Creativity to New Product Development: Making the Idea Real

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Note: This is the text-only version of this week’s lecture.
All media (i.e. videos, flash presentations, and PowerPoints) and learning activities (i.e.
assigned readings, assignments, and discussions) are accessible only through the
online course.
Week 2: Creativity to New Product Development:
Making the Idea Real
Week 2: Overview
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Video Transcript
Week 2: Introduction
Entrepreneurial activity has been shown to contribute to innovative activities, competition,
economic growth, and job creation (Carree and Thurik, 2003). According to a 2004 Venture
Impact study, 10% of the U.S. Gross Domestic Product (GDP) is directly related to new venture
creation, and perhaps more importantly, over 20% of research and development (R&D) in the
U.S. is performed by firms with under 500 employees (this has risen from 6% in 1984) (Global
Insight, 2004). Startups are vital to global economic growth. In the US, high-growth ventures
account for up to 50% of new jobs created (Fetsch, 2016). Simply put, new ventures are vital to
the economy.
Key to the vitality of new ventures is creativity and innovation. These are buzzwords for sure,
but data suggest that new firms are in fact drivers for innovation. Additionally, a recent study by
the Small Business Administration found that products by small firms are more economically
and technically important in terms of innovations than larger firms. Entrepreneurial managers
need to be able to develop creative technologies, processes, and business plans to successfully
enter into the market and thrive. How does one go about doing this? Can creativity be learned
and “exercised?” If so, how can these techniques be applied to new product and business
ideas? This week is designed to give access to tools that will help you accomplish innovative
strategic thinking.
Finally, since we’ll be learning tools for innovative product and business development, a major
asset to the newly developed innovation is protecting it. That is why we are also covering
intellectual property (IP). IP can help a firm protect its technology, processes, and innovations.
There are several strategies to accomplish this, and we will explore each of them in detail.
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Lessons
Lesson 1: Brainstorming, Idea Screening, and Evaluation
Lesson 2: New Product Development
Lesson 3: Intellectual Property
Week 2: Learning Objectives
By the end of this week, you should be able to understand:
ï‚· Creative brainstorming and how these processes can be used in product and business
planning.
ï‚· The product development process and how it applies to new ventures.
ï‚· The role and types of intellectual property in new products, businesses, and processes.
Week 2: Learning Activities
Week 2
Learning Activity Description Due Date Point
Value
Weight
Week 2 Lesson 1 Brainstorming, Idea
Screening, and Evaluation
Day 5 ~ ~
Week 2 Reading 1 Essentials of
Entrepreneurship: Chapter 3
Day 5 ~ ~
Week 2 Lesson 2 New Product Development Day 5 ~ ~
Week 2 Reading 2 ï‚· IDEO Case Study
ï‚· On the Use of a
Simplified New
Product Development
Process in an EarlyStage Firm
Day 5 ~ ~
Week 2 Discussion 1 IDEO Case Study/Video Initial Post:
Day 5
Response:
10 30%
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Day 7
Week 2 Lesson 3 Intellectual Property Day 5 ~ ~
Week 2 Reading 3 ï‚· Free Patent Searches
ï‚· Government Site
ï‚· Copyright Office of
the US Government
Day 5 ~ ~
Week 2 Discussion 2 Intellectual Property Initial Post:
Day 5
Response:
Day 7
10 30%
Week 2 Assignment 1 Written Case Study Day 7 100 40%
Total 120
Note: All assignments are to be submitted through the Assignments area of the course.
Similarly, all discussions can be accessed in the Discussions area.
Lesson 1: Brainstorming, Idea Screening, and
Evaluation
Introduction
Creativity is the ability to develop new ideas and discover new ways of
looking at problems and opportunities. Innovation is the ability to apply
creative solutions to those problems to enhance or enrich people’s
lives. Successful entrepreneurs come up with ideas then find ways to
make them work to solve a problem or to fill a need. Apple was started
because the founders wanted to make an assembled home computer.
Starbucks was founded to give patrons access to gourmet coffee.
Walmart was founded to give customers excellent value.
Entrepreneurs often look at the status quo and want to challenge it. Take Steve Jobs for
example, Apple’s co-founder and former CEO. In 1976, he and Steve Wozniak challenged the
assumption that only large corporations would want computers. Their idea was to put computers
in each home. In 1983, Jobs challenged the notion that computers are complex devices for
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business people and scientists, and created the Macintosh. In 2001, he challenged the music
industry with the creation of iTunes. You may think to yourself, “I’m not Steve Jobs – I’m not that
creative!” Perhaps not, but we all have an innate creative ‘muscle’ that can be worked,
strengthened, and improved.
