Innovation and new products or services are the lifeblood of every business. But in todays’ quickly changing marketplace, if your R&D isn’t fast enough, your business could wind up falling behind faster and more nimble competitors.
Shrinking time – to – market, faster obsolescence and increasing competition is making the “invented here” syndrome an increasingly risky route. But there’s a better option that’s faster, lower cost, and less risky. Licensing – in an outside intellectual property gets you the rights to make and sell a “market-ready” product, service or technology.
A small New England steam turbine packing ring manufacturer used licensing to expand its product line and grow its business significantly. Through an industry contact, the company found a Swedish inventor with an improved packing ring who had tried unsuccessfully to license it to one of their competitors. With some creative negotiating, they signed a licensing agreement. As part of that agreement, they also brought the inventor on board as a consultant to oversee new product development.
Because the company didn’t spend its time on trying to develop new products, it used the licensing option to get what it needed to expand its products and meet its business goals.
Some IP has the potential to grow your business from zero to millions of dollars literally overnight. A good example of this is entertainment content, particularly for kids. These properties can suddenly become popular among kids, and the demand for products can skyrocket. I experienced this first hand when I was licensing kids entertainment properties. When demand exploded, companies who licensed these properties were generating millions of dollars in sales. Some of them reached this level of sales in less than two years from the time they got the license. While this is the exception, it is a good illustration of the potential “business growth power” of licensing.
Looking outside your business is one of the best and fastest ways to expand your business. Licensing allows your business to lower your internal R&D costs while simultaneously expanding your products or services. It’s also a faster and less risky way to enter new markets. Rather than spending your time and money testing new product ideas, you can focus your resources on making and selling a “market-ready” product or technology.