Innovation is one of those areas that all organizations are looking to improve upon. Companies like Apple are looked on enviously as they churn out cutting edge product after cutting edge product, helping them to build up their $90 billion cash pile.
Achieving this isn’t easy however. There is a whole culture to overcome whereby knowledge is power and therefore hoarding it inside either yourself or your team is the way to success. The patent system provides a nice parallel to this dilemma. On one hand it grants innovators free use of their product for a period of time in order to reward them for their efforts. On the other of course this period stifles attempts by others to build on this work.
New research by the University of Buffalo sums up the difficulties with the traditional approach. The study suggests that the benefits of giving up patent protection far outweigh the risks of surrendering market share. Their findings reveal that by opening up their original innovation to further research it helps to stimulate demand for the product, whilst at the same time enabling it to evolve more rapidly.
“This research arose from the notion that a too-tight patent protection actually may hinder technological progress, reflected in sovereign acts taken by firms who give it up,” Gilad Sorek, author of the study explains.
So whilst the company may lose a bit of market share as other companies build on the original innovation, the process of doing this makes the entire market larger, therefore benefiting the original innovator more than if they had kept things to themselves.
“In the scenarios I study, further innovation happens (through free-licensing) because a firm needs more research-and-development efforts to be taken by other innovators to stimulate the development of complementary technologies, or in order to encourage consumers stepping into a new market ” says Sorek.
So how does this apply to innovation at your company?
There are two main lessons I think from this research.
Firstly for innovation to flourish you need to open up ideas to people with a diverse array of insights and experiences. Research has shown for instance that ideas are often best discovered individually, but they are best developed collectively. Social business tools allow you to open up your ideas to colleagues across the organization.
The second lesson is that innovation can arrive from unexpected sources. The best companies now are soliciting ideas from wherever they may come. Not invented here is no longer good enough. The research shows what can happen when you open up your ideas to outside forces. Sorek uses hardware and software companies as an example. He says that if a hardware manufacturer sees many firms working to improve software that runs on its equipment, the probability of that software improving is greater than just one firm working toward that goal. Because there is a greater probability of success, Sorek says, the hardware firm will be more likely to invest in improving upon its own technology, which in turn makes software improvement more profitable.
The traditional patent system marks innovators as competitors against each other rather than collaborators working for mutual gain. As the saying goes, a riding tide lifts all boats, so don’t let your innovation efforts sink by allowing colleagues to compete against one another. Socially sharing ideas is good for your business.