The Financial Times featured an article last week calling the patent system the curse of innovation. Patents have become weapons of mass destruction in certain industries, most recently in the smartphone category.
“Escalating courtroom battles over intellectual property – whether evidence of an efficient market in ideas or a sign of a broken patent system – are placing a mounting burden on the (technology) sector…In smartphones alone, an estimated $15 to $20 billion has been spent buying patents for both defensive and offensive strategies. Legal bills are conservatively estimated at $500 million.”
This “colossal squander” is spreading to stable industries like food, autos, and mining. All face dramatic increases in patent lawsuits.
The patent system is not the only curse associated with innovation. Here are six curses, some that inhibit innovation and some that stem from innovation:
- The curse of desperation. Failure to innovate organically leads companies to their only option – buy it. So called “open” innovation isn’t cheap. Jay Kim at INSEAD says companies overpay when they become desperate for growth. The true cost is even higher because acquisitions are distracting. Companies devote top talent and budget dollars to assimilate the acquired asset which, by design, weakens the core businesses that sacrificed those resources.
- The curse of competition. Great ideas draw attention and support in the form of budget dollars, usually at the expense of another project. Unscrupulous employees have learned to be on guard. They monitor innovation activities carefully so they can “nip ideas in the bud.” They don’t wait for a great idea to develop. Instead, they “volunteer” to be part of innovation workshops so they can spot any threatening ideas as they emerge. They make sure those ideas are seen as “tainted“.
- The curse of absurdity. “If at first, the idea is not absurd, then there is no hope for it,” said Einstein. Great ideas occur when two previously unrelated ideas suddenly converge. The suddenness takes us by surprise. The convergence is odd, counterintuitive, even funny. We laugh it off. We expect the absurd notion to die a quick death and never be mentioned again.
- The curse of novelty. Innovation is its own curse. Novelty is fleeting. People have short memories when it comes to innovation. Any idea is new only for a brief period of time. After that, it becomes old news. Smartphones are amazingly innovative, yet most people would have come to expect its functionality.
- The curse of change: Highly innovative products fail in the marketplace at significant rates. J.T. Gourville at Harvard Business School argues “the typical consumer is endowed with the entrenched alternative and the typical developer is entrenched with their innovation. As a direct result, consumers tend to undervalue and developers tend to overvalue such an innovation relative to the existing option.” This “curse” systematically increases the likelihood of failure for a highly innovative new product.
- The curse of success. Success in the market weds companies to the status quo. James Utterback at M.I.T. says, “As firms grow large, their top managers necessarily function more as conservators than as creators; they have income-producing products that must be nurtured and preserved to continue the benefits of shareholders and fellow employees.” Blackberry (RIM), Yahoo, Kodak…the list of cursed companies is getting longer.