We will learn techniques for improving creativity and brainstorming. These techniques are
perfect for the small entrepreneurial team seeking to improve or even develop the initial spark of
an innovative idea.
Learning Objectives
By the end of this lesson, you should be able to understand:
ï‚· Different techniques for idea generation, screening, and evaluation.
ï‚· Brainstorming and how it can be applied to new business and product ideas.
Ideation and Brainstorming Techniques
In being an entrepreneur, one needs to balance the left and right brain.
The left brain is logical, and processes things in a step-by-step fashion.
The right brain is unsystematic, unstructured, and is generally
associated with creativity.
The following is taken from the course textbook, Essentials of
Entrepreneurship. Our textbook notes several key points in trying to
balance left and right brain thinking: Maintaining discipline while
maximizing creativity.
People that have developed their right brain skills tend to:
ï‚· Ask, “Is there a better way?”
ï‚· Challenge convention.
ï‚· Be prolific thinkers, generating lots of ideas.
ï‚· Realize there may be more than one right answer.
ï‚· See problems as springboards to ideas.
ï‚· Relate seemingly unrelated ideas to a problem to generate innovative solutions.
ï‚· Have ‘helicopter’ skills – the ability to rise above the daily routine to see an issue from a
broader perspective, then swoop back down to focus on an area in need of change.
As a fledgling entrepreneur (or intrepreneur), how does one go about enhancing creativity in a
problem space? Our text talks about some interesting ideas such as talking to a child, playing
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with toys, reading books, and taking time off. Those are good ideas, but what is needed is a way
to come up with good ideas. A common tool which is used is called brainstorming. We will now
turn our attention to this tool.
Creativity Techniques
In my years of harnessing creativity, I have typically used one-hour brainstorming sessions.
These typically occurred with a team of no more than five people. This seems like the right
amount of time, and the right amount of people. I have found that within the process, it is key
that everyone is encouraged to participate. It is also important that someone be designated the
scribe, ahead of time.
The great thing about brainstorming sessions is that with the use of the internet, these sessions
can occur practically anywhere at any time! For virtual brainstorming sessions with virtual
teams, I use Skype. These virtual sessions, for me, have typically involved one other person.
Creativity Techniques
Innovation (1 of 2)
View the following video on the entrepreneurial mindset:
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Innovation (2 of 2)
View the following video on industrial design and innovation.
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Brainstorming (1 of 3)
Brainstorming is a process in which a small group of people interact
with very little structure, and with the goal of producing a large
quantity of novel and imaginative ideas. The goal is to create an
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open, uninhibited atmosphere that allows members of the group to generate and iterate ideas.
Ideas should be evaluated without criticism, as many times off-beat ideas can influence the
thought process to produce unique solutions.
Here’s a video on how IDEO brainstorms.
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Self-Check
Type your answer to the question in the box and then select Submit for a response.
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Brainstorming (2 of 3)
Our text gives a good guide for brainstorming sessions. The following information can be found
in our course textbook (p. 21), Essentials of Entrepreneurship.
Select the gears in the man’s head to learn the steps to brainstorming.
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Alternate Version
These sessions can be used in large companies, as well as the fledgling new venture. Imagine
a small group of founders sitting around a table brainstorming the business model. Try it – it
works! Later in the lesson we will see the well-known design firm IDEO using structured
brainstorming in the new product development process. The process and results are
compelling, and are absolutely applicable to planning a new company.
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Brainstorming (3 of 3)
View the following video on brainstorming:
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Method 635
Using Method 635
As pointed out before, this method is used for finding/collecting ideas — similar to general
brainstorming. However, this method is more disciplined.
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Theory of Inventive Problem Solving (TRIZ) (1 of 7)
Theory of Inventive Problem Solving (TRIZ, pronounced TREES)
An even more structured approach to creative problem solving is TRIZ. I’ve used TRIZ on
several occasions. For example, when I was developing a product of my own, I was stuck for
about a year. I then decided to try TRIZ. In a few hours I had several concepts which ended up
being chosen for final design. One of those concepts will be in production shortly.
The following information, along with additional information regarding TRIZ can be found at the
following location:
What is TRIZ?
TRIZ was developed by Genrich Altshuller and his colleagues in the former USSR
starting in 1946, and is now being developed and practiced throughout the world.
