The “Incremental vs. Non-Incremental Innovation” Problem That Is Not Taught at Law School
This is where I am coming from. A company is knocking at my firm’s virtual door, asking for “your best price of a patent”. That innocent question triggers several alerts.
We certainly want to help our future clients and this is why we qualify them before we onboard them. Part of the qualification step is to determine whether the enquirers already are or at least are willing to become a so-called “informed client”.
This is because there are often problems that cannot be solved with a “Silver Bullet”, which is a quick standard solution. We have a number of standard solutions for typical problems in the patent area available in my firm but often, these standard solutions need to be tailored in order to provide value to the client. That is why some minimum understanding of patent law is required on the client’s side. Without such a minimum understanding, client relationships can quickly turn difficult.
Here is one example of a potentially difficult client, and I am very cautious before onboarding these as real clients.
Example: Smart & Experienced Tech Business Owners
Things become difficult if you find yourself with a member of this specific group: successful and highly intelligent business owners with a technical background. They run mature small companies and, despite their expertise, they may hold misconceptions about patentability that they have picked up over their careers. Their personality traits, such as a focus on self-interest, a business-oriented mentality, and a tendency to expect exploitation from suppliers, makes them uncooperative and distrustful which can hinder their ability to align their patenting strategies with their broader business goals.
It sometimes helps to ask simple questions to open them up and awaken the interest in deeper insights, for example about the expected quality of their patent application, which has an impact on the effort needed for preparing it. I have a screencast lesson about that talking point for that purpose, hidden behind the innocent title “Patent Application Types And When To Apply Them For What“.
These smart but difficult people have gained some insight into Intellectual Property (IP) matters because they have successfully run a business for a few decades. They have heard others talking about IP. And they have done their Internet searches. They have a feeling that innovation can and must be managed time-wise and budget-wise in order to be successful. But they do not know how.
When they talk with a patent attorney, one of their primary goals is to siphon out legal advice for free. And what they conclude is that patent attorneys display their case such that this is a specialty, which makes it expensive, when all they want is a simple commodity: a cheap patent application.
Well, in short words, there are indeed patent applications that are a commodity, but these are for Incremental Innovation. And not for Non-incremental Innovation.
Here comes what explains the difference.
Incremental Innovation vs Non-incremental Innovation
Some say that it is only 75% but I say from my own experience as a patent attorney with 30 years of experience in the profession that about 80% to 90% of all innovation on this earth is so-called Incremental Innovation. Both conventional management tactics and conventional IP tactics are well-aligned for the simple type of inventions that come with Incremental Innovation. There is even an entire ecosystem in place for patenting Incremental Innovation, that starts in the factories and ends in government statistics that indicate national economic power.
Most people, and not only the smart technicians-mindsets mentioned above, have never heard of the concept of Incremental vs. Non-Incremental Innovation. Literature rarely dives into the subtleties of the differences between these two fundamentally different areas of innovation, simply because it is already difficult to get a grasp of the concept of Incremental Innovation when it comes to securing the underlying intellectual property: patent law is highly non-linear, and at least two-dimensional. That is so because the scope of protection of a patent depends not only on what is provided in the patent itself but also on the prior art for that patent which is often only fully known long after the patent application has been filed. And nothing can be added to an existing patent application after the filing date.
A short introduction into the concept of “Incremental Innovation vs Non-incremental Innovation” can be found in the book “Serial Innovators” (for a book review click here), in Chapter I “Breakthrough Innovation in Mature Firms”. This book is a recommended read for everyone that works in the area of Innovation, and it focuses on a type of Non-incremental Innovation that is called “Breakthrough Innovation”: a company ventures into completely unchartered territories. I would like to add that there is so-called “Transfer Innovation” when a company adds technology from a neighboring technical area to its own products. I have classified the various terms around the buzzword “innovation” in an earlier article, here: ip-lawyer-tools.com/innovation-becomes-a-useful-term-when-the-contextual-environment-is-set-right-a-pragmatic-approach/
Essential For Explaining Incremental Innovation vs Non-incremental Innovation: The Ansoff Matrix
The Ansoff matrix captures the various types of innovation best. It is a simple 2×2 matrix that is used to determine the risks that come with different approaches to commercial growth:
The Ansoff Matrix can be used to decide which growth strategies should or should not be applied, depending on where a company is in its lifecycle and its ‘risk tolerance’. In very short words: growth with new products in new markets is riskier than growth in the existing market with the existing product.
