To Increase Rewards and Reduce Risk
by: William E. Dueease
Your "Personal Business Coach"
At one time or another most people have generated ideas to make things better or to provide a new solution to a problem, by creating a new invention or process. Yet very few people do anything about it, and even fewer are able to reap any benefits. Why? And what can be done about it?
The answers to these two questions are the focus of this article.
In order for an inventor to reap monetary and/or other rewards from their invention or idea, it must be made valuable to others. People must be willing to pay a price greater than the inventor's invested costs to be able to provide the inventor a profit (read reward).
What is the real reason anyone would pay for an invention? To reap the benefits the implementation of the invention provides. Therein lies the key to the success of an inventor.
It can be stated that the difference between a great idea and a bad idea is implementation. Any idea that is implemented is a good idea. Being the originator of an idea is not as important, as being the first to implement it. How many people before Christopher Columbus came up with the idea of sailing west from Europe to find a new course to India and riches. In being the first to implement the idea, Columbus found a whole new world, and was greatly rewarded.
Lets look at some significant cases where the those who were the first to implement reaped the rewards even though others had the same ideas or could have joined in beforehand.
Wilbur and Orville Wright were the first to fly and, as a result, they reaped bountiful rewards, even though many others before them generated the same idea to develop heavier than air machines for manned flight. Most people do not know they existed, let alone their names.
Galileo drew some remarkable plans for a helicopter in the 16th century. Yet, 19 year old Igor Sikorsky was credited with inventing and implementing the first helicopter in 1909.
Chester Carlson developed a copying system which he took to IBM for evaluation. Company "Experts" projected limited use of the bulky machine when carbon paper was so readily available. He pursued the business of his xerography process with a company to be known as Xerox.
The implementation of inventions, in reality becomes a business process, which must be performed for rewards to be created. Knowing and understanding the business game, the inventor will be in the enviable position of making informed decisions which will greatly improve his chances for rewards.
The inventor does not have to totally participate in the business game to provide a much better product for implementation. Educating oneself in the process of what eventually needs to be done will help the inventor to decide what steps to perform personally and what steps to engage the service of others.
The entire process can be broken down into 2 stages. The invention stage, culminating in the written, documented creation of an invention that fulfills a need, and the business stage, culminating in the sale for profit of the delivered and/or implemented invention.
Stage I
The invention stage has three basic steps which are essential before attempting the second stage.
1. Find a need and fill it. Virtually all inventions are created to fulfill a need or a desire. The statement "Necessity is the mother of Invention" is as true today as it was when stated.
The Chinese language has over 10,000 symbols and the symbol for "Chaos" is the same for "Opportunity." Thus, the entire process starts with a problem, to which the inventor creates better solutions. The solutions should focus on the value of the benefits provided, and the costs to those who acquire and implement the solution. The greater the value of the benefits compared to the overall cost in time, money, and hassle for someone to use it, the greater the opportunity for the inventor to reap considerable benefits. For example, an inventor will reap considerably greater benefits from providing a safe and effective diet pill versus providing a new paint color.
There are three different processes of inventing.
Process #1: Create a new or revise an old product (thing) that produces a solution to fill a need or a desire.
Process #2: Create a new or revise an old process (way of doing things) to fill a need.
Process #3: Implement (use) an existing product or process in a new way to fill a need or desire.
This is a good time to recognize that the process of marketing begins with this very first step. The final objective is a creation that provides valuable benefits at a low cost in time, money, and hassle for someone to implement it.
Personal Options for the Inventor. This is clearly what inventing is all about and inventors will want to perform this function themselves. Inventors have and enjoy using unique skills, like being able to think out of the box, and knowledge to create very valuable solutions. The practical application or implementation of solutions to problems should become the main focus, if the inventor intends to reap the greatest amount of rewards.
2. Record the inventions in writing. This step is vital for several very important reasons. Recording the invention organizes the entire process and is the basis for educating others about the invention. The recording process also provides a form of documentary proof to help protect the inventor's invention through the legal process.
The recording process means documenting in writing, the invention itself, its purpose, how it can be produced, the benefits it provides, how and why it provides these benefits, and the process the inventor took to develop it. This is where the inventor defines what will eventually be implemented.
Personal Options for the Inventor. Once again this is a function that most inventors want and should perform themselves. Especially to protect their work, keep it private, and to assure that the invention is accurately portrayed. This is quite often the best time to apply for protection under patent and copyright laws, to limit potential damages from having to reveal the invention to others later on.
One of the key ingredients to protect an inventor, and maximize his rewards, is to somehow gain exclusive control over the use of the invention. The inventor should pursue all available legal steps that will provide him exclusive control of the invention.
