Business ideas

Science: the improbable frontier of new business ideas


“Fail fast” has become the mantra of business innovation, but new research suggests that inventions that rely on science, with its systematic observation and methodical experimentation, can bring more value to businesses.

According to a paper co-authored by Harvard Business School professor Joshua Lev Krieger, University of Munster professor Martin Watzinger, US patent filings that cite journal articles earn companies 26%, or 8.7 millions of dollars, more valuable than patented inventions developed without citing scientific research. and Monika Schnitzer, professor at the Ludwig Maximilian University of Munich. Grounding innovation in science also results in more unique products. For companies with thousands of patents, the difference in value adds up quickly.

“If you’re willing to dive into the frontier of scientific journal articles, the rewards of science-based innovation are really high.”

Companies faced with ever-shorter product lifecycles and rapidly changing technology are under pressure to bring new products to market faster. Business spending on Research and development (R&D) in the United States has also outpaced inflation, raising the stakes for profitable discoveries. The findings suggest an opportunity for the investment pendulum to swing from fast earning businesses to slower and potentially more rewarding ventures.

“If you’re willing to dive into the frontier of scientific journal articles, the rewards of science-based innovation are really high,” says Krieger, assistant professor in the Entrepreneurial Management Unit. “I hope it’s an eye opener to the value of hard, risky, weedy science for business innovation, as opposed to ‘let’s just build the thing and make it work on the fly.'”

What does basing an invention on science look like? Krieger says companies don’t need to run internal labs to reap the benefits. It suffices to reference the methods and results of formal scientific research to increase the value of a patent.

Defining the “scientific intensity” of a product

Krieger, Watzinger and Schnitzer ranked some 1.2 million US patents filed between 1980 and 2009 based on their references to scientific studies and other patents. When companies file a patent application, they must cite all past technologies, research, and products that underlie their proposed inventions.

Applications that directly referenced at least one study received the highest measure of “scientific intensity,” followed by patent filings that did not cite articles but referenced another patent that did. The less scientific products offered no link to previous research in their repositories.

“The uncertainties and added costs of difficult technology development and commercial exploration require a different approach.”

To estimate the value of a patent, the authors looked at how a company’s stock price fluctuated after it received approval, comparing filings within the same technology class and year. The most scientific patents were valued 26% more than patents that had no connection to prior scientific research. Patents that cite other scientific patents had values ​​18% higher.

The group also assessed the novelty of a patent by evaluating combinations of words, finding that those rooted in science were more unique, adding to their value. However, the potential rewards of scientific R&D also come with higher investment risk. While science-based patents are more likely to have higher values, they are also more likely to be total flops. In their efforts to commercialize new science, R&D teams often fail to replicate key discoveries or struggle to turn valuable scientific knowledge into marketable products, resulting in patents of little or no value.

A tale of two storage systems

In total, the most scientific patents were worth about $15.8 million, compared to $8.7 million for non-science-based inventions.

“I’m not surprised that a patent with many citations of academic papers, able to quantify novelty and utility, and resulting from a methodical, time-consuming and risky R&D effort, is more valuable,” says Krieger, noting that even a single citation to prior research is associated with greater patent value.

To illustrate the difference, Krieger’s study highlights two very disparate companies – Coca-Cola and McKesson – that have applied for patents in the same technology class. The companies offered devices that used carousel-like storage systems to dispense drinks and medical supplies, respectively. While both applications provided detailed technical drawings of the mechanisms of the products, McKesson’s application also cited 15 scientific papers. The Coca-Cola filing made no reference to any previous research.

Even patent applications for some medical devices – arguably an industry closely tied to academia – did not include scientific references. For example, some filings for materials that prevent oxidation in medical implants and air filters that may deactivate viruses do not cite any studies. Krieger’s findings show that patents in the same technology category that refer to scientific papers would, on average, have more value and greater novelty.

Krieger and his colleagues detailed their findings in the working paper Standing on the shoulders of sciencereleased in June.

A changing R&D landscape

Over the years, says Krieger, big companies have moved away from in-house R&D, focusing more on buying finished innovations from startups or iterating on existing technology with “me-too” products and cycles. short development. He quotes an oft-quoted maxim from Facebook’s Mark Zuckerberg to describe the prevailing zeitgeist among startups and investors alike to “move fast and smash things.”

As R&D departments seek to reload operations after a year of uncertainty due to COVID-19, Krieger points to science labs that never stopped — and some that worked overtime, like companies like Moderna that produced vaccines in record time. He sees many more organizations trying to support these types of “hard tech” businesses than in recent years, indicating that change is potentially already underway.

“The uncertainties and added costs of challenging technology development and commercial exploration require a different approach to testing the startup hypothesis, raising capital and building teams,” he says.

Hire the right scientific expertise

How can companies tap into academic expertise? As a manager, it’s not always easy to dig into the science, says Krieger. Sometimes study results are difficult to replicate or require additional research to become “translatable” into commercial products. It can be difficult to cut through academia’s red tape to negotiate with an institution’s technology licensing department. Knowing where to look for the most interesting scientific advances and how to filter out reliable studies is not the strong point of any manager.

“The question for corporate management is, ‘Where should you look for new, innovative ideas?'”

Companies don’t necessarily need to fund their own research, but they should consider hiring employees familiar with the scientific landscape of their field to help find, read, and understand scientific literature in their field. Researchers would do well to consider ways to retain and better share knowledge between the corporate and academic worlds, so managers don’t have to decipher the ever-expanding body of journal articles, Krieger says. .

“Managers need more than just a search engine for scientific articles; they need maps and signals indicating which results and methods are still under development and which show promise for commercial use,” he says.

“The question for corporate management is, ‘Where should you look for new, innovative ideas?’ says Krieger. “If you really want to be on the frontier, look at the science.”

About the Author

Avery Forman is a Boston-area writer.
[Image: Unsplash/ThisisEngineering RAEng]

What does it take to launch a product in this market?

Share your observations in the comments below.

Source link