In the above version of the Ansoff matrix, I have drawn in typical terms that you will read often in the context of Innovation. This is done for making clearer for which business strategy stands for what Innovation. You find more information about that in my earlier article about the Ansoff matrix (click here).
Again, the problem starts with a lack of understanding of what “Innovation” is, and what classes of innovation are there. My article here circles all about this question. In addition to my earlier article (click here) about the Ansoff matrix and how business risk and Innovation are related to each other, I have published my exam questions for the “Innovation Strategy Course” that I am teaching at the university level, together with the answers by the ChatGPT bot (click here). The ChatGPT robot has passed the exam with a flying “B”, but would you achieve the same or even a better result?
In short words, Non-incremental Innovation happens when a company diversifies its products. In most cases, this will be a related diversification, for example, if the innovation consists of applying a technology or business concept from a neighboring business area. For example, a conventional house construction company aims at applying manufacturing robots to their conventional manual assembly line. It goes without saying that the techniques for putting unrelated diversification into practice are the same as for related diversification, just that the players must be much more prepared for failure: carefully count the costs before playing a part in such a venture as a patent attorney. I speak of experience.
But now, how to recognize Incremental Innovation in practice, without knowing the business strategy behind it? Very often, Innovation is started even without a clear understanding or plan of a business strategy. So at what point in time can one recognize that you are no longer dealing with Incremental Innovation but with Non-incremental Innovation?
I start with Incremental Innovation.
Soft Signs of Incremental Innovation: Everything Is Smooth. And Boringly Predictable
So here is the most important sign of Incremental Innovation: they are usually conceived by uncreative characters.
Remember what I have written above? 80% to 90% of innovation is all about pushing product development by developing improved products that better meet the need of existing markets. Example: There is a customer who is telling the sales department that they would buy a large number of the current product if only a small detail could be changed. “Make it run with 24V instead of 12V”. “Have that cover made from transparent plastic instead of solid metal”, or “bend the upper right edge backward from the current forward’s position”, just to name a few.
Many engineers love that kind of simple design work because it does not require creativity at all. Roughly 60% of mankind has literally zero creativity, and that applies across the board to all occupations: engineers, medical doctors, lawyers, patent attorneys, just to name a few academic professions, but also to all other professional areas: foodstuff making, craftsmen, salespeople, managers, and so on. There are even university professors, artists, and creativity coaches that are not creative, at all. Going beyond incremental innovation is a painful experience for these people. They would go for the “low-hanging fruits” as they call it apologetically.
Most processes in the industry are adapted to Incremental Innovation, starting from R&D and ending in Marketing. Innovation management is done Waterfall/Stage Gate style. Whenever you see engineers that are happy with Waterfall/Stage Gate style innovation management, there is a high likelihood that you are dealing with Incremental Innovation.
The next sign of Incremental Innovation is that you can easily recognize by hindsight how a specific Innovation emerged from the prior art of the same or an adjacent technical field. The earlier product did not change much. In a side-line only, this goes as far as discussing whether or not it was obvious to combine two or three prior art documents in order to obtain that Incremental Innovation; if you work with patents then this would sound familiar to you. Yes, patent law is aiming at rewarding Non-incremental Innovation but being pragmatic, lawmakers have given up in view of the overwhelming amount of Incremental Innovation that dominates the business. There are clear rules on what makes Incremental Innovation patentable: if a combination of two prior documents is explicitly recommended by the prior art documents themselves then it is clear that the combination was obvious. Patent attorney exams often revolve around the question of whether or not combining these teachings is also obvious if the combination of two prior documents is only implicitly recommended by the prior art documents themselves. You do not have this type of discussion for a Non-incremental Innovation. Consequently, patent attorney qualifying exams revolve only around Incremental Innovation because the emphasis in these exams is meant to be on legal problems, and not on business problems.
The Problem: Incremental Innovation Is Smooth But It Leads Nowhere
Needless to say, Incremental Innovation comes with severe long-term limitations for companies that leverage technology. For those who have doubts about that statement, I recommend chapter One “Why Leaders Become Losers” of the McKinsey book “Innovation – The Attackers Advantage” (R. N. Foster, 1986). In short words: long-term survival in business is only available for companies that exercise Non-incremental Innovation.
