Investing in inventors is good for business

Leslie Kwoh, writing to Wall Street Journal on 23 May 2012 questioned whether the companies really innovate when they say that. The diagram summarises the key points of the article.

Even in Sri Lanka the situation is not much different. Most of the annual reports of listed companies have innovation either as a core value or as a key strategy.

But the outcomes really do not match to the claim.

As mentioned by Kwoh: “Businesses throw around the term to show they’re on the cutting edge of everything from technology and medicine to snacks and cosmetics. Companies are touting chief innovation officers, innovation teams, innovation strategies and even innovation days. But that doesn’t mean the companies are actually doing any innovating. Instead they are using the word to convey monumental change when the progress they’re describing is quite ordinary.”

http://online.wsj.com/article/SB10001424052702304791704577418250902309914.html

Yet it is an established management axiom that innovation is the key to real business success whether it is product or service innovation or process innovation leading to providing better, faster, easier and cheaper solutions to customers.

Companies use various methods ranging from suggestion schemes, brain storming sessions to hiring consultants to generate new ideas. The six hats and other thinking techniques introduced by Dr. Edward De Bono are also used to generate new ideas with a view to generate innovations in companies and other organisations.

Having realised the importance of innovations, the Government has launched a programme appointing chief innovation officers in charge of management reform cells, committed increased budgets for research and offered various monitory incentives for scientists to engage in research activities.

As you can see most of these are top-down strategies. Companies organise brainstorming sessions to develop new ideas. Participants squeeze these meetings in between their day job and many telephone calls, SMSes and e-mail messages. No wonder breakthrough ideas rarely come.

Having had the opportunity to interact with inventors in the last few months I could observe them closely. These inventors are more like artists. They are passionate about their inventions. For many it is their life. They mortgage their own house and pour that money in to the invention.

Some keep improving the invention over 10-15 years. They have a mind of their own and in many instances think ahead of others so they are even misunderstood. They do not get any monetary incentives yet they keep working on the idea. They see the light at the end of the tunnel.

This is not a common trait that we see in organisations where most of members in organisations just do a day job. Hence monetary incentives will not generate new ideas and innovations.

Inventors are keen observers much like artists. They are sensitive to the environment and they are not ready to accept the status quo. For instance, young inventor Sajini Jayanetti from Visakha College related how she embarked on inventing a new kind of a gas stove where the flames do not get disturbed by wind as she could not use the fan in the pantry while her mother was cooking.

A normal child would opt to go away accepting that the wind disturbs the flame, but not an inventor. Inventors get into action the moment they come across a problem or they become sensitive to a situation. The question ‘why cannot this be done faster, easier, better, cheaper?’ are the kind of questions that drives them.

What inventors do can be broken into several steps:

Firstly, they observe a phenomenon and frame a problem statement. This problem statement provides the platform to the possible solution.

Secondly, they use the known technological knowhow to arrive at the solution visualised.

Thirdly, they move on to developing a prototype.

Finally, the inventor moves to patent or commercialise the invention.

Since only less than 10% of inventions really become commercial successes, it is important the number of attempts is increased. This I believe is affected by so many factors and they can be grouped in to three main areas: education, economy and attitudes. The three factors are interlinked.

Education is a key limiting factor and is twofold. One, science and technical education and second, exposure. The higher the technical education, the higher the level of technical superiority of invention. That is why most of the cutting edge inventions tend to come from countries where standard of scientific education are developed.

This was emphasised by Dr. Ajith De Alwis in his article ‘Danger: Science illiteracy ahead (Daily FT of 17 July): “Recently a report indicated that out of the 9,790 schools functioning in Sri Lanka, there are 90 schools with only one teacher and 1,552 schools have fewer than 50 students each. The discourse on science education and the role it should play in national development had been different and much less emphasised.

“Some prominent speakers have indicated that more than 93% of Sri Lankan schools have no science programs in the Advanced Level stream. Usually around 200,000 students take Advanced Level examinations in a year. 93% is a scary percentage to be declared over a negative aspect. The value is so close to 100% and that should be really worrying and should be a mandatory action point for educators and planners alike.”

The effect of this can be seen by the fact that most of the inventions are in the areas of simple mechanics. According to the statistics available with SLIC, 54% of the inventions fall within the category of mechanics.

Without underestimating the value of these inventions, it is also important to note that the greater market premiums are given to more sophisticated inventions that are combination of different disciplines such as robotics, mechatronics, and more modern fields in bioengineering, nanotechnology and ICT.

In addition to the level of science education, the exposure to what happens in different fields also influences the types of inventions that are possible.

Young inventor Chandula Padmasiri of Ananda College demonstrated how he had developed a microscope using the built in camera of a mobile phone. With a 2.6 megapixel camera of a phone, his solution was able to generate a 400 time magnification using the power of digital zooming. This is an example of the impact exposure and education has in invention.

Economic reasons also contribute to the inventive process. During economic difficulties and restrictions too people tend to invent solutions. This tends to be more owing to necessity. We saw a large number of local inventions during the closed economic period in the ’70s. Some of those inventions such as paddy husk stoves became very popular.

