If you are a founder and/or member of the management teams of a RBSU, i.e., research based startup…would it matter to know that achieving operational familiarity with your key intangible assets (intellectual, structural, and relationship capital) could favorably affect the pace, momentum, speed, etc., which your innovation would be launched? (RBSU’s are widely defined as new business start-ups which develop and market new products or services based upon a proprietary technology or skill set.)
It hardly needs stating that the timing of product-service launches…should not be coincidental nor accidental, nor the product of a ‘leak’. Instead, innovation – new venture launch timing is important on many levels especially considering all will be cast upon ‘the public stage’ where it will be immediately subject to the inevitable ‘like – dislike’ variables, some of which may not have even been considered or vetted insofar as response and/or rebuttal.
When new venture stake holders, prospective users, and investors reaction is collectively favorable…launches can propel RBSU’s innovation a few steps closer to generating revenue, says Ans Heirman and Bart Clarysse (formerly of Ghent University) in their fine paper ‘Do Intangible Assets at Start-Up Matter for Innovation Speed?’
Heirman and Clarysse’ thesis (in this paper) is that…pre-founding R&D efforts in conjunction with the underlying intangible assets, in this instance, founders tenure, experience level of founders, and collaborations with third parties, etc., are important contributors to the speed which innovation – new ventures can and should be launched!
The model, Heirman and Clarysse’ espouse…which demonstrates the influence of intangible assets for new ventures and innovation, was tested using an event-history approach (methodology) on a dataset of 99 RBSU’s examined.
Today, of course, there is more known about new product development processes in new ventures and innovation and which intangible (asset) factors influence necessary time frames to launch RBSU’s initial product into its respective market. For new ventures, time to market, obviously can be, and often is, a crucial factor Heirman and Clarysse suggest, and I agree, for four, rather obvious reasons, i.e., to…
- gain early cash-flow that leads to greater financial – operational
independence. - gain external visibility and legitimacy (of the product) as
quickly as possible. - try to gain market share as early as prudently possible.
- increase the likelihood of RBSU sustainability (survivability).
Relevant literature, according to the work of Brown & Eisenhardt…on matters related to new product launches, describes the dominant factors to successful launches lie in various and specific intangible assets, e.g.,
- team tenure and routines (intellectual capital)
- experienced and cross-functional teams. (structural capital)
- alliances or collaborations with other organizations. (relationship
capital)
The speed which an RBSU’s innovation arrives at its launch stage…is important for other reasons as well, perhaps particularly, attracting successive rounds of investment.
Another increasingly crucial factor that affects the speed which RBSU’s innovation is positioned for launch…is early recognition of the necessity to effectively…
- safeguard any-all proprietary, contributory, and enabling intangible assets which in most instances have been (are) already and thoroughly embedded in the innovation itself.
To study how intangible assets influence the time it takes to develop a first product that is ready for launch…Heirman and Clarysse used an ‘event-history analysis’ which takes-into-account both (a.) the occurrence and (b.) the timing of specific events contributing to new product launches, while (c.) estimating the effects, i.e., contributory – enabling – variable role of intangible assets.
I have witnessed numerous RBSU founding management teams… prematurely, and, in my view, imprudently, become overly focused on (personal – professional) aspirations to seek the issuance of a patent for their innovation.
Through my experienced lens, this conveys naivete…as some RBSU management team members assume ‘the patent route’, standing alone, will serve as sufficient safeguards for the intangible assets underlying their innovation. The ‘patent’ aspiration is often influenced by investors preference, and equally often framed as their requisite to (further, additional) investment, i.e., an innovation must have a patent issued, or have a patent action pending.
What innovators (and their investors) tend to discount…overlook, or have insufficient knowledge, are the valuable (contributing, enabling) intangible assets that routinely serve as the underlying foundation to every innovation, whether IP is issued or not.
Based on my anecdotal (investigative) assessments from observing numerous venture forums, I generally estimate that 90+% of the pitching RBSU’s building blocks – foundations for their innovation launch, growth, profitability, and sustainability lie in – evolve directly from various intangible assets often introduced – embedded on day one of the project.
Even though Heirman and Clarysse’ paper was published in 2004…in my judgment, it still carries much relevance insofar as making another persuasive case that precursors – preludes to innovation speed lies in identifying, unraveling, distinguishing, safeguarding, and managing the projects’ key (contributory, enabling) intangible assets, particularly, the intellectual, relationship, and structural capital.
Heirman and Clarysse also make a very favorable case that other equally important intangible assets…which they refer to as ‘pre-founding R&D efforts’!
I have found (not rocket science) most entrepreneurs understand that the element of speed – timing of launching their innovation is important for numerous reasons, among them being…
- attracting – acquiring early investment to achieve more (greater)
financial independence, - achieving broader external visibility and legitimacy for their
innovation as quickly as possible, and - delineating the innovations’ competitive advantages as early as
possible.
I agree with Heirman and Clarysse, that R&D cycles and innovation launches can vary widely based on, among other things, the (a.) necessary phases of product development, and (b.) specialized and costly technologies that may be required. Being an intangible asset strategist, risk specialist, and trainer, no surprise here.
Collectively, all of the above confers additional credence on the view…that identifying inter-connected and collaborative clusters of contributory and enabling intangible assets is crucial insofar as they may, can, and not infrequently do re-emerge at some future point as enablers to other RBSU innovation initiatives.
That’s one reason why I strongly encourage RBSU management teams and innovators to avoid being dismissive of, or neglecting the intangible assets which are inevitably in play as if they are merely ‘a single use asset’. Too, it’s perfectly feasible that certain intangibles can be extracted from an already launched innovation to become independent sources of value and revenue.
Michael D. Moberly June 27, 2017 St. Louis [email protected], the ‘Business Intangible Asset Blog’ since May 2006, 650+ blog posts published, where one’s attention span, intangible assets, and solutions converge!
Readers are invited to explore other published blog posts, video, and position papers at https://kpstrat.com/blog
