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The Role of the Knock-Off Effect in Innovation published on TechCrunch:
Even the not-so-successful ones are eventually flattered in this way. It’s pretty quick, generally. If you’re lucky, you’ll get a couple years, but if your product is on shelves and people are seeing it, they will be “inspired”. It’s not even necessarily nefarious. It’s human nature. People see a possibility they didn’t see before and it opens their mind: to something very similar to the new innovation. They become blinded by the innovation and can’t see any other possibilities. Sometimes it is ill-willed, however, and companies make intentional rip-offs. Some companies actually specialize in this. The only thing that will discourage them is the threat of patents. So the inventors’ objective is to come up with an innovation that can be reasonably protected with a patent. If the product really takes off, you can try and hold on to your market, at least for a time. However, a patent does not enforce itself and you will have to be proactive to protect your territory. This can get very expensive (over $1 million for a lawsuit), so it will typically only make business sense for big-time products, like the iPhone.
In any case, patents don’t last forever; they expire (20 years for utility patents and 14 for design patents). They exist to encourage innovation by granting inventors the right to own their creations and pursue investment without fear, or at least with recourse, from knock-offs. Market forces will eventually take over, whether or not a patent exists, and the knock-offs will appear; and so will true innovations that actually improve on the original. An “innovation” is what we call a “knock-off” that makes something better rather than just cheaper. That said, the nature of “knock-offs” is always to be cheaper. When is the last time you saw a copy BETTER than the original?
This is how the Knock-off Effect works: someone has an idea for a new product which they release after research, development and investment. Someone else copies it for less money (because that is their nature) and in a much shorter time span as the hard part has already been done. The parties may or may not fight over it in court, but regardless, the premium the innovation commands is diminished. The innovator reacts to protect their market share by going out and making something new (because that is their nature) and the cycle repeats, meanwhile the original innovation is now available to the consumer for less.
The deceptively insightful little book, Who Moved My Cheese? presents this cycle through a rat and cheese analogy: one rat goes out and finds some cheese, other rats join in and once someone moves the cheese, some rats will keep going back and complaining about where the cheese used to be but some rats will go out and find another cheese. The first one there gets the choicest bits of the cheese and the others scramble for parts. You see this scenario a lot with Intellectual Property (IP). Innovators see the new opportunities and the other companies come along to copy it. As an innovator you need to recognize when to move on, and not merely sit back and bemoan the inevitable. This doesn’t mean you shouldn’t fight when you need to (and it makes sense to) protect your invention in order to maximize your return; but you also need to keep innovating.
When really large amounts of money are involved, as in the case of Apple v. Samsung, it makes sense to fight in court. Apple came out with an innovation that was guaranteed to be imitated by other people who just hadn’t seen the possibilities before. One possibility I see is that once they had seen the iPhone, it’s not that Samsung didn’t want to innovate, but rather that they were blinded by Apple’s design. They simply couldn’t imagine anything else that was equally cool that was not remarkably similar, and so that is what they produced. This is a manifestation of the Knock-Off Effect, and now consumers can get really great smartphones without buying into Apple. The courts decided Samsung walked too close to the line, and the success of those products in question was based on how close to the line they were walking. Hopefully as a result of Apple’s win, companies will try and walk further from that line and we’ll see more product diversity which will benefit the consumers by giving them more variety in their purchase of smartphones. Meanwhile, while Apple is snagging an extra billion dollars from an already old design and dealing a blow to a major competitor, don’t think it is not already moving on to the next innovation.
The truth is, knock-offs happen every day to every innovation. Most Inventors can only watch the value of their IP decline as the knock-offs emerge. But that is the reality of the world we live in (the same world which allows almost anyone to play in the inventing game, so don’t get too bitter). So keep inventing and let someone else pick up the crumbs. Just remember that with the Knock-Off Effect, speed is your best friend. Speed to innovation, speed to market and speed to general awareness in the public eye.
Take for example the pizza cutter: someone first comes out with the wheel blade and stick handle model and that becomes the standard for a long time and a whole bunch of people copy it.
Then Zyliss comes out with the idea that the handle doesn’t have to be a
stick, which opens up the mind to non-stick-and-wheel pizza cutters.
Now Zyliss has to decide to whether or not to pursue a patent lawsuit based the value of their intellectual property and the cost of the legal battle. The knock-offs are on shelves regardless of lawsuit putting price pressure on your products,
this good for the consumer because now they are getting better prices due to the competition.
creates a new innovative pizza cutter, the Pitzo, which improves upon every design advancement made to date. Now we will inevitably go back into the cycle again.
Knock-offs help drive the prices down for the consumer, forcing innovation. It’s all part of the innovation ecosystem. Even though it’s frustrating for the inventors to be copied, they’re innovators by nature, so they are in the best position to respond to it and stay one step ahead. That market pressure is what continues to drive more and more value to the end-users. Today you can buy a pizza cutter that is very effective thanks to the designs that were created due to market pressures brought on by knock-offs in the Cycle of Innovation.
