Picture this scenario. The sales team tells you that eight of 10 customers are asking for X product. That’s something you know you should be able to make, and you think you can, but there are some holes in your capabilities. Filling those holes requires expanding your technology in one or two process areas.
Or perhaps it’s a material you’ve never worked with or even an entirely new product you’re going to have to figure out how to make. Now it becomes an R&D problem to create it within certain management directives. For example, “we’re only going to be able to sell it for Y dollars, so don’t come back with something that costs double that to produce.”
APPROACHES TO THE PROBLEM
Many companies have traditionally approached this problem the same way: by turning to their in-house R&D team and tasking them with developing the needed product, process, or component. But that’s not always the optimal solution. Sometimes, outsourcing to a third party under contract, or accessing the needed technology via licensing from someone who already has the expertise in the area you are seeking and may only be using it in a non-competitive way, can provide a quicker, more cost-effective solution, and perhaps do so with less risk to ultimate success. The best approach needs to be considered by management on a case-by-case basis, balancing each of these factors.
Let’s look at each of these options separately:
IRONING OUT THE INTELLECTUAL PROPERTY RIGHTS ISSUE
Intellectual property is a key issue that must be considered carefully before an approach is decided upon, any contracts are signed for outsourced development or licensing, and certainly before any related product is sold. If you use your own team, you may be able to preserve your new IP as a trade secret and never incur the cost and limited protection duration of patenting.
Just provisional patents can cost thousands of dollars to establish, with many thousands of dollars down the road to finalize and file, while still having limited time periods and geographic scopes of protection. So it may be preferable to try to keep IP as a trade secret as long as possible—this will be heavily dependent upon your internal controls and company culture. If you outsource the innovation, the contract will have to be carefully written to preserve your intellectual property interests. When licensing, careful consideration must be given to the deal structure to ensure some degree of exclusivity is provided with the license to deliver long-term value and competitive advantage.
Deciding which approach will be best for you should be done on a case by case basis. The approach to your decision should not simply be to fall back on what you’ve always done before, but decide only after considering:
Overall, it’s important to ensure that the decision you make meets both your current and future strategic needs and is not simply “the way things have always been done.” By exploring and utilizing all your options, you’ll be able to meet cost goals and fulfill the market’s product requirements, while maintaining your competitive advantage.
Lone-wolf leadership doesn't work anymore. Today’s most impactful leaders foster cultures of collaboration and shared…
U.S. manufacturers rate current conditions at their worst level since the pandemic, but continue to…
An all-star team is the foundation for success. CEO Barrow shares his tool to help…
The annual Yale CEO Caucus drew many of the top names in American business—and little…
Instead of poking about this as a “Should we explore AI?” moment, perhaps we need…
Having clarity about who we are allows us to envision the person—and leader—we want to…