An interesting new concept is cropping up these days, according to the Wall Street Journal. In a nutshell: large consumer product companies are looking for the inventive ideas many small business owners and entrepreneurs have–in order to gain an edge. Let’s face it: in increasingly competitive, slowing markets where a continual pipeline of new products is called for, this is an interesting proposition. In exchange: a piece of the action.
In a recent WSJ article, “My Brain, Your Brawn,” Kraft is cited for implementing a program that seeks out innovative ideas from small business people. Steve Goers, VP for open innovation and investment at Kraft shrewdly pointed out: “The world has gotten much smaller, and innovation is happening at small businesses.”
The trade-off: entrepreneurs get exposure and distribution for their product ideas. . .”usually in return for handing over autonomy, naming rights and marketing control, and a good chunk of the profits”. Still, for most cash-strapped entrepreneurs and idea-hungry CPG companies, this could be a win-win.
According to Kraft, for example, various kinds of agreements can be struck, from partnerships to licensing agreements to joint developments. Of course the company is most interested in working with entrepreneurs whose ideas are patented or protected as proprietary.
With the marketing and testing capabilities of companies like Kraft, as well as their deep pockets, products can be slightly amended so that they have a higher percentage chance of success in the marketplace. These are assets the average entrepreneur cannot afford.
And this idea is catching on. Procter & Gamble is soliciting ideas from outside sources. General Mills launched its Worldwide Innovation Network in early 2007 to call for inventive new ideas from entrepreneurs, as well. According to General Mills Senior VP for innovation, technology and quality, Peter Erickson, 300% more ideas have come into General Mills since it launched this initiative.
According to consultant Cheryl Perkins, who helps entrepreneurs in these kinds of ventures with large CPG companies, these inventors should seek patents for their ideas, or at the very least, trademarks for their own protection. It also signals to large companies that “you have an intellectual asset that’s worth buying from you.”
Questions:
* What do you think of the idea of large companies soliciting ideas from entrepreneurs and small businesses?
* What are the advantages/disadvantages for both sides?
* Would you consider approaching a large company if you had a great idea you couldn’t finance, as long as you secured patent protection?
* If not, what would you do to realize your dream idea?
I’d love to hear from you.
Related posts:
In short: Smart people look for good ideas wherever they can be found.
Exactly, Lewis. And I’ll say this: business people ought to put their heads together in this down economy to push innovative ideas forward. That might be the only thing that spurs some consumer spending right now. Thanks for your comment, Lewis. It’s appreciated.
Ted, as you know a trademark application could be $10K. And I’ve never applied for one, but a patent is a very time consuming process (and then there is the wait for issuance).
How else can contributors and/or entrepreneurs protect their IP without having a company say, “oh we’ve already thought of that”–when they had not, and then taking that idea to market?
Great points and question, Paul. Undoubtedly, the large companies are drawing up agreements, as well, and this kind of language ought to be in there. . .ought to be.
I suppose entrepreneurs could have their own attornies draw up documents that state that these innovative ideas are their intellectual property and then go on to spell out the agreement as to their use with the large company in question as additionl protection. I am not an IP attorney, so I’m not sure how all of this works. Perhaps some of our DF readers have this expertise and can tackle this for us.
Thanks for weighing in, Paul.
I work for a company that designs develop and present product ideas to corporations. It’s basically an outscoring of R&D to us. We also work with Inventors helping them do product research, engineering, packing design etc. I have a feel this type of open innovation will be taking off soon.
Good for you, Ideaman. Sounds like you’ve got the right idea. True innovations are sorely needed in many businesses now. Since so many companies are willing to outsource or interested in contracting the ideas of entrepreneurs, it’s a great time to be in your position. I wish you well in your endeavors, Ideaman. Go get ‘em.
Most companies are looking to leverage open innovation my deploying external idea portals for their partners and customers. We’ve seen this trend over the past 2-3 years. Cisco launched iPrize on our system and found over $20B in new markets on their top 3 ideas.
Here is more information on what companies are succeeding by leveragin open innovation concepts:
WebStorm 5.0 Product Overview
https://share.acrobat.com/adc/document.do?docid=3368579b-b2e2-44fa-8bf8-8ce2d9b63c0e
Regards,
Paul Tran
BrightIdea …. Innovation and Idea Management
ptran@ brightidea.com
415-992-2082 office/mobile
415-842-0300 fax
Yahoo IM: paultran888
http://www.brightidea.com
Interesting stuff, Paul. Not a bad pitch for your services, either;). Thanks for weighing in here. I appreciate it.
What do you think of the idea of large companies soliciting ideas from entrepreneurs and small businesses?
I do not think that business is a zero-sum game. That is, that one party has to win and the other has to lose. At the risk of sounding trite, I think that win-win is more common than win-lose.
So this a great idea especially if an entrepreneur has a sound idea but not the resources to see it through. It is then a question of not much happening, and the idea happening. The choice is obvious.
I think I would always tend to try and make a run at something myself, before approaching a large company for help. That way, I have at least some sense that the idea is legitimate before I look like an idiot. Plus, in most cases the large company in question very likely needs the data you have (hopefully) collected to evaluate you as a partner.
Many feel as you do, Eric. I’m all for entrepreneurs launching their own businesses; after all, I did. Sometimes, though, an idea needs a serious infusion of capital to become reality. Not all entrepreneurs are able to raise the cash they need. In those cases, they can either choose partners or they may opt to bring their ideas to large companies for a piece of the action.
One other thing, Eric. If you have an idea, never think you might look like an idiot. Some of the most improbably ideas have led to some of our greatest inventions. And sometimes “no” opens the door to other possibilities.
Thanks for weighing in, here. I appreciate your comments, Eric.