However, legal protection can be very time consuming and expensive and might not always protect the inventor. One of the most effective ways to reap the most rewards from an invention and, in essence, to protect the inventor is to be the very first to provide it to others for implementation. Wilbur and Orville Wright did not have to patent their airplane, they just implemented first. So the rapid completion of this whole process is in the inventors best interest.
3. Research the invention. This entails 2 different purposes, that often follow very similar paths. One purpose of research is to discover if the invention has been recorded by others, to investigate other similar attempts and implementations to learn how to be more successful in implementation. This is also part of the patent process. The second purpose of research is to learn about the potential benefits the invention will provide and the potential value these benefits will provide to others.
The feedback inventors will receive from this research will provide extremely valuable knowledge to be used to revise their invention to become more valuable to potential users. This is one of the best times to tweak the invention to make it more valuable.
Once again, this step is part of the Marketing process because the inventor is revising the invention to create greater value to potential users. For example, Richard James developed an invention to produce an anti vibration device for ship instruments to instantly counterbalance wave motion rocking a ship at sea, but failed. However, further research showed that his invention had considerable value in other fields and it has been implemented millions of times as the famous toy "The Slinky."
Personal Options for the Inventor. Most inventors want and should perform this function themselves to gain direct unfiltered information and to be able to discuss the aspects of the problem. The inventor might want to have others help in gathering information, but this will diffuse the knowledge gained and eliminate the give and take with the potential users.
Frankly, most people will openly discuss their problems an invention will solve and will gladly describe their value of the benefits from the solutions. Inventors will be amazed how others will be anxious to help.
Stage II-
The Implementation (Business) stage requires considerable business knowledge and skills to complete effectively.
4. Complete a Feasibility Study. This is to determine if it is feasible (possible, likely, etc.) to create enough profits from the implementation of the invention to reward all involved parties enough to want to pursue the process. The results of the study should provide the inventor enough information to determine if he wants to invest his time, money, effort, and thought into having all of the remaining steps completed to final implementation. The results should also indicate whether the inventor will be able to entice others to participate in the business stage.
The Feasibility Study does not have to be a formal document, but it is very important that it be recorded and documented. It entails investigating, organizing, and making best estimates of: How much money and time will be required to deliver the invention to potential customers to complete the process of generating profits from implementation; and How much profit will be available from implementation. This will involve having to investigate the costs and time for prototype development, for production, for packaging, for advertising, for financing, for delivery, for sales, and for running the entire business to fruition.
Personal Options for the Inventor. This is the main stumbling block for most inventors, because it requires a whole new way of thinking and the full knowledge of and understanding of the game of business. This is where inventors should seriously consider getting help from others. This is the real beginning of the implementation stage, is not taught in schools, and requires different skills, purpose, and perspective. Hence, the reason inventors have such difficulty crossing this bridge.
Some sources of help are possible partners, whether with financing or not, operations employees, and/or professional firms that specialize in this area. If inventors want to know more about the process to either better control it or even do it themselves, they need to get an Advisor, Mentor, Guru, or Business Coach to take them through the process.
5. Complete a Strategic Plan. The strategic plan determines HOW to implement the business to attain rewards, described in the feasibility study, which determined IF it was possible to reap enough rewards in the first place.
The information gained from the feasibility study will be used to develop the detailed strategy of HOW, WHEN, WHERE, WITH WHOM, and WHY the implementation (business) stage will be accomplished. The Strategic Plan will detail how the final profits will be attained from the business of implementing the invention.
The Strategic Plan, also, does not have to be a formal document, but it is very important that it be recorded and documented. However, it is a much more detailed process. If the inventor is still in control, the plan should be developed to best suit his goals.
The Plan will reveal numerous options to the inventor and the cost to benefit relationships of many of the key steps, to allow the inventor to pick and choose the best path, for himself.
Personal Options for the Inventor. The inventor needs to be actively involved in developing the Strategic Plan because he has such a big vested interest in the invention and the eventual rewards. These are all business issues that require one or more people with considerable business knowledge, skills, and wisdom to complete. Thus, the inventor should seriously consider getting outside help. Unfortunately, many inventors feel that they can do this themselves, and proceed on using the famous "Trial and Error" (with emphasis on Error) method, resulting in a very high percentage of failures, extracting considerable expense in time, money, and health from the inventor. Several studies have shown that fewer than 8% of all start up businesses succeed, and the inventor can, if he does not watch out, fall into this same program with a 92% chance of failure.
