Chapter 7 Analyzing Product Service Risks and Benefits Copyright

Overview • The nature of product/process development • Entrepreneurial product/service development • The product development cycle • Intellectual property development Copyright © Houghton Mifflin Company 2

Changing Times, Changing Strategies • Need to develop new products in a dynamic, even chaotic, international environment • Need to develop faster • Need to keep costs down • Need to be able to compete against giants Copyright © Houghton Mifflin Company 3

Action Step #1: Put Customer Knowledge at the Core of Everything You Do • Talk to the customer… – Concept stage – Design stage – Prototype – Production – Market introduction Copyright © Houghton Mifflin Company 4

Benefits of Customer Input • Talking to the customer results in. . . – Giving them exactly what they want and need – Avoiding redesign that lengthens process and increases costs – Building lifelong customer relationships – Achieving a competitive advantage in the marketplace Copyright © Houghton Mifflin Company 5

Action Step #2: Design Right the First Time • Use cross-functional communication • Prototype early • Seek fast failures Copyright © Houghton Mifflin Company TIP Product Design is 8% of the budget but 80% of the product cost. Design right the first time! 6

Benefits of Step #2 • Designing right the first time results in. . . – Tremendous cost savings from not having to redesign – Faster time-to-market • More likely to meet customer needs • Substantial gains at the bottom line • Better design & performance, which means value for the customer Copyright © Houghton Mifflin Company 7

Action Step #3: Focus on Core Competencies • Focus your efforts and resources on what you do best—become the best • Choose strategic alliances to gain the advantage of others’ core competencies Copyright © Houghton Mifflin Company 8

Benefits of Focusing • You become the expert in your competency • You can

Action Step #4: Think Virtual • Form an alliance of companies with different core competencies (outsourcing) • Keep overhead costs to a minimum TIP Make sure your partners have a vested interest in what you’re doing • Buy off-the-shelf parts Copyright © Houghton Mifflin Company 10

Benefits of Being Virtual • Being virtual allows you to. . . – Share resources and spread the risk – Increase your ability to innovate – Reduce time to market – Sell solutions – Develop open systems with plug-in components Copyright © Houghton Mifflin Company 11

Action Step #5: Prepare Financially Before You Start • Have plenty of your own resources • Check out government sources • Tap friends and family Copyright © Houghton Mifflin Company TIP Remember that prototypes cost at least 10 -20 times more than the final product 12

Benefits of Preparing Financially • You won’t rely on outside capital, which is difficult to raise at this stage • You’ll be able to focus on product development without financial worries • You’ll have more flexibility • You will get through product development faster Copyright © Houghton Mifflin Company 13

The Product Development Cycle Copyright © Houghton Mifflin Company 14

Intellectual Property Development • Protect what you develop Copyright © Houghton Mifflin Company 15

The Intellectual Property Pyramid Copyright © Houghton Mifflin Company 16

Which Invention Has the Most Patents? Copyright © Houghton Mifflin Company 17

Finding the Better Mousetrap • “Build a better mousetrap and the world will beat a path to your door. ” —R. W. Emerson • Original patent in 1903 • 40 patents every year • 9 categories • Only 24 of 4, 400 patents have made money Copyright © Houghton Mifflin Company 18

What Is Patentable? • Must fit into one of five categories – Product/apparatus –

Business Method Patents • Fundamentally different ways of doing business is the claim – Priceline. com and Amazon “one-click” • Signature Financial Group—patent upheld – Computer-based business model Copyright © Houghton Mifflin Company 20

Patentability: Only Inventors May Apply • Must have utility • No prior art •

What Rights Are Granted • Right to exclude others from – Making – Selling – Distributing – Importing – Right to seek relief—injunction • For 20 years from the date of application on a utility patent and 14 years on a design patent Copyright © Houghton Mifflin Company 22

Types of Patents • Utility – Protects the functionality – 20 years from date of application • Design – Any new, original ornamental design – 14 years from date of application • Plant – Uniquely different from anything in nature – 20 years from date of application Copyright © Houghton Mifflin Company 23

Patent Process • Disclosure Document – Two years to file formal patent • Patent Application • Patent Applied for Status • Receive a Notice of Allowance • Patent Pending Status • Patent Issued Copyright © Houghton Mifflin Company 24

Provisional Patent • Allows inventors to show inventions to manufacturers without fear • Doesn’t replace patent filing • $75 filing fee and declaration that you are a small inventor qualifying for reduced fee • Equivalent to a disclosure but more legal force Copyright © Houghton Mifflin Company 25

Trademarks/Service Marks • A trademark is a word, name, symbol or device (or some combination of these things) that when used in connection with a product or service, serves to identify the source of the product or service Copyright © Houghton Mifflin Company 26

Trademarks/Service Marks (cont. ) • Brands: symbol, word, slogan, sound, scent, or design • Check validity with knock-out search, then against state and federal registers • If in use, file use application • If not, file intent-to-use application • Submit three specimens showing commercial use Copyright © Houghton Mifflin Company 27

Trade Secrets • Recipes, ingredients, source codes, discounts, mfg. costs • Know-how that is not patentable • No specific rights from PTO • Use employment contract Copyright © Houghton Mifflin Company 28

Nondisclosure Agreements • Provide for consideration • Define what is confidential • Identify how the other party will use the information • Designate what is to be done with materials exchanged Copyright © Houghton Mifflin Company 29

Copyrights • Original works of authors, composers, screenwriters, and programmers • Work must be fixed & tangible • Copyright 2002 [name] • Register • Good for 70 years plus life Copyright © Houghton Mifflin Company 30