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The S-Curve, Innovation, and Intellectual Property

Every technology grows on an “S-curve.”  The S-curve cycle is where an idea is born, then it struggles to get product-market fit through infancy.  Once it begins to get traction, there is a period of growth, after which the technology levels out and eventually declines.

You can think of the S-curve as the growth cycle of successful technologies.  Every idea starts out with an (unproven) concept.  There is a period of struggle, where the entrepreneur works on the idea through the technology and market hurdles.

A typical startup company or new product has an S-curve trend of growth.

The technology hurdles are the engineering or technical problems that must be solved, and the market hurdles are the education, messaging, and value proposition outreach to customers.

Technology hurdles

The engineering problems are solved by prototyping a solution and scaling that solution.  The prototype is figuring out if the solution even works, and the scaling part is doing it at volume.  For a software product, a prototype might be a wireframe sequence of user interfaces or a basic solution written in a no-code type framework.  A scaled up product is a “production-worthy” version that might be architected and tuned for performance.

When I worked as a mechanical engineer, we would create a “cartoon” of a mechanical device in a 3D CAD system to explore how a mechanism might work.  The “cartoon” stage was just enough detail for us to figure out how the mechanism might operate with respect to other components or devices in the larger system.  Once we had a good understanding of our working envelope and the function of the mechanism, we would get to work on the details of the mechanism.  The details would be sizing the motors, picking the right bearings, making sure the materials were strong enough, and all the details like how the mechanism will be assembled.

In many cases, when we started in on the next level of detail, we would find out that we needed more room in one area that we had not anticipated at the cartoon phase.  This led to some negotiating back and forth with another group who had responsibility for a neighboring feature.

In some businesses, having a product that barely works is good enough.  One of my stints as an engineer was at Hewlett Packard, where we were developing test fixtures for cell phones.  These were one-off designs that were stout enough to go on a production line and survive 24 hour production.  Our job was merely to over-design the product.  The cost to the customer was more engineering time than it was manufacturing costs.

Later, I worked at WaterPik, where we build high-volume consumer products, namely the WaterPik oral care products and showerheads.  We would build prototypes to prove a new concept, but that was just the beginning.  Our goal was to squeeze the manufacturing costs out of the product to meet our financial target.  Even when a product entered manufacturing, we would go back and improve areas to increase production yield or lower our cost of goods.

In each of these stages, there are interesting problems to solve – and each one could be a barrier to entry for a competitor.  A seemingly minor invention of adding a spring deep inside a shower head might seem innocuous, but it may be the key to a reliable, low cost, and high value product.

A patent on that little spring could control the marketplace because every competitor would need it. This patent would be very easy to get because it is narrowly focused, but this patent would have much more value than a “grand idea” patent on the overall concept of the device.

This is a perfect example of a super-valuable “picks and shovels” patent that is often overlooked in the patent process.

Marketing hurdles

Brand new products are often the most difficult products to bring to market.  There is a myth within the entrepreneur community of “first mover advantage.”  The truth is that the first to market has a lot of difficult ground to plow.

Every business seeks to have a competitive advantage.  For many businesses, their competitive advantage might be location.  Think about a grocery store or barber shop.  These businesses’ main advantage is that they are conveniently located.  Most grocery stores have the same products at about the same prices, but rural grocery stores with little competition can charge a bit more than grocery stores in highly competitive cities.

For these location-based businesses, they merely need to run a few ads in the local paper and put out a sign on the highway to find more customers.  Their customers know what the product will be and do not need much more education about the competitive difference.

Most technology entrepreneurs are tackling a harder problem in terms of customer acquisition.

A technology entrepreneur, to a greater or lesser extent, needs to make customers aware of their problem, then sell them a solution.  This is a monumental step in addition to the barber just putting a sign on the highway to attract customers.

It cannot be understated that marketing is far more important to the success of a business than the “cool” inventions.  A bad product that is well marketed will be far more successful than the best product with mediocre marketing.  Witness the Pet Rock.

Successful marketing is a series of trials and errors.  It is expensive to try different messages, different calls to action, different language in the outreach copy.  It is very expensive to find the market segments, narrow in on a very specific segment, and try to reach those customers.

The good marketing campaigns do extensive A/B testing.  A/B testing is a method of trying one set of messaging against another to find out which one performs better, selecting the winner, and repeating the cycle again.  It is a long slog to find the messaging that works.

Good marketing copy looks easy and simple, but it is brutally hard to do – and essential for the success of a business.

Once the marketing message is clicking, that message is why customers are buying the product.  The problem/solution of the marketing message is resonating with customers and they are buying.

From an IP perspective, the only valuable patents of a company are those that come from why customers buy your product.  If we have a patent on a feature of a product, but nobody uses that feature, that patent is worthless.

The S-Curve Happens on the Macro Scale as Well

The S-curve phenomena happens on the macro scale as well as the micro scale.  From sewing machines in the 1800’s, to radio, television, to cellular telephones, every major technology started with an idea, struggled to get some traction, then grew and eventually stabilized and declined.

IP development follows the technology S-curve as well.

At the beginning of the S-curve, there are a small number of (what turn out to be) very high value patents.  These are very prophetic, because there are lots of unknowns, but there is a vision that the product will be a success – eventually.

The infancy of the idea is where it goes through a thrashing process as product-market fit evolves.  This is usually a high period of experimentation of what works and what does not, working out the technology issues, but also the business issues of the idea.  During infancy, there are lots of ideas that are tried, evaluated, and many are discarded.

During the growth phase, the focus of the business turns to operations: build inventory and shipping products.  Few inventions come at this stage, as the company spends little on research and development. As a product inches towards maturity, research and development increases as the company focuses on squeezing more life out of the product.  Cost reductions, production improvements, and feature extensions are the focus.  There is an increase in the number of patents during this phase, but they tend to focus on smaller, incremental improvements.  At some point, a new set of ideas will come up to eclipse the existing technology