This is where the inventor can make some very prosperous choices. The possibilities are unlimited and some are :
1. Sell the invention to a business firm outright;
2. Sell the rights to use the invention with royalty rights, or overrides;
3. Lease the rights to manufacture and sell the invention;
4. Contribute the rights of the invention to a business as an ownership share;
5. Use the rights of the invention to form a business of profiting from the implementation;
The inventor needs to decide what course is best for him, considering the nature of the invention, the nature of his protection for the invention, his business skills, his motivation to become a part of the business stage, and his time schedule.
6. Attain Money to Finance the Business. This is the stage where the money needed to finance the business for profiting from the implementation of the invention (as described in the Feasibility Study and further defined in the Strategic Plan) is acquired. This can be and is usually a very frustrating, time consuming, and difficult step for many inventors. But this step can be made much easier and profitable. Lets discover how.
The first key is for the inventor to have thoroughly completed ALL OF THE PREVIOUS STEPS. Why? Because, the information and results gained from the previous steps will show that the business is worth pursuing and has a very good chance of being financed in the first place. In addition, virtually all of the important information needed to convince others to invest has already been gathered.
For simplicity, we will refer to all forms of money providers, as investors, whether lenders, or investors,
Investors have a different perspective and their goals need to be addressed in order to convince them to invest money. Investors need to be convinced that they will:
1. make a profit from the money they provide that is commensurate with the risk/reward ratio they are willing to accept;
2. minimize their involvement in the effort to create business profits;
3. have a "good feeling" about the business.
Inventors seize the investor's attention when they address these three points. If inventors don't successfully address these points, they won't succeed. Frankly, inventors are offering investors the "Opportunity" to invest in something they feel good about, will not have to work at, and can profit from, all at the same time. Such a deal!
The most effective marketing tool used to convince investors of all three of the above is the "Business Plan." A Business Plan is a formal document that has specific formats and information required. However, virtually all of this information has been gathered in the previous steps and can be easily included in the Business Plan. The Business Plan informs an investor: how much money is requested, what it will be used for, how the business will generate profits, how much profit the investor can expect, who will operate the business, when everything will occur, and why the entire process will be successful. Note, the foundation of this whole process is being able to convince enough customers to buy and/or implement the invention at the price needed to generate the profits promised and needed.
Most investors want and need to have some type of good emotional connection with the business and/or the invention itself. The stronger the positive emotional connection an investor has, the greater the chances they will provide funds. This fact is frequently overlooked in the normal pursuit of financing, and should definitely be addressed. Frankly, determining those who will have the highest likelihood of having strong positive emotional ties should be the basis of selecting who to approach.
Lets look at some potential investors from their emotional perspective, from their highest positive connection to the lowest: the inventor himself (highest possible emotional connection), inventors family and close friends (strong emotional bond to the inventor), co-workers and business associates (respect and good feelings from working with inventor), potential vendors, manufactures, and businesses that market similar products (strong desire to benefit through their business), investors with good feelings about the field of the invention (with emotional interests in improving the areas that the invention benefits), investors, sometimes called Venture Capitalists that focus on inventions and new ideas (emotional ties to be part of something new, exciting, and profitable), money managers, investment groups, or corporations (that have some affinity to take the risk to fund the business of implementing an invention), stock underwriters (who thrive in the excitement and profits of taking new businesses public) and finally traditional lending institution (with the least amount of emotion and the greatest number of risk avoiding policies).
Personal Options for the Inventor. The inventor should definitely get very good help in this arena, because it as a very specialized game, the stakes are very high, and the investors know the rules and are very skilled at playing them. Caution is warranted: Too many times, investors have structured financing arrangements with inventors that virtually eliminate any possibility of the inventor receiving benefits. Inventors should remain very involved, because they will be directly affected, but need to protect themselves by using professionals, who operate well in the financing game, and have the inventors interest in mind.
7. Produce and Package the Invention for Implementation. This entails the construction, duplication, and preparation of the invention for delivery or implementation, and is where a good bit of the money is spent. It is also one of the core ingredients of the Business Stage.
Personal Options for the Inventor. Most inventors are not geared to personally handle this step. Producing and packaging an invention is a special business related action that is quite different than the creation process. For this reason, the inventor should use either a team or an outside business to complete this step. However, the quality and accuracy of the produced invention will be of a big concern to the inventor.
8. Promote the invention to entice others to buy. This is the last step in the Marketing process, and is unfortunately most often considered the only Marketing Step. The first 3 steps of the Marketing process are:
1. Producing a product that others will want;
2. Placing the product where it will be easier for others to get it;
3. Pricing it so that others will be willing to pay the price and generate the desired profits.
These were partially discussed in the previous steps.
We will only discuss the Promotion step further. The Promotion step has two parts. One part is Public Relations (PR) and the other part is Advertising. Lets define these 2 parts.