TRIZ research began with the hypothesis that there are universal principles of invention
that are the basis for creative innovations that advance technology, and that if these
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principles could be identified and codified, they could be taught to people to make the
process of invention more predictable. The research has proceeded in several stages
over the last 50 years. Over 2 million patents have been examined, classified by level of
inventiveness, and analyzed to look for principles of innovation. The three primary
findings of this research are as follows:
1. Problems and solutions were repeated across industries and sciences
2. Patterns of technical evolution were repeated across industries and sciences
3. Innovations used scientific effects outside the field where they were developed
In the application of TRIZ all three of these findings are applied to create and to improve
products, services, and systems.
Theory of Inventive Problem Solving (TRIZ) (2 of 7)
TRIZ works! Large and small companies are using TRIZ on
many levels to solve real, practical everyday problems and
to develop strategies for the future of technology. TRIZ is in
use at Ford, Motorola, Procter & Gamble, Eli Lilly, Jet
Propulsion Laboratories, 3M, Siemens, Phillips, LG, and
hundreds more.
Projects of all kinds frequently reach a point where all the analysis is done, and the next
step is unclear. The project team must be creative, to figure out what to do. Common
creativity tools have been limited to brainstorming and related methods, which depend
on intuition, fiat, and the knowledge of the members of the team. These methods are
typically described as psychologically based and having unpredictable and unrepeatable
results.
TRIZ is a problem solving method based on logic and data, not intuition, which
accelerates the project team’s ability to solve these problems creatively. TRIZ also
provides repeatability, predictability, and reliability due to its structure and algorithmic
approach. “TRIZ” is the (Russian) acronym for the “Theory of Inventive Problem
Solving.” G.S. Altshuller and his colleagues in the former U.S.S.R. developed the
method between 1946 and 1985. TRIZ is an international science of creativity that relies
on the study of the patterns of problems and solutions, not on the spontaneous and
intuitive creativity of individuals or groups. More than three million patents have been
analyzed to discover the patterns that predict breakthrough solutions to problems. (triz–
journal)
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Theory of Inventive Problem Solving (TRIZ) (3 of 7)
TRIZ is spreading into corporate use across several parallel paths – it is increasingly
common in Six Sigma processes, in project management and risk management
systems, and in organizational innovation initiatives.
As mentioned, TRIZ research began with the hypothesis that there are universal
principles of creativity that are the basis for creative innovations that advance
technology. If these principles could be identified and codified, they could be taught to
people to make the process of creativity more predictable.
The short version of this is:
Somebody someplace has already solved this problem (or one very similar to it.)
Creativity is now finding that solution and adapting it to this particular problem.
Much of the practice of TRIZ consists of learning these repeating patterns of problems—
solutions, patterns of technical evolution, and methods of using scientific effects—and
then applying the general TRIZ patterns to the specific situation that confronts the
developer.
Exhibit 1 describes this process graphically.
Alternate Version
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In Exhibit 1, the arrows represent transformation from one formulation of the problem or
solution to another. This four-step problem solving approach forces the user to
overcome inherent psychological bias that is typically the foundation of psychological
ideation techniques. (triz–journal)
Theory of Inventive Problem Solving (TRIZ) (4 of 7)
For example, a powerful demonstration of this method comes from the pharmaceutical
industry. Following the flow of Exhibit 1, the specific problem is as follows:
Tailored bacteria are used to cultivate human hormones, producing a superior product to
those refined from animal sources. To produce the product, very large quantities of
tailored bacteria cells are cultured, the cells must be broken open and the cell wall
material removed so that the useful hormones can be processed. A mechanical method
for breaking the cells had been in use at a moderate scale for some time, but the yield
was 80 percent and it was variable. A current crisis was a reduction in yield to 65
percent, and a long-term problem was anticipated in trying to scale production up to high
rates, with yield much better than 80 percent.
The TRIZ general problem, at the highest level, is to find a way to produce the product
with no waste, at 100 percent yield, with no added complexity. A TRIZ general
solution formula is “The problem should solve itself.”
One of the patterns of the evolution of technology is that energy (fields) replaces objects
(mechanical devices). For example, consider using a laser instead of a scalpel for eye
surgery. In this case, ultrasound can be used to break the cell walls or use of an enzyme
to “eat” the cell wall (chemical energy) could be used instead of hitting them. This may
seem very general, but it led the pharmaceutical researchers to analyze all the
resources available in the problem (the cells, the cell walls, the fluid they are in, the
motion of the fluid, the processing facility, etc.) and to conclude that three specific
solutions had high potential for their problem:
1. The cell walls should be broken by sound waves (from the pattern of evolution of
replacing mechanical means by fields).
2. The cell walls should be broken by shearing, as they pass through the
processing facility (using the resources of the existing system in a different way).