That is why companies that leverage technology usually have a number of Non-incremental Innovation projects in the pipeline, for strategic reasons. Many companies prefer the convenient way of buying a smaller company with a new product idea, instead of becoming non-incrementally innovative themselves. But many companies decide to start their own Non-incremental Innovation center. That comes with severe consequences: Non-Incremental Innovation requires different processes, starting from R&D and ending in Marketing. Agile management methods are required. All that needs special personalities in all kinds of roles. It is not that uncreative people cannot do purposeful work in a Non-Incremental Innovation environment, but they are often only auxiliaries to the real maker. Sensitive characters cannot stand that easily.
Patent attorneys who want to be part of such a creative team must learn more about Non-incremental Innovation and about the special legal problems and business problems that come with it. It does not make sense to apply Incremental Innovation patenting strategies and tactics to Non-Incremental Innovation.
But how to recognize Non-Incremental Innovation and how to discern it from Incremental Innovation?
Soft Signs of Non-Incremental Innovation: Problems Everywhere
You can recognize Non-Incremental Innovation often by talking with the people that conceive it: special personality traits are required for promoting Non-incremental Innovation to success and only very rare characters have them. These people are not easy to work with. They have all the traits of an entrepreneur, but – in the case of an employee serial innovator – they have no willingness to take personal financial risks. But still, Serial Innovators would rather resign from what they perceive as a “dumb job” than working in the Incremental Innovation area for a long time.
Another soft sign of Non-incremental Innovation is that it is not welcomed by the incumbents of the existing technology in a company. The established bread earners would ask why they should engage in a new venture when the old venture is so successfully making money. What the incumbents often do not admit is that they cannot stand the arrogance of people who successfully do Non-Incremental Innovation.
No wonder technicians which work under a KPI regime (and they all have to) prefer incremental innovation techniques over resorting to non-incremental techniques. Applying these non-incremental techniques is by far riskier because this introduces a not small chance that the result will not work. People who successfully do Non-Incremental Innovation despise such fainthearted characters.
The same fear applies to conventional Innovation managers: they literally hate Non-incremental Innovation. There is indeed a high likelihood that Non-incremental Innovation will fail, and a failed project is traditionally seen as a failure of the project manager that was in charge, and not of the technicians that were doing the grunt work. No manager wants to be the culprit of a failed innovation. But that is not all. Conventional innovation management methods simply do not work for Non-incremental Innovation. Non-incremental Innovation requires knowledge and skills in the still-developing area of Agile management methods. Why would a manager want to change his toolbox when it works so well for the grand majority of challenges out there?
All this constitutes good reasons why large existing companies prefer to not directly engage in Non-incremental Innovation. Larger companies, therefore, prefer to acquire smaller companies that have successfully navigated through the Fuzzy-Front-End (“FFE”) of Non-incremental Innovation.
The Two Hard Signs of Non-incremental Innovation: Many Big and Little Inventions in One Product, Within A Very Short Time. And No Useful Prior Art Document Can Be Found
Different from Incremental Innovations, Non-incremental Innovation is characterized by a large multitude of inventions that are conceived while pushing a new product idea through all Technology Readiness Levels (“TRL”s) from Zero (“0”) to Ten (“10”). This is the first hard sign of Non-incremental Innovation.
If you don’t know what a TLR is then click here for an overview of TLRs in different technical areas. You need to know that concept by heart if you work with Non-incremental Innovation.
Non-incremental Innovation comes with a large multitude of inventions to produce a multitude of features and variants for solving a specific problem. I can tell you from experience because I have seen a lot of Non-incremental Innovation. There are even techniques for promoting this in a systematic way, and TRIZ and Design Thinking are only two of them. The goal of producing a multitude of features and variants for solving a specific problem comes with the understanding that all these many features and variants are only generated for later systematically culling them down to very few alternatives. This is one of the key ideas of Design Thinking. The underlying rationale for that teaching is that only those of the many features and variants should be turned into a product that the customers are willing to pay for. The book “SPRINT. Solve Big Problems And Test New Ideas In Just Five Days” demonstrates a very drastic example of putting such an innovation strategy into practice. And that is right. It works!