Public Relations is communicating to the public about the existence and possible uses and benefits of the invention. The purpose is to alert the public that the invention exists and make them familiar with it.
Advertising is communicating to potential customers about the availability and specific benefits of the invention. The purpose of advertising is to create a desire in potential customers to contact someone about the invention. In other words, to create contact (traffic).
Personal Options for the Inventor. Many inventors enjoy personally participating in Public Relations , because it involves personal recognition and the need to tell the story in a human context. Just like Authors present their books to the public, so can the inventor. It can be hard work, and when done right, can be fun and be very productive.
Inventors should seriously consider using others to execute the Advertising step who specialize in this field, because it requires unique knowledge, talents and skills.
9. Sell, Install, and Collect. Advertising creates contact, but the final sale of the invention is different step that requires further educating the customer about the benefits of the invention, the high value to the user, and that the price charged is much less than the value of the invention.
Sales is the consummation of the total process and is not completed until the invention is delivered, installed, and full payment is collected. All of the marketing actions taken previously, Product design, Placement, Price, and Promotion are culminated in the final sale.
Personal Options for the Inventor. Many inventors feel that they are very qualified to complete the final sale step themselves, and in some cases this may be true. However, the sales process creates the probability of rejection by potential customers, and it is hard enough to deal with this rejection when there is no tie with the product, but it can be even more difficult to deal with if the person has emotional ties with the product, as will the inventor. Success is most often achieved when this process is left to those who are best suited for sales (and rejection) and can better connect with the customer. Too much effort, time, and money has been invested in creating the possibility for sales to not have the best folks get it done.
Many times the nature of the invention may require that the inventor be closely involved in the installation process, which normally occurs after it has been sold.
10. Manage the Whole Business Stage and Disseminate the Rewards. Someone has to be in charge to make sure the Business Stage is completed. This person should be responsible AND have the authority to get the job done. They must, at least, have excellent Managerial and People skills, and be very knowledgeable about the game of business. They should lead the successful completion of all of the steps in Stage II.
The final step is to deliver the rewards (normally money) to the inventor and all others who are entitled to receive them. For instance, the investors and anyone compensated through the profits of the business. Because this is a very important step and because it needs to be very accurate with the agreements made, the process should be very well organized.
Personal Options for the Inventor. Frequently, inventors do not have the knowledge of the business game, and the skills to play, nor the desire to work at getting them, and should seriously consider having someone who is fully versed in both to complete the business step. The process of inventing is hard enough, requiring free thinking, and creativity to "step out of the box," without having to take on the new game of running the business of implementing the invention for money. This is a big leap that an inventor should seriously consider attaining a Mentor, Godfather, Guru, Advisor, or a Coach to help him through Stage II, if he wants to perform this stage himself. Even the business person the inventor might choose to perform this stage should have a Mentor, Godfather, Guru, Advisor, or a Coach to help him. Too many times, a great invention that would have been an excellent candidate to produce considerable rewards has produced no rewards, because the business Stage II was not accomplished.
Conclusion.
Rewards from an invention are gained from the profits generated from the business of convincing people to pay for it. The business is performed successfully by the completion of all of the steps listed above. The business game is a much different process than the invention process. Whereas the invention process requires free thought that is unconstrained by limits, the business game is a well defined process that requires discipline to operate within the rules. The perspective, skills, focus, and even the thinking process needed by a person to be a good inventor are much different than the perspective, skills, focus, and thinking process needed by a person to be a good business person.
That is why so many inventors have such difficulties entering the business world, and lead to frustrations, stress, loss of money, and health. An inventor does not have to complete or even be a part of the all of the business steps, but the inventor must recognize and deal with the fact that the business game must be eventually played for rewards to be achieved. A person will learn the rules of football, but does not have to actually play the game to actually benefit, but has to know enough about football to be able to pick and back a winning team.
The trick for the inventor is to pick the best time to turn the business game over to others, how to do it, and to whom. Its basically a risk-reward analysis. The greater the involvement by the inventor in the business process the greater the risk and consequently the greater the rewards should be. The less involvement the inventor has in the business process the lesser the risk with the rewards usually being less.
Now the inventor knows why rewards for inventions are created and what he can do about it to increase his chances of reaping rewards from an invention.
Bill Dueease is a business owner coach who specializes in educating owners to increase profits, reduce stress, and gain control over their business to reach their life goals. He offers owners two free articles: "What business owners can do to overcome the 7 major causes of business failure" and "10 Insider Secrets most Business Owners never Learn" by calling (941)-482-5159 or by sending your request by e-mail to
hawkeye@gate.net.