3. An enzyme in the fluid should “eat” the cell walls and release the contents at the
desired time.
All three methods have been tested successfully. The least expensive, highest yield
method was soon put in production. (triz-journal)
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Theory of Inventive Problem Solving (TRIZ) (5 of 7)
The “General TRIZ Solutions” referred to in Exhibit 1 have been developed over the course of
the 60 years of TRIZ research, and have been organized in many different ways. Some of these
are analytic methods such as:
ï‚· The Ideal Final Result and Ideality;
ï‚· Functional Modeling, Analysis and Trimming; and
ï‚· Locating the Zones of Conflict (This is more familiar to Six Sigma problem solvers as
“Root Cause Analysis.”).
Some are more prescriptive such as:
ï‚· The 40 Inventive Principles of Problem Solving;
ï‚· The Separation Principles;
ï‚· Laws of Technical Evolution and Technology Forecasting; and
ï‚· 76 Standard Solutions.
In the course of solving any one technical problem, one tool or many can be used. The 40
Principles of Problem Solving are the most accessible “tool” of TRIZ. These are the principles
that were found to repeat across many fields, as solutions to many general contradictions, which
are at the heart of many problems. (triz-journal)
Theory of Inventive Problem Solving (TRIZ) (6 of 7)
A fundamental concept of TRIZ is that contradictions should be eliminated. TRIZ recognizes two
categories of contradictions:
1. Technical contradictions are the classical engineering “trade-offs.” The desired state
can’t be reached because something else in the system prevents it. In other words,
when something gets better, something else gets worse.
Classical examples include:
o The product gets stronger (good), but the weight increases (bad).
o The bandwidth for a communication system increases (good), but requires more
power (bad).
o Service is customized to each customer (good), but the service delivery system
gets complicated (bad).
o Training is comprehensive (good), but keeps employees away from their
assignments (bad).
2. Physical contradictions, also called “inherent” contradictions, are situations in which one
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object or system has contradictory, opposite requirements.
Everyday examples abound:
o Surveillance aircraft should fly fast (to get to the destination), but should fly slowly
to collect data directly over the target for long time periods.
o Software should be complex (to have many features), but should be simple (to be
easy to learn).
o Coffee should be hot for enjoyable drinking, but cold to prevent burning the
customer.
o Training should take a long time (to be thorough), but not take any time. (trizjournal)
Theory of Inventive Problem Solving (TRIZ) (7 of 7)
TRIZ research has identified 40 principles that solve the technical/tradeoff contradictions and
four principles of separation that solve the physical/inherent contradictions. Additional examples
include:
Entertainment Singapore needs to find a way to manage automobile traffic on the
Sentosa, its entertainment island (aquarium, bird sanctuary,
dolphin show, restaurants, music, etc.). Applications of TRIZ
developed eight families of solutions.
IT Product Development A manufacturing company doubled the value to the customer of
their patient interview system for opticians’ offices by applying the
feedback and self-service principles of TRIZ to the overall product
development, and applying the principles of segmentation—taking
out and composite construction to the training and support.
School Administrators Creativity has been greatly enhanced in situations ranging from
allocation of the budget for special education to building five
schools with funding for only four, to improving racial harmony in
schools.
Waste Processing Dairy farm operators could no longer dry the cow manure due to
increased cost of energy. TRIZ led the operators to a method used
for the concentration of fruit juice, which requires no heat.
Warranty Cost
Reduction
Ford used TRIZ to solve a persistent problem with squeaky
windshields that was costing several million dollars each year.
Previously, they had used TRIZ to reduce idle vibration in a small
car by 165 percent, from one of the worst in its class to 30 percent
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better than the best in class.
From loose brainstorming sessions to TRIZ techniques, creative sessions can help you. This is
true whether you are in a large company, or in the formation of a new venture. You can develop
innovative solutions for even the most mundane problems. Try it! (triz–journal)
TRIZ in Action (1 of 3)
Please view the following video on TRIZ: Part 1.
TRIZ: Part 1
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TRIZ in Action (2 of 3)
Please view the following video on TRIZ: Part 2.
TRIZ: Part 2
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TRIZ in Action (3 of 3)
Please view the following video on TRIZ: Part 3.
TRIZ: Part 3

Alternate Version
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Week 2 Reading 1 (Complete by Day 5)
Value: Participation
Please read:
Essentials of Entrepreneurship: Chapter 3
Lesson 1: Summary
The entrepreneur’s secret weapon in creating ventures with value in the marketplace is applying
creativity and innovation to solve problems. Creativity is the ability to develop new ideas and to
discover new ways of looking at problems and opportunities. Innovation is the ability to apply
creative solutions to those problems and opportunities to enhance or to enrich peoples’ lives.
