Michael D. Moberly August 27, 2012
For start-ups, the launch of their first product is an important event because it brings a new venture closer to growth, profitability, and financial independence, says Ans Heirman and Bart Clarysse formerly of Ghent University and now with Scientific Commons, in their paper ‘Do Intangible Assets at Start-Up Matter for Innovation Speed?’ Of course, my answer to that question is unequivocally yes!
Innovation speed is also relevant to startups insofar as sustaining and attracting additional (new) investment. But, an increasingly crucial factor affecting the speed which start-ups can successfully launch their innovation and enter the market space, is by recognizing, protecting, and managing the enabling (ancillary – complimentary) intangible assets integral to every innovation.
Unfortunately, in far too many instances, start-up innovators, i.e., university-based or independent, are frequently overly focused on filing – being issued a patent and tend to discount and/or overlook the equally valuable (enabling) intangible assets that routinely serve as the underlying foundation to any spin-off company’s innovation and (new product) launch. For startups, it’s certainly not unusual for 90+% of their sources of (company) value, revenue, and ‘building blocks’ for growth and sustainability to reside in – evolve directly from intangible assets.
Even though Heirman and Clarysse’ paper was published in 2004, I find it still very relevant insofar as making a convincing case that antecedents (speed) to innovation lie in the recognition, management, and safeguarding of key intangible assets, particularly, in my view, intellectual, relationship, and structural capital.
Heirman and Clarysse also make a very favorable case that other equally important intangible assets, referred to as pre-founding R&D efforts, e.g., team tenure, the experience level of the start-ups’ founders and/or management teams, and collaborations with third parties, are also important contributors to innovation speed. To test and test this notion, Heirman and Clarysse collected a dataset on 99 research-based start-ups (RBSUs) and applied an event-history approach.
Experienced entrepreneurs, they conclude, understand that innovation speed is important for many reasons, key among them are to…
• acquire early investment to achieve more (greater) financial independence,
• achieve broader external visibility and legitimacy as quickly as possible,
• establish competitive advantages as early as possible.
Both Heirman and Clarysse acknowledge however, that innovation (R&D development) cycles can vary rather widely based on the number and phases of product development, along with specialized technologies that required. Being an intangible asset advocate and strategist no surprise here.
This giving additional credence to the view that identifying individual and/or inter-connected clusters of intangible assets that emerge as ancillary and complimentary enablers of RBSUs, should not be dismissed, overlooked, or neglected as potential (additional) sources of value, revenue, and ‘building blocks’ for future (distinct, stand alone) innovations.
Ultimately Heirman and Clarysse found that RBSUs differ with respect their starting conditions, for example…
- start-ups which are further in their product development cycle (at founding) will likely launch their initial innovation (product) faster.
- software and other firms that require a beta-version (test) will quite naturally experience slower product launch times.
- experience of startup founders and management team tenure can facilitate (produce) faster product launch times.
- a startups’ alliance with other firms does not significantly (favorably) affect innovation speed.
- startups which collaborate with universities (perhaps as a spin-off, etc.) generally lead to longer innovation development and launch times.
It’s worth noting again, for startups, it’s not unusual for 90+% of their value as a company, sources of revenue, and ‘building blocks’ for growth and sustainability to reside in – evolve directly from intangible assets. So, it’s easy to understand the importance of identifying, managing, and safeguarding enabling intangible assets!
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