Do Not Let Your Clients Wait Until They Have a Prototype Before Starting To Collect Market Response.

Do Not Let Your Clients Wait Until They Have a Prototype Before Starting To Collect Market Response.

Here is the core of the 4×4 Innovation strategy: if you cannot get anyone interested in the benefit of your invention, why bother building a prototype or even starting a company? Most inventions fail because they are not marketable, and you can find that out at a much earlier Technology Readiness Level than at the prototype stage.
This is how this situation looks like in the 4×4 Innovation matrix (click here for an introduction into that subject matter):
In very short words, an inventor has had an idea, they have developed it into a conceptual model that shows that the idea in principle works, and now they want to build a prototype.
They should have done some Freedom-to-Operate (FTO) studies, and get some basic IP protection, so that they can do some market validation. But nothing has been done.
That is a “Yellow Alert”! If you do not warn this inventor after you have recognized the cliff in front of him then you become complicit with the imminent economic loss because of the likely failure of their invention. You should know better because you are a professional in the area of innovation.
Here is some further insight into this problem.

The Common Inventor Personality

Inventors have most of the time weird personalities. They are always creative and often intelligent, although that is not always the case.
I have described a wild example of a failed inventor on pages 26 – 29 of my book “The 4×4 Innovation Strategy” (click here), and I recommend that you read the entire example. I have named this inventor “Gene” but he does not exist in reality. Gene´s case is actually compiled from three real cases that I had in my own practice.
In the following is the list of those mistakes that lead to the “Yellow Alert” case above. Maybe there are more mistakes, but these are Gene´s most obvious ones:
  • As a perfectionist engineer, Gene could never finish his R&D. There was always one more important bug that needed to be fixed, before Gene would even consider switching to serious sales. He had too much of a Technician mindset
  • Gene lived in a dream world where the rules did not apply to him. Gene was not interested in whether his plans were possible. To him, the obvious advantages of his invention would convince lawmakers to adapt their regulations to allow his products into the market. He was aware of some competitors, mostly huge MNCs, that were working in the same technical area, but he never cared much about their IP portfolios. There was always time to deal with it later.
  • Gene never considered sales important, and tried to develop a finished product without getting any market response. He was sure that his product was so good that a salesman was not needed. He often quoted Ralph Waldo Emerson: “Build a better mousetrap, and the world will beat a path to your door”. Was the product something the market wanted? He did not know. Were there potential customers for the product? Maybe, but he did not try to reach them and get feedback about what they really wanted.
  • He did not understand freedom-to-operate (FTO). FTO refers to whether it is commercially safe for you to sell your product in a country, without infringing existing third-party rights. Perhaps there are patents owned by others, with potential infringement risk. Perhaps the country has strict laws and requirements. Perhaps the industry has tough compliance regulations. Perhaps the product comes with a liability that no one wants to shoulder. Basically, he thought that having a patent was good enough.
  • He did not know anything about his competitors. Gene, like many inventors in love with their own product, lived in a world where there was no competition. Anyway, he figured that by patenting his invention, he was fully protected and did not have to worry about competitors. First, there is always competition! Second, the competition also has patents, and they may try to enforce their rights. Knowing the patent landscape allows you to evaluate business risk, and take evasive action.
  • Gene, like many inventors, had a stubborn, rigid personality. He was convinced that he was always right. He thought that he knew marketing, because only common sense was necessary for understanding it. He did not actually care about marketing, spending perhaps 10 hours reading about it when he should have spent at least 1,000. All he cared about was his invention. The very fact that he invented it convinced him that there had to be a market. He did not develop his product to meet an immediate need or desire. He also ignored the fact that buyers do not want to be educated, nor do they want to do things differently. He was so set in his ways that all efforts to persuade him otherwise failed.
Do I need to tell you more about the typical inventor personalities? Different from successful innovators, inventors often suffer from their own inability to acquire wisdom in innovation. And they still want to show everybody that they will be successful.