There is a common perception that inventors are, and should be, paranoid about getting their ideas stolen. Stories like Robert Kearns’ battle with Ford (David and Goliath story, Flash of Genius) add to this culture of paranoia. There are lots of inventors who are so protective of their ideas they won’t even tell their spouse or friends about it, secretly nursing their idea for years. They think they don’t know who they can trust, and that their idea is so valuable that anyone who hears it will literally be uncontrollably compelled to steal the idea and try to bring it to market. They act suspicious of everyone they do try to work with, often alienating the very partners that could help them make their idea real.
I am here to tell you that it’s very hard to bring products to market, to make a business out of an idea, and the execution is far more important than the idea itself. Having an idea does not make you special, doing something about it does. For a someone not well-positioned to take advantage of an idea (like your poker buddy or bartender), stealing your idea would be taking on a HUGE project. Without the passion and commitment of the inventor, it is unlikely they will get anywhere.
Idea theft is much less common than inventions being stymied by overly paranoid inventors. When idea theft does happen, it’s from predictable places. Your friend is not likely to steal your idea. So, too, your spouse, co-workers, and other inventors (who, by nature, pursue their own ideas) are not likely to steal your idea. There are intellectual property ramifications, so I am not recommending just blabbing to everyone, but you don’t need to act like a deep-cover spy with people you normally trust.
Threat of Knock-offs
People are paranoid that their ideas will be stolen before they have been released, but the much bigger issue is knock-offs after the product is released. And it is usually by people who are in a position (in terms of both capability and inclination) to easily take advantage of the idea, who wait for the product to prove itself successful first. For example, a Chinese factory that specializes in making low cost housewares is much more likely to “borrow” a houseware idea than someone who isn’t specialized, because making one more item is easy for them. Also, they already have the customers so the risk is lower. However, by nature, these companies are not innovators. They don’t make things better, they make them lower-quality and cheaper. If they made a knock off and made it “better”, we wouldn’t call it a knock-off, we’d call it an innovation! Every product will eventually get knocked-off if it’s successful.
So when you are showing your product to a person in a position to easily knock you off, that is the appropriate time to exercise caution. However, you still shouldn’t be overly paranoid. You’ll need these industry partners to be successful. Be appropriately cautious, get an NDA signed, and only proceed if you trust the person. If you decide to proceed, though, don’t treat the person as though they are just trying to figure out a way to screw you, because no one has time for suspicious partners.
The Bottom Line
It is hard to be a successful inventor, especially if you are overly secretive. Every obstacle you throw up to “protect” your idea can make it that much harder for you to be successful. It’s best to eliminate as many barriers as possible to increase your chance of success.
Paranoia results from a lack of understanding of the true sources of threats in the business. You don’t have to be paranoid of your friends and co-workers or other inventors and generally, you won’t have many worries until after the product is on the market. You’ll need partners to succeed, so you have to be prepared to talk to people.
Don’t be careless with your intellectual property, but don’t treat people who want to help you as potential threats. However, if you don’t trust someone, don’t trust a contract with them either. Trust your gut.
Modern invention is a team sport. The ideal of the lone wolf inventor is out of date. It takes many skills to develop an invention idea to the monetization point, and very few individuals will be good at all of them. As you progress, assemble experts in a variety of areas, both as core team members and advisors. Cover the following areas of expertise: product design, engineering, branding, manufacturing, finance, legal, marketing, public relations and sales. You might possess several of these skills, and someone else might be able to handle several of them. You just need to make sure they are all covered. Many of these skills can be brought into your team at no expense at first; interview some lawyers and accountants. They’ll give you some basic advice in your interview! Recruit your designer and engineer for equity.If you are manufacturing your invention find a sales rep in your industry and sign a deal to start getting their input on strategy. You want power players for each role in the invention process. Each person should be great at what they do, so you can focus on your own strong suits.
Once you have a great team in place, it becomes easier to create the next product. With each person knowing their role, you can eliminate most of the bottle-necks in the process. After 16 years of being in the invention business, it takes me 10 percent of the effort to accomplish the same work due to the strength of my team.
Since it is inventing, one of the most important team members you need to locate is a manufacturing partner. For most items, China is the place where things are made. There are many agents that can help find reliable manufacturers. You can also use Alibaba.com (a web-based directory of Chinese factories). However, I recommend auditing any factory you plan on proceeding with past prototyping into production. Either go yourself (it’s cool in China!) or send an auditor like AsiaInspection.com. The right manufacturer won’t charge for basic engineering and will provide inexpensive prototypes as proof that they can actually produce the product.
Most of the “invention services firms” you see advertised on TV are a waste of your money. They offer to “help” you for a fee, sometimes quite large. Then they do nothing active to secure a licensee for you product, merely adding it to their catalog of inventions which they publish. It takes focused and special attention for every single product that is licensed. This kind of approach very rarely provides any useful value for what you pay. You need to work with devoted partners who are committed to your product.