There are methods to help the entrepreneurial team develop innovative solutions. These include
brainstorming and more structured methods like Method 635 and TRIZ. Entrepreneurship is the
result of a disciplined, systematic process of applying creativity and innovation to needs and
opportunities in the marketplace.
Lesson 2: New Product Development
Introduction
New Product Development (NPD) is the conceptualization, design, engineering
implementation, and commercialization of a new product. It has been well-studied in the
context of established corporations, across a broad range of industries, for decades.
This body of research argues the importance of practices ranging from the
implementation of cross-functional teams to the planning and adoption of scalable
architectures and product platforms. The NPD process is arguably the most important
dynamic capability within a firm.
However, what about new product development within early-stage entrepreneurial firms?
Firms with fewer than 100 employees are known to comprise more than 98% of all
businesses in the United States and are key contributors to innovation and economic
growth. Data suggest that effective management of the development of new products in
such firms is no less important – and perhaps more so – than for mature corporations,
given historically high product and firm-level failure rates. In new firms, the successful
launch and commercialization of the first product has been shown to be critical to
survival and is perhaps the most important aspect of a firm. Approaches to and
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successful outcomes from new product development are both by common sense and
study one of the foundations for venture survival. Understanding the product
development processes and methods used to increase the likelihood of successful
outcomes is paramount to the new venture. New firms do not have the resources – time,
money, and staff – to absorb product failure that is the result of a poorly executed
development process. Understanding NPD practices in the context of new ventures and
executing them properly is fundamental to entrepreneurial success.
IDEO is a world leading design firm. They have designed many of the product innovations you
use on a daily basis. They believe their critical skill is their design process – the way they
structure and think about a problem. Many outside companies use their services to obtain
unique solutions. Ford used them to design the unique green dashboard for the Fusion Hybrid
Sedan. The special leaf growing gas meter is being hailed as, revolutionary. IDEO structures
their process to frame a problem, and they use brainstorming to come up with special solutions.
This type of thinking is not only useful for products, but it is useful for new businesses and
business models as well. In this section we will see how IDEO does it, and how you can do it
too!
Learning Objectives
By the end of this lesson, you should be able to understand:
ï‚· The new product development process and its use in early-stage firms.
ï‚· Team brainstorming dynamics.
ï‚· How market investigation and brainstorming can shape product and business ideas.
Week 2 Reading 2 (Complete by Day 5)
Value: Participation
Please read:
ï‚· The HBS IDEO case.
ï‚· On the Use of a Simplified New Product Development Process in an Early-Stage Firm.
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Week 2 Discussion 1
Week 2 Discussion 1: IDEO Video
Value: 10 Points
Review the IDEO Video and the Design Thinking Video from MIT Altitude.
The new shopping cart is an interesting idea, but nearly 20 years later we are still using the
same old designs.
Answer the following questions:
ï‚· Why wasn’t this idea commercialized?
ï‚· What are some of the faults in the design?
ï‚· What about the business model?
ï‚· Are there any issues with the ‘shopping cart market’ that would inhibit innovation?
ï‚· What did you notice about their empathetic, enthnographic approach? Did you see any
example of the issues from the Altitude MIT video?
ï‚· How do you feel about their approach to brainstorming? Did you see any differences
from the IDEO video?
Post your response in the Discussions area by end of Day 5, and comment on at least
two of your classmates’ posts by end of Day 7.
IDEO Deep Dive Video
New product development and new venture development can utilize many of the same
structured creative processes and principles. IDEO is a design firm located in California. It has
developed some of the most recognizable innovations over the last twenty years. The following
videos show the development process centered on making the typical shopping cart better.
Video: Inside IDEO .
Design Thinking
David Kelly is a world leader in design thinking, and IDEO’s strategy for approaching design is
very applicable to the entrepreneur. Many entrepreneurs rush to a decision, direction, or design.
What is needed is a different approach, and IDEO’s methods are a good place to start for the
new entrepreneur.
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Here is a short brief on design thinking from IDEO’s CEO:
We can’t tell you about our “process” because we don’t have one. Design challenges are
inherently complex and deserving of more than a step-by-step plan in order to resolve
emerging nuances and provide pathways to implementation.
Because design is messy and non-linear, each project we do is bespoke. We customize
it for the challenge at hand. The scoping of the project plan is when our approach starts
to take shape, and where our partnership with you begins.