Needless to say that most startups, although not all of them, want to do Non-Incremental Innovation. If a startup company wants to be successful in Non-Incremental Innovation then they have to adopt the same techniques as mature companies that are willing to engage in Non-Incremental Innovation.
The second hard sign of Non-incremental Innovation can only be recognized by prior art searches done: there is simply no clear close prior art available. One can find components of one non-incremental innovation in several technical areas that are remote from each other, but never together. Or the patent publications found are so old that they are not seriously relevant because outdated technology is used to achieve a similar result. As mentioned above, while patent attorney exams often revolve around the question of whether or not a specific Innovation is obvious if the combination of two prior documents is only implicitly recommended by the prior art documents themselves, you do not have this type o discussion for a Non-incremental Innovation. Consequently, patent attorney qualifying exams never address the issue of Non-incremental Innovation because the emphasis in these exams is meant to be on legal problems, and not on business problems. Be careful, if you are a patent attorney and you give your clients business advice based (only) on what you learned in law school, there is a high likelihood that you are guiding them toward incremental innovation while Non-incremental Innovation remains untapped.
Handling The IP Aspects Of Non-Incremental Innovation
My blog here is about Intellectual Property (IP) in the first place, and here is why I am writing about Non-incremental Innovation: while Incremental Innovation can be handled well with conventional methods that are taught in law school, Non-incremental Innovation poses a problem. Not only with respect to handling IP but also when it comes to managing the overall innovation process. While Serial Innovators are inherently able to put Non-Incremental Innovation into practice, the task of successfully synchronizing that R&D with the other areas of Freedom-to-Operate (FTO), IP, and Market Response activities with the overall business strategy of a company is still a difficult and largely unsolved mystery today, at least in the Fuzzy-Front-End phase of Non-incremental Innovation.
It is not surprising that the standard patent law teaching stops at handling Incremental Innovation. Working with Non-Incremental Innovation requires a serious amount of strategic thinking and understanding that cannot easily be taught, especially not by legal professionals that themselves have never made any innovation in their lifetime. What can be said without hesitating is that the methods that are required for handling Incremental Innovation are very different from the methods that are required for handling Non-Incremental Innovation, and one would certainly not pass any patent attorney exam in this world when applying these Incremental Innovation tactics in an exam paper.
There are some recurring problems with patenting Non-incremental Innovation. One major problem is that, while talking a lot about those features and variants that are seen in the current product, current Innovation tactics taught at law school never talk about those many features and variants that are still good but are not used in the current product. These follow from the above-mentioned strategy of systematically producing a multitude of features and variants for solving a specific problem, only for later systematically culling them down to very few alternatives. These leftovers can very valuable when they are relevant to that Innovation. Maybe they will be used at a later time, but not now, either by the company that develops the Non-incremental Innovation into a product. Or by the competition, if they get hold of them: for building around a patent for the innovation or for blocking its further development. How to handle these leftovers? There is no company in this world that can afford to file one single patent application for each and every new feature and variant that is conceived in such a bulk creative effort. One tactic to deal with these is shown in my earlier article “Yes, It Is Legal To File Several Different Inventive Aspects In One Single Patent Application.
Another recurring problem is how to translate such a multitude of features and variants into a reasonably small number of patent applications, as they occur over a time period of several months or a few years. One must aim at generating early filing dates for every single feature and variant but that comes with a potential lack of enablement or disclosure in a patent application, which should be avoided. How can these potential gaps be handled in practice such that there is more freedom of decision and money saved? My Patent Strategy Basics course (click here) deals with this aspect of canning Non-incremental Innovation in patent applications.
Coming back to the initial question “give me your best price of a patent” above. Two things come together here: creative and intelligent, but distrustful paymasters that have no clue about patent law and who don’t want to have a clue. And they have an Innovation project that goes beyond Incremental Innovation.
There is no solution to this dilemma.
A pragmatic way of dealing with that situation is to sell them what is called an “Economy Class” patent (click here). That is more common than what you think and widely accepted by mass filers who know what they are doing. Some examples of such “Economy Class” patent applications done by reputable patent filers are here: DE102011106555, DE102016015724, EP1113086, EP0834441, DE102019207439. I have literally thousands of them.
The basic question behind all this is the following: would these creative and intelligent, but distrustful paymasters even be interested in knowing what they are going to get?
Martin “Non-incremental” Schweiger