The Inventors And Their Prototypes

Being an inventor myself, I know that magical feeling well: you hold a prototype of one of your ideas for the first time in your hands. Suddenly, you can now touch, see, and play with something that only existed in your head. I have been inventing myself and also working with inventions as a patent attorney for three decades, and I still feel that same way. It will probably never be different.
Here is the question: should inventors build a prototype for every idea that they have? 
My answer as a professional in the field of innovation is a clear “no!”. The difference between being a playful inventor and a successful innovator is that successful innovators create products that are profitable. Full-stop.

And innovating is a numbers game, which means that one cannot predict which idea will be profitable and which one not. The success rate is anywhere between 1% and 50%, but seldom higher.

A prototype of a complex electronic device can easily cost a 6-digit figure. I can become expensive if you build a prototype for each idea.

That brings with it that the risk of converting a new idea into a failed product must be reduced.

 

How The 4×4 Matrix Is Used For Mitigating The Failure Risk In Innovation

The 4×4 Innovation matrix is a tool for managing that risk. By using it, you can turbocharge an invention. You minimize your risks through a controlled cutting of losses. You give up early on ideas that do not work out, and focus resources on developing better inventions.

Let’s look at an informed inventor. I will put realistic numbers into the 4×4 matrix that is shown above. You start at the same place in the 4×4 matrix, by investing $5,000 into technical implementation to see if the idea works.

Next, instead of moving horizontally along the X-axis to develop a conceptual model, you stick with your idea, and invest in a $5,000 FTO study. Why do this now? Because it helps you find out, very early on, if you are allowed to do what you want. Next, you protect your IP with a simple provisional patent application at $5,000. Then comes your market validation, rather cheaply at $5,000.

At this point, you might be asking, how can you do this without an actual product or a prototype? Well, you need to start thinking like an entrepreneur, and be more bold than the average inventor. By examining your value chain, you figure out where your product sits in it. Then, you ask potential customers to give you a Letter of Intent. This is a simple letter that basically says, “Dear  inventor, I like your idea very much. If you will provide a product with this feature, I’m willing to do a prepaid purchase for 100 products.”

What can you show to people? One way of promoting your idea is a so-called “sell sheet”. A sell-sheet is a one-page advertisement of your product or service. A good sell sheet explains the benefits and value of your product or service in a clear and succinct way. If it’s product-focused, the product will act as the hero image catching the people’s attention. There are plenty of sell sheet templates out there on the Internet. Sometimes, a video is all you really need to show your idea. I call this a “Ghee Whiz” video (click here) and you can even do it as a simulation in the idea phase.

You should be able to get three Letters of Intent for concluding the idea phase. Show them to potential investors, often family and friends. They will generally say, “Okay, I trust you. You have three Letters of Intent, so this idea is validated. I will give you some money, let’s build a conceptual model to see if this idea works.”

After receiving these three Letters of Intent, you will go through the cycle again for the conceptual model phase. Technical implementation at $25,000, FTO study at $5,000, protecting your new IP (these are the additional inventive concepts from the conceptual model) at $5,000, and again, market validation. You will spend about $15,000 to knock on doors. You will send LinkedIn messages, call people, go to trade fairs, and in general, talk with potential buyers. If you talk to the right ones, you can get three paid reservations for your as yet unfinished product. This is
actual money on the table!

The 4×4 Innovation matrix then looks like that:

With this success under your belt, you can think about licensing your invention out. This should be easy. Or let’s assume you take a loan from the bank, or from your grandmother, or you get an investor who believes in your idea. With these resources, you can start the cycle for the prototype phase.  But not earlier!

This strategy of selling the benefit first is just practical and it will save you a lot of heartache in the long run.

 

Everything Has Been Done. We Can Build The Prototype

Let´s assume that one of the companies that you have submitted your idea to for licensing consideration will tell you that they like it and ask to see a prototype.

That is perfect! Now is the time to build one.