We refer to our overall approach as “design thinking”: a means of problem solving that
uses design methodologies to tap into a deep reservoir of opportunity. These methods
include observation, prototyping, building, and storytelling, and can be applied by a wide
range of people to a breadth of organizational challenges.
An inherently shared approach, design thinking brings together people from different
disciplines to effectively explore new ideas—i deas that are more human-centered, that
are better able to be executed, and that generate valuable new outcomes.
Design thinking also enables us to collectively tackle problems and ideas that are more
complex than the lone designer can imagine: inaccessible healthcare, billions of people
living on a few dollars a day, energy usage outpacing the planet’s ability to support it,
education systems that fail students, and beyond. These problems all have people at
their heart. They require a collaborative, human-centered, iterative, and practical
approach to finding the best ideas and ultimate solutions. Design thinking is just such an
approach to innovation. (IDEO)
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Some discussion questions:
ï‚· What did you notice about their empathetic, ethnographic approach? Did you see any
example of issues from the video?
ï‚· How do you feel about their approach to brainstorming? Do you see any differences
from the IDEO video?
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IDEO: Additional Notes
Through IDEO we saw how a type design firm goes about developing an idea into a functional
prototype. Of note was the way IDEO used structured brainstorming and a project leader to
shape the product idea and specifications. There are many parallels of this process to refining
business ideas and models. Also important was the in-field investigation into customer needs
and the issues with current product offerings. Again, this type of ground-work is invaluable to the
start-up company. Lastly, the use of prototyping was shown. Regardless of a product for an
established firm or a new start-up technology, showing physical mock-ups can be essential in
conveying the business idea.
Video: Some Points of Mention
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Video Transcript
Product Development in Action (1 of 2)
Software Development
View the following videos about product development.
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Alternate Version
Product Development in Action (2 of 2)
Product Development of Drugs – The FDA Approval Process
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Lesson 2: Summary
The new product development process is essential to the new firm. However, it is unrealistic
that a very small firm will adopt very high levels of the NPD practices across-the-board. What is
more likely is that a firm will have a flexible development strategy working through an informal
process that selectively adopts best practices when they are needed, and to a level that is
appropriate given the needs of the product and management team. Many successful firms, as
shown in the PaperPro and IDEO cases, use outside firms to foster the development process.
What is important for the new firm is that there is certainly a need for balance in the strategic
management of the nascent firm between flexibility, structure, and process. New ventures can
benefit from well-established NPD practices, but they need to be free to implement them in
manners that foster, rather than inhibit, responsiveness. Maintaining flexibility, with the proper
amount of NPD discipline, seems the surest path to successful early-stage NPD.
Lesson 3: Intellectual Property (IP)
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Video Transcript
Introduction
Since new product and technology development is key to the new firm’s success, protecting it is
just as vital. In this section, you will be exposed to different intellectual property definitions and
strategies.
Learning Objectives
By the end of this lesson, you should be able to understand:
ï‚· The types and strategies for IP.
ï‚· The value to new ventures.
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Intellectual Property and Google
Please view the following video on IP from Google’s perspective.
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Alternate Version
Intellectual Property
Intellectual property is invaluable for the new venture, particularly those that develop products or
services. IP is an asset of the firm, and can be the basis for licensing or future acquisition.
However, many entrepreneurs think that getting a patent means success. I have seen many
people spend thousands of dollars on worthless patents when they should have been making
and testing prototypes.
As a first step, search the Internet and stores to see if there are already existing products. If not,
consider getting a provisional patent. If, and only if, you think you have something protectable,
then proceed with utility and design patents. Anytime you mention a product or service in words,
put a trademark symbol by it. It’s essentially a provisional patent for trademarks.
Additional definitions of Intellectual Property.
What is a Provisional Application for Patent?
As a first step in intellectual property, one should file a
provisional patent.
A provisional application for patent was designed to solve
an age-old problem. You want to see if your invention
has commercial appeal, but if you tell people, you run the
risk they will “steal” the idea.
Before 1995, inventors could either build the invention
themselves, or they could file a full patent application before telling anyone about their
invention. However, there were significant problems with both approaches. First, it is
time-consuming and expensive to build a working prototype, especially one based on
new technologies. Second, hiring an attorney to prepare a full patent application can
cost thousands of dollars.
ENTR 6212: New Venture Creation
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The solution was the provisional application for patent. According to the U.S. Patent
Office, a provisional application is designed to provide a “lower-cost first patent filing.” A
provisional patent lets you quickly secure an initial filing date for your invention and
legally allows you to use the words “patent pending.” These words serve as a strong
warning. Anyone who copies your invention risks patent infringement.