On the other hand, when economic conditions improve when people use more sophisticated products, inventions tend to move in that direction; i.e. high-end techno solutions and herbal products.

Attitude of society plays a vital role in promoting inventions. In places like the USA, investing in ideas is very common. They are called angel inventors. This is the biggest boom to investors. When investing in ideas is not common, inventors need to rely on debt equity, which is not the most desirable root since the success rate is very low.

For instance when Larry and Serge, the founders of Google, approached angel investor Andy Bechtolsheim, having heard the proposition of the search engine, he immediately drew a cheque of US$ 100,000 in favour of Google Inc even before the founders had opened a bank account. Though it is common to speculate millions on the stock market, there is very little venturing into potential business ideas in Sri Lanka.

Giving recognition to inventors and respecting intellectually property rights are also social attitudes that contribute to the development of an innovative culture. There are many talented young students who have a flair for invention, but the attitude of parents prevents these children developing their skills further.

If society wants to benefit from the creative brains of inventors, a collective appreciative attitude towards inventors is a must.

This is true for an enterprise as well. It is nothing unusual for inventors to leave organisations and start their own because the corporate cannot comprehend the power of the inventions. The story of Matsushita is one such well-known incident but it is not the last. The bureaucracy and managers who protect their own little cabbage patches prevent inventions seeing the light of day.

While it is a good thing to promote inventiveness within organisations, I believe outsourcing innovations can be a faster route. This way the companies can have those who are really talented in inventing dedicating time and effort for the benefit for the company. I give below some simple ways Sri Lankan companies can leverage the creative powers of the Sri Lankan inventor community.

Sponsor inventors

Commit a small percentage of your CSR funds to sponsor an inventor. Most of them do not need large sums. There was an inventor who had been struggling to perfect an automated tea plucking machine suitable for local conditions and he needs less than Rs. 1 million to fine-tune the prototype.

Pick an inventor who is passionate in inventing in an area that is of strategic importance to your business and provide him the support he needs. Rather than just giving money, it is important to agree on the milestones of the experiment and release facilities accordingly.

Inventors need support in three areas. First is financial, to improve prototypes and commence commercial production. Second is technology, sometimes in the very field he or she is working or from a different field of science. Third is market access. A corporate can support inventors in all these three areas.

When working with inventors, one of the concerns the inventors have is the potential of losing their intellectual property rights. In this regard, executing binding non disclosure agreements and coming to an understanding on how the project can move ahead at the outset itself is useful.

While just supporting can be one option, there are viable business models. The company can form a joint venture with the inventor recognising his IP as a part of equity with the option for the inventor to buy back or sell out using a pre-agreed formula.

There is also the possibility for the company to buy the IP outright so that the inventor can have capital to move on to another project. Manufacturing under a royalty agreement or distributing for the inventor can be other options that can be considered.

The SLIC will be able to help corporates identify potential inventors. They can record their interest by visiting the web site www.slic.gov.lk.

Use inventors as problem solvers

Inventors’ ability to think out of the box can be used by companies to solve their technical problems. Since my association with SLIC, I have come across many such incidents.

According to one story, a piece of medical equipment worth millions was non-functional in the North Central Province for months. Even the agent was not able to rectify the matter and the option was to get down an expensive part costing Rs. 1 million. An inventor who had volunteered to look at the problem gave a solution with no cost at all. This is the power of inventors thinking.

The SLIC website is geared to act as a bridge to introduce inventors to companies which have technical problems to be solved. The company can register and publish the problem in the SLIC website using the special section. The name of the company is withheld.

Depending on the field of technology that is relevant, inventors with compatible competencies will be contacted automatically, alerting them to respond to the request. The company can then establish direct communication with the inventor and engage him or her to provide the solution.

I appeal to businesses to use the intellectual power of our inventors in win-win partnerships. As much as companies can leverage the inventive power of the inventors out there, it is also a good idea to have them in-house.

Recruit inventors

There is a comprehensive programme organised by SLIC and the Ministry of Education to promote inventiveness among students in schools technical colleges and even universities. Some of them have won international awards for their inventions, beating the best brains in the world; i.e. Ganindu Nanayakkara of Ananda College.

When employing new recruits, companies can give preference to those who have invented things as students. Since it is an innate talent, they will continue to apply that capability in whatever the field.

Scholarships to young inventors

Corporates can come forward to establish simple scholarship schemes for those young inventors who win awards at regional, national and international level competitions. These scholarships can be even promising to provide educational material and such needs till they finish college level education.

Corporates can sponsor participation of these promising young inventors at various international exhibitions thus raising the level of inventions in the island.

These are only a few ways businesses can benefit from inventors in Sri Lanka in their own quest for innovation.

The time is ripe now to have broader discussion on how we can innovate and be successful as businesses and as a nation.

(The writer is also the Commissioner of the Sri Lanka Inventors Commission and can be reached via [email protected])