First thing is that you have to ask the company what type of prototype it would like to see.

There are different types of prototypes, and some are much more expensive than others. A prototype can be full-scale or miniature. A prototype can be made from different materials, and not necessarily those that you want for your finished product. Whatever you do, you should make sure your prototype is built durably enough to be used multiple times.

Before you hand out an order to build a prototype, get a price quote for multiple prototypes. The first prototype is always going to be the most difficult one to make. So, if there is an option to purchase multiple prototypes at a discounted price, look into it – you might need more than one.

What is important is that make sure that whomever you hire to help you build a prototype has some actual knowledge of the real production of products. That is because when your prototype is a success, the next question will be: “What is it going to cost to manufacture the final product?”

Carefully check with whom you are working: will they be able to fulfill all of your needs? Find out before you embark on the making of your prototype.

Two important legal aspects when it comes to making your prototype should be taken into account when you talk with people that offer to make your prototype:

  • the company or person that makes your prototype should sign an NDA. A contract manufacturer or engineering firm usually has ALL of the equipment and contacts necessary to make your product. That was the whole point of contacting them in the first place. Do not be fooled by the “free consultation.” Without a contract in place, they can easily steal your invention and start competing against you.
  • the person that makes your prototype can become an inventor. Many think that because they have hired and paid someone to assist in developing a product, they own the results. Or, they think that it was their idea, and they don’t need to add these experts as inventors. Many times, they don’t even mention it to their patent attorneys, thinking it is not important. That is a big mistake. In some countries such as in the USA, if an outsider is an inventor of just one claim he can have equal rights to the entire patent. And whether they are listed as an inventor or not, they may be able to license their patent.

And very soon, after all these questions are answered, you hold the first prototype in your hands.

 

Showing Your Prototype Around. Or not.

Don´t send your prototype out via mail yet! Here is what can go wrong:

  • a prototype that has been sent in the mail has arrived broken, before anyone even could use it.
  • the people who receive the prototype do not know how to use it correctly, they decide that it doesn’t work and this leaves a bad impression with them.

You have no control over how your prototype is received and tested, when you mail it off. This is why I do not recommend to mail a prototype.

Instead, create a number of different “Gee Whiz” videos of your prototype in action. You can share these videos over and over again and most of the times, such a “Gee Whiz” video is all that you need to show. And you need these videos to show the recipients how to use your prototype before they even take it out of the box. In addition, create written instructions for using your prototype.
Then follow the 4×4 Innovation matrix. After building and documenting your prototype, update your FTO. And include the new inventions that you have made during building the prototype into your exiting patent application and file it again in order to secure a new filing date for the additional subject matter. That way, you can include what is working well and what is not, which can make your patent easier to obtain and stronger.
Only if the FTO and the IP have been updated can you demonstrate your prototype to potential buyers or cooperation partners.

Best is to demo your prototype yourself. If at all possible, I highly recommend that you demonstrate your product in person. Only this way can you control the so-called “sales pitch”, and you can make sure that it is not an unlimited number of people that see your prototype. One option is to pitch your invention using Zoom or Skype, which can save a lot of time. Send out your prototype only after you have checked that this is the last resort.

And there is one thing that I cannot repeat often enough: don´t show your prototype to an unlimited number of people, and if you do so, make sure that no paper traces are left. That makes the prototype so-called “prior art” and that can backfire on you when you try to patent further improvements of your invention. Please note that displaying your ideas at a booth on a trade show is NOT a good idea (click here).

One last thing: when you send out your prototype via mail, then don’t expect to get your prototype back. This has been my experience. Swallow it.

 

Conclusion

I know that inventors just want to see their product ideas come to life. I completely understand that, because many times, so do I!

The real question is not whether you should build a prototype, it is when and why you build a prototype.

A lot of work has to be done before you decide to build a prototype.

And you have a professional duty to tell your clients when you see that they short-cut, because that often ends in a failure.

 

Martin “Innovation” Schweiger







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