Once a provisional application is filed, you have 12 months to test your idea and seek
funding before filing a full patent application. Filing a full patent before the end of the 12-
month period gives you the original filing date of the provisional application. In other
words, if you filed your provisional application on January 1, 2007 and then file your full
patent application on December 31, 2007, the filing date for the full patent will be
January 1st.
If you decide not to move forward with your patent, you can simply abandon it, knowing
your upfront costs were minimal.
Filing a provisional patent typically costs under $500 if you write the claims yourself.
The above copy is courtesy of legalzoom.
Filing a Non-Provisional Patent
After the year expires for the provisional, you can file a non-provisional patent. This can include
two types of patents: utility and design.
Utility Patent
A Utility Patent covers the functionality of a product or technology. For example, I have a Utility
Patent on an Ice Scraper. In the patent, the functionality of the invention is described, and a
description of what makes it unique. Obvious claims are discounted, and the patent office wants
you (the inventor) to describe the invention in detail. Supporting renderings and graphics are
used to illustrate the invention claims. The process of a utility patent can take several years, and
cost anywhere from five to twenty thousand dollars. Once a patent is granted, it is up to the
inventor to maintain it, which can cost thousands of dollars over the years. It shall be noted that
approximately one percent of patents are truly new and revolutionary, most are incremental
improvements over existing products.
Additional description on Utility Patent.
ENTR 6212: New Venture Creation
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Design Patent (1 of 2)
A design patent is a patent that covers the ornamental appearance of a product. For example,
the unique shape of a new type of soft drink bottle may be covered under a design patent. All
the shapes, curves, colors, etc. can be included in the design patent. The purpose of the design
patent is to inhibit direct design knock-offs.
Moment of Reflection
Can you think of any designs that were recently copied?
Design Patent (2 of 2)
To protect your invention in other countries you will need to file an international patent
application under the Patent Cooperation Treaty (PCT). Though this does not provide
you with an international patent it delays the expense of filing in other countries allowing
you more time to access the feasibility of selling your invention abroad. Laws under the
PCT allow you to file a single international patent application that will temporarily protect
your invention in up to 117 countries for as long as 2½ years. Foreign patents should be
discussed with a registered patent attorney.
Many people looking to obtain patents are tempted to use so-called “idea companies”
that charge a fee to develop potential leads for your invention. Most patent attorneys will
warn you away from the vast majority of these companies, as will consumer watchdog
groups. Instead, once an invention is protected by patent pending status, or patent,
many insiders suggest attending trade shows with a prototype to seek viable leads
yourself.
Patents can protect the inventor from losing millions of dollars, should an invention be
successful. For this reason it is recommended that anyone seeking a patent secure the
services of a registered patent attorney, whose first step will be conducting a thorough
search to see if someone has already patented your idea or invention.
To conduct a preliminary search yourself, you can visit the search section of
the USPTO (http://www.uspto.gov/patft/). Enter a keyword to bring up results, then select
on a patent to view it. By reading a few patents you can get an idea for how involved
they are and why an attorney is a good idea. The USPTO can also help you find patent
attorneys in your area.
Obtaining utility patents are rather expensive and can cost up to $8000 U.S. dollars or
more, with attorneys fees. Design patents will be less. the USPTO website includes the
ENTR 6212: New Venture Creation
23
fee schedule (but this does not include attorney’s fees).
Text courtesy of wisegeek
Trade Secret
A trade secret is when a company decides to keep their technology or intellectual property
hidden from the outside world. For example, the exact ingredients, amounts, and processes of
how to make Coca-Cola are secret. In fact, it has been a secret for over a hundred years. Since
patents only last a certain period of time (i.e., consumables, materials), this can be a good
option.
The following is a further explanation of Trade Secrets.
Broadly speaking, any confidential business information which provides an enterprise a
competitive edge may be considered a trade secret. Trade secrets encompass
manufacturing or industrial secrets and commercial secrets. The unauthorized use of
such information by persons other than the holder is regarded as an unfair practice and
a violation of the trade secret. Depending on the legal system, the protection of trade
secrets forms part of the general concept of protection against unfair competition or is
based on specific provisions or case law on the protection of confidential information.
