Product Strategy

Having recently posted the Signature Capture case on this web site, I thought that it would be a good time to share four criteria for a successful patent.   It was my responsibility at NCR to determine which patent applications to pursue in order to protect the signature capture concept and the market that was expected to emerge.  While we built a portfolio of about 15 patents, there were obviously some patents that were much more critical than others, and several that ultimately proved to be worthless.  Nevertheless, the result was an effective patent portfolio, with NCR owning the intellectual property for this space.

Many companies can not afford to build a portfolio of patents.  The initial cost of obtaining a utility patent is typically $10,000 or more.  Even filing for a single patent can be a financial burden for a small company.  With most studies showing that 90% or more of all U.S. patents have no commercial value, the decision to pursue a patent should be made carefully. 

I offer these four criteria in evaluating the decision to pursue a patent.

1.  Economic Value

The product or feature concept must have the potential of generating profit margins several times over the cost of the patent application and lifetime maintenance.  If you are not sure whether a market will develop for the product or if enough of the product can be sold to generate sufficient returns, then you may want to apply for a provisional patent.  This application can be done for a small cost, and effectively "holds your place" for a year, giving you additional time to study the market before filing the full non-provisional patent.

2.  It is Core (Can't Compete in the Future without it)

The goal is to cover an entirely new concept, so that no one can participate in the new market/product category without infringing the patent.  If the patent is for a new feature or modification to an existing product concept, then the feature must have a strong possibility of becoming a requirement in the market.  In other words, future versions of the product are expected to be non-saleable without the new feature.

3.  No Viable Alternatives 

Will your patent represent the only viable alternative to implement the concept or feature?  It is no use pursuing a patent if there are several other ways to achieve the same thing - unless, of course, you are planning to patent all of them. Make sure that you have a competent patent attorney help you with your claims - covering both apparatus and methods.  You want to leave no viable alternative which will allow a competitor to participate in the market/product category without infringing the patent.

4.  Infringement should be Easily Detectable

Even it you meet the first three criteria, you may still decide not to pursue the patent if you will not be able to tell if a competitor is infringing the patent.  This is especially the case with software or firmware.  Will you be able to determine  infringement from simply observing the product in operation?  If not, will you have a workable plan to obtain competitive products and determine infringement?  Will you need to examine a competitor's source code to determine infringement?  If so, how will this be done and at what cost? 

I typically want to see all four criteria being met to justify a patent application, especially in a small company setting where a patent application represents a major financial investment.  Using these four criteria, you can increase the probability that your company will achieve a financial return on the patent.  

Good ideas can come from customers, product managers, engineers, salespeople, technical support staff, or really anybody in your company.  Generally, a good idea will solve a problem or fulfill a need, whether current or anticipated, and its implementation will provide a benefit which preferably can be quantified.   A good product idea therefore is often a result of good problem understanding. 

So how do you identify and understand problems or unfilled customer needs?

First, you need to get out to see the target customers - in their environment.  This could be an informal visit or tour, or it could be part of a more structured market research project.  While on site, it is advantageous to talk to as many people as possible, in a variety of roles.  It is possible that the higher level people may not be aware of all the problems in their organization. 

It is important that you are open to listening and observing.  Now is not the time to be selling.  You are asking about problems and looking for opportunities.  Some problems may exist but are never identified as a problem because "it has always been done that way."  If the customer is not aware of a better solution, they may not consider their current method to be a problem.  They may also have a need that is being filled, but not to the extent that a newer, enabling technology will allow.

This brings us to the next point - perspective.  You bring a different perspective to the scene, which will also be different from other people within your own company. So it is beneficial to have a variety of people from your company visit customers to observe and listen.  And by all means, solicit thoughts and ideas from those individuals (salespeople, technical support, customer service) that interact with customers on a regular basis.

Many companies today focus on a vertical niche.  This gives them the advantage of focusing their time and attention so that they can more completely understand the customer's environment.  This will yield solutions that fit better into the environment and have features that may solve multiple problems or fulfill critical needs.

If your company is trying to play in too many markets, you may find that you are getting beat by competitors with more focus on the vertical, and a as a result, are implementing better ideas at a faster rate. 

With the completion of the first two case studies for the new Product Strategy web site, now is the time to start the blog portion of the site.  The purpose of this site is to explore best practices in product strategy and product management through extensive use of case study.  I am hopeful that this site will be a repository for product strategy case studies - each with lessons to be learned. 

I am encouraging comments on the first two scanner related case studies, both originating from my time at NCR Corporation. Please post your comments about these cases.  If you have some familiarity with the cases, I would like to understand your perspective as well. 

If you have experience with product strategy, and have an interesting story that should be told, please initiate contact with me via the contact me page.    We can discuss publishing your story as a case study on the site.