For turning your invention into a winning consumer products, nothing is more important in generating success than great product design. Design is thought. A product with good design has more thought put into in it than a poorly designed one. Every point has been considered in order to perfect both the performance and appearance of the invention.
My theory for product development is what I call the Perfect Product Pyramid. I don’t mean absolutely perfect, of course. I mean relatively perfect. The perfect product is the one that gets on store shelves and sells well, not the one that is so well-featured that only a few can afford it. To be “perfect”, products need to have three areas of excellence:
1. The design,
2. The technology
3. The function.
Most “inventions” have to do with either their function (what it does that is special) or the technology (how it does it). To make the product great, it needs all three. A great functional invention with lousy design is a common mistake that inventors make. Look at the products on the shelves at the store. Everything looks great! That’s where you want to be, so your product needs to look great, too. Also, it needs to look diFFiRenT in order to stand out among competitors at the store. Good design isn’t just styling, it also impacts the user experience – providing ease-of-use, lack of annoyances, clever construction ergonomics and enjoyability. Good technology with a bad functionality is also a common mistake many inventors make when creating their products. Good ergonomics is expected by the modern consumer. And we’ve all had experience with products or inventions that look great but don’t work well. We call that “designer”. It’s art more than it’s product.
If you aren’t a product designer, you’ll need to hire or partner with one in order to turn the rough concept of your invention into a defined one that is ready to be shared with a factory or potential licensees or customers. A good designer will work with you in order to guide your decisions based on their experience in the industry. They can answer many questions about the financial repercussions of design decisions and help you come up with a realistic solution to the problem you’ve identified.
There are certain types of products that we use on a day to day process, things that we don’t even realize we need unless we don’t have it or run out. One of these items is soap. Recently, I have noticed a surge of energy in soap products that has been brought on by the development of foaming action. All of these years we have been using liquid soap, and there hasn’t been much innovation except new fragrances and funky bottle shapes, nothing truly compelling. But when you change the consistency, it changes the world as we know it. Sure it’s cheaper, but is it easier to apply? I don’t know. Does it smell better? Maybe, maybe not. But the fact is that it is just cooler. This describes an aspect of the design process, the innovation aspect. It is something we do here every day. A lot of the things that we work on aren’t new and futuristic products. They are things that have existed for a long time and we are simply transforming them to make them better. Just like changing the consistency of the soap, we change colors, features, and mechanisms that make a product easier to use, more attractive, and more likable. The motto here at trident is “transforming everyday tasks into opportunities to enjoy life.”
How do you become a successful inventor? I’m not really sure. It’s definitely an extremely difficult question to answer. There are many variations, many different paths and they don’t all lead to success. In fact, most don’t lead you anywhere or take you on the scenic route. I tend to feel that unless you are extremely gifted or just really lucky you’re usually walking on the scenic route. It’s all part of the process, we all try to walk the line but it always seems easier to stray and only once you’ve strayed too far do you realize you’re going in the wrong direction. If you have the right attitude and the will to push on through you will eventually reach your destination. If you asked Chris this question he would tell you that “there are so many ways to approach success but the most solid and consistent approach is to stay focused and be genuine in your actions. Good marketing is key, but if you provide genuinely good content you will receive long term success.”
Chris has been asked to participate in an interview that will take place on the launch Hour, a weekly radio show for innovators, product developers & entrepreneurs. Hopefully the questions won’t be so deep and will have somewhat more of a straightforward answer; otherwise Chris will probably be sweating it out. the launch hour podcast will air 2/24/2011. To be honest Chris is an innovator, product developer, and entrepreneur so I’m sure he will be fine. As well as participating in the radio show/podcast Chris will be offering his knowledge in depth in monthly classes starting in April. Chris has decided to give back to the invention community with a series of informative classes using real world examples from his life and experiences. The intention is to prepare up and coming inventors for the realities of the business as well as encourage them to push as hard as they can.
My wife and I were visiting my family up in the Toledo, Ohio region and had a lovely Christmas. My niece and nephew (5-year old boy and girl twins) received lots of cool toys. It’s amazing how much variety there is and how many cool things now exist for exploring the imagination. It makes me wonder how all this stimulation will affect their minds as they age.
Will they be super-imaginative due to their relatively unlimited access to different ways to express themselves? The modern toys have much greater fidelity and flexibility than the ones I had. Or perhaps the plethora of options will stunt their imaginations, as all the expressions of their creativity can be manifested externally, without having to rely on mind’s eye hallucinations to add vivid elements to their creations. Or is the net effect a wash? My guess is that it overall adds to the imaginative capacity of these children and we will see an increase in the imaginativeness of the coming generations. There is likely to be some cost, however. Perhaps it will come in the form of a greater reliance on external devices to express creativity, generating a certain type of dependence on machines/ technology.
I suppose if this is the case, we will already be seeing this in some form in people of my generation (‘x’ I believe.), who have grown up with an already much greater variety of expressive opportunities than our parents. And I suppose we do see this.
Anyway, it makes one think.