involve clarifying the relationship with the parent company.

This primarily concerns three aspects:

1. The access to services from departments such as Human Resources or Legal. Is it possible to continue to use central services from the outsourcing company? And if so, in what form? If not, resources must be made available to set up separate departments.
2. Legal issues, especially tax issues, such as better profit and loss controls or subsidies and tax relief.
3. The sense of belonging of employees. How do employees of the spin-off company react to no longer belonging to the original company?

3. The business unit

The third commercialization platform is the business unit located in an established company. Its advantages are obvious:

• the access to capital
• the expertise
• already mature structures and processes

This is where the challenge lies, finding a suitable company if the innovation is a university research result that does not originate from a company's research and development department.

The search for an interested company can be conducted through the university. Some universities have departments that support researchers in their search and in making contact. On the other hand, you can work with an external consultant without university ties. He or she often not only has a broader network than the university in question. The fact that external consultants are impartial is also an advantage. As actors without ties to a specific university, their view of the advantages and disadvantages of working with a particular company is usually richer in perspective.

5. Develop a detailed go-to-market strategy.

You have:

• assessed the market opportunities of your invention positively,
• decided on a monetization strategy and
• chosen a platform for commercialization.

Now it's time to develop and implement the go-to-market strategy. You should proceed as follows:

1. Decide whether you want to make companies (B2B) or end consumers (B2C) your target group.
2. Analyze the needs of your target group very precisely. Also determine the willingness to pay and the individual upper price limit.
3. Analyze the market and the competition. What can you do better than the competition? Why should your customers buy from you? Why now?
4. Create a business plan and a market entry strategy. Where and how do you want to produce? When will the pre-series start? Do you have pilot customers?
5. How are you planning distribution? Do you already have sales partners?"
6. What does the service look like? An aftersales department is important for handling complaints and quality management, but also for maintaining existing customers and selling other products and services.
7. Launch your product.

Conclusion: Technology transfer thrives on market opportunities and perseverance during implementation

In order to forge a company with a functioning business model from a technical innovation, the following is important:

• Evaluate the chances of developing a business model from your invention and actually implementing it openly and honestly.
• Be persistent: a successful market entry takes at least two years.
• Assemble a team with the right mix of skills and personalities. (And if you set up spin-offs or business units, don't poach from the original company.)
• Develop a detailed go-to-market strategy.

And finally:

• Every situation is different. Find your own way!