Teece’s Win-Lose Innovation Model
It is a tremendous challenge to successfully develop an innovative new product. Nearly every business in the world would love to create the new product that changes an area of the market forever – but such innovation is far easier said than done. Most companies fail long before they reach any kind of meaning innovative achievement. However, those who do manage to create a completely new product are rewarded in a significant way financially – correct? Not necessarily.
Unfortunately, history is littered with examples of companies who have actually succeeded in their quest to develop a new type of product, only to be overtaken quickly by competitors before they could profit from their development. Without the right legal protections in place, imitators will quickly flood any market which shows the potential for profit.
If you feel that you may be on the verge of a meaningful innovation, you might need to think carefully about how you are going to take that innovation to the public at large. Failure to protect yourself from ‘copycat’ businesses could cause you to lose out on the windfall you feel you deserve. With that in mind, you may wish to review Teece’s Win-Lose Innovation Model. This model is focused on helping organizations to profit from the innovations they have taken to market.
This model features three unique areas, which are highlighted below.
1 – Protect Your Idea
The first step in allowing your organization to profit from your innovation, rather than a competitor, is to acquire legal rights to the greatest degree possible. Depending on what it is that you have created, you may or may not be able to fully protect yourself against imitators, but using the law to the fullest extent in the first step in this process.
Which direction you go with regard to legal protection is going to depend on the laws in place in your location. Patents and copyrights may be in play, as well as intellectual property rights. It should go without saying, but the legal work done at this stage should be completed by trained attorneys who will be able to plan for any loophole or angle an imitator could use to profit from your ideas.
The legal fees and other costs associated with protecting your ideas should be seen as an investment in the product itself. Part of the cost of developing a new product is the legal work required to protect that product, so don’t cut corners on this point just to save some money. As long as your product is as successful as you expect, the upfront legal fees will soon seem like a drop in the bucket.
2 – Respond to the Market
At some point, you are going to release your product to the market and wait for the reception of users. If the launch is successful, it is almost certain that imitating products will quickly find their way onto the market as well. Even if you have done your legwork with regard to legal protections, some other companies will find a way around those protections in order to get a piece of the action.
The simple presence of competition in your newly-created market is not necessarily a bad thing. Most likely, the competition will take notice of one or two things about your design that they see as a weakness or inefficiency. Their products will be slightly different than yours, and it is up to you to analyze their designs in order to make adjustments to your own. Often, it is the company which adapts quickest to the desires of the market that will come out on top. Speed is of the essence when it comes to holding on to your place at the top of the market, so consistent redesign and adaptation are critical.
3 – Reaching Scale As Soon As Possible
If you are starting out as a relatively small organization, you may not be prepared for the crush of demand which can take place when you land a popular item on the market. When you do launch a winner that captures the attention of a large number of buyers, you need to be ready to supply the market with the units necessary to satisfy demand. Organizations who fail to scale up quickly enough to meet market demands will find themselves immediately falling behind an imitating company which has the capacity to scale up much faster.
There are a couple of options for scaling quickly enough to meet market demand. If possible, you can choose to scale up in house. This will give you more control over the final product and the timing of production, but it will require a significant capital investment – and it may be difficult to achieve in a timely manner.
The other option, of course, is to look to external suppliers for assistance. If you turn to third-party help, you will be giving away some of the control over your process, but you will likely be able to turn around production much faster. The right answer to your scaling requirements will depend on your exact situation, but this doesn’t have to be an all-or-nothing decision. There is a middle ground available where you can decide to keep some of your processes in house while outsourcing the rest.
The need to use Teece’s Win-Lose Innovation Model is inherently a good thing. Most businesses would love to have to worry about what they are going to do to protect their innovation – because that means they managed to innovate something in the first place. When you do find yourself at this point, think about the three ideas included in this model to make sure you are doing what you can to avoid losing profits to the competition. Others are sure to break into the market once you have set the bar, but that doesn’t mean you have to concede defeat. Protect yourself both through legal means and by continuing to develop and improve your product. In the end, you just may be able to hold off the imitators while claiming the majority of the market for yourself and your organization.
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