The subject matter of trade secrets is usually defined in broad terms and includes sales
methods, distribution methods, consumer profiles, advertising strategies, lists of
suppliers and clients, and manufacturing processes. While a final determination of what
information constitutes a trade secret will depend on the circumstances of each
individual case, clearly unfair practices in respect of secret information include industrial
or commercial espionage, breach of contract and breach of confidence. (www.wipo.int)
Trademarkâ„¢
Trademarks are generally distinctive symbols, pictures, or words
that sellers affix to distinguish and identify the origin of their
products. Trademark status may also be granted to distinctive and
unique packaging, color combinations, building designs, product
styles, and overall presentations. It is also possible to receive
trademark status for identification that is not on its face distinct or
unique but which has developed a secondary meaning over time
that identifies it with the product or seller. The owner of a
trademark has exclusive right to use it on the product it was
intended to identify and often on related products. Service-marks
ENTR 6212: New Venture Creation
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receive the same legal protection as trademarks but are meant to distinguish services rather
than products (Cornell Law, 2008). In a new business, always put aâ„¢ by product names and
slogans, it will be considered statement of first use, a “provisional patent” from trademarks.
(Cornell Law School)
Copyright ©
The following content is courtesy of Wikipedia. It is suggested that you
follow the links for some very useful background information.
A copyright is a form of intellectual property which gives the creator
of an original work exclusive rights for a certain time period in
relation to that work, including its publication, distribution and
adaptation; after which time the work is said to enter the public
domain. Copyright applies to any expressible form of an idea or information that is
substantive and discrete. Some jurisdictions also recognize “moral rights” of the creator
of a work, such as the right to be credited for the work.
The intent of copyright is to allow authors to have control of and profit from their works,
thus encouraging them to create new works and to aid the flow of ideas and learning.
Copyright has been internationally standardized, lasting between fifty to a hundred years
from the author’s death, or a finite period for anonymous or corporate authorship; some
jurisdictions have required formalities to establishing copyright, most recognize copyright
in any completed work, without formal registration. Generally, copyright is enforced as
a civil matter, though some jurisdictions do apply criminal sanctions. (Wikipedia)
Week 2 Reading 3 (Complete by Day 5)
Value: Participation
Please read and explore the following:
ï‚· Free Patent Searches.
ï‚· Government Site.
ï‚· Copyright Office of the US Government.
ENTR 6212: New Venture Creation
25
Week 2 Discussion 2
Week 2 Discussion 2: Intellectual Property
Value: 10 Points
Please research the long history of IP issues between Apple and Samsung. Then write a short
1-2 paragraph analysis considering:
ï‚· What is the background of the case. What is Apple claiming?
ï‚· What did the courts decide?
ï‚· Samsung is a supplier to Apple. Do you think Apple’s pursuit of this case is a good one,
or is it short-sighted?
ï‚· Samsung embraces the Android operating system, a more open platform. Apple controls
iOS. Which do you think is a more viable strategy long-term?
Post your response in the Discussions area by end of Day 5, and comment on at least
two of your classmates’ posts by end of Day 7.
Week 2 Assignment 1 – Written Assignment: Individual Case
Study
Week 2 Assignment 1 – Written Assignment: Individual Case Study
Due: Day 7
Point Value: 100
IDEO Case
The analysis write-up is not to exceed five pages (double spaced, 12pt. font, one-inch margins).
It should answer the assigned questions related to the case.
Case write-ups will be due by 3:00 a.m. E.T. on the specified due date.
No late cases will be accepted.
For the IDEO case analysis, please note the following:
ï‚· What are the founders’ main issues?
ï‚· What are development issues with the Palm V?
ï‚· With Handspring development, what are the major hurdles for introduction?
ï‚· How would you approach the development process?
 Should IDEOs upfront process be shortened to meet Handspring’s timeline? What are
ENTR 6212: New Venture Creation
26
the pros and cons of doing this?
Case Assessment Criteria
Submit your analysis write-up via the Turnitin drop box found within the Assignments
area by end of Day 7.
Lesson 3: Summary
Intellectual property is critical to the new venture. Intellectual property gives the firm right to any
product, process, or technology developed and can be one of the most important assets of the
company. As a first step in the process, one should file a provisional patent. This gives the
entrepreneur 1 year, and some time for further development of the technology, to file a nonprovisional. A non-provisional can either be a utility (function) or design (ornamentation) patent.
Typically these can cost anywhere from $5 to $15,000. It may take several years to be granted
a patent.
Other types of intellectual property include trade secrets, copyright protection for software, and
trademarks. As an entrepreneur, one needs a way to benefit off the value of protection versus
the cost of obtaining that protection. Spending tens of thousands of dollars on a patent that has
no business potential is not a good idea. Spending $500 on a provisional patent and further
developing the technology and business model is. If at the end of the year you feel the patent is
worthwhile – file. If not, you have not wasted those funds.

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