Solving three challenges of innovation

One of the challenges for many inventors is identifying the market potential of their idea.  Another challenge is manufacturing their idea.  Perhaps the biggest challenge is distributing and selling their idea.

Check out how Quirky solves all three of these problems by crowdsourcing opinons about new products and helping inventors to get started.  Some of the products developed on the website even sell on HSN!

To Start-Up or To License?

One important decision to make when creating a new product is whether to sell the product directly to consumers (or businesses) or to license the technology.  There are, of course, various mixes of the two approaches.  For example, a company can be established solely to develop and license products.  Or a company may need to be established and the technology proven in the market before it can be licensed.

At the outset, it may not be obvious which route will be more successful.  However, there are some indicators that can hint at whether licensing or selling the product directly is the better route to market:

  1. Existing intellectual property rights
  2. Established distribution channels and barriers to market entry
  3. Technology production and manufacturing capabilities
  4. Funding opportunities and financials
  5. Lifestyles preferences of the founding team / inventors

Below is a matrix that may help clarify whether a technology would be better commercialized via licensing or selling directly to consumers.

 

License Idea Sell Directly
Market research indicates a market

Yes

Yes

There are high barriers to entry

Yes

No

You can protect intellectual property

Yes

Yes

You want to be an entrepreneur

Not really

Yes

You have knowledge and access to resources for production

No

Yes

You will be able to obtain financing for your business by demonstrating favorable ratios and financial statements

No

Yes

You plan on “going it alone” without a team

Yes

No

You have a high tolerance for risk

No

Yes

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