Product Management Library of Knowledge
Removing Inventoritis from the Innovation ProcessRemoving Inventoritis from the Innovation Process; Lessons from Thomas Edison, World's Greatest Product Marketer
by Peter P. Roosen & Tatsuya Nakagawa
To make R&D dollars count, the optimum product development and commercialization processes are marketing-led, engineering-supported and driven by customer feedback and insights with a thorough understanding of the competitive landscape and one's place in it.
Thomas Edison with his famed Menlo Park laboratory is known as the greatest inventor in world history. Research and development activities have been modeled on a misinterpretation of Edison by companies seeking a competitive advantage. They spend vast amounts of money on R&D but an endless series of winning products is not the normal result. Many senior managers and owners are dissatisfied with the relatively low rate of hits to misses and with how their company identifies new products and categories, while being aware that modern R&D is usually detached from marketing needs and often led by people with inventoritis. A proper understanding of Edison is long overdue and can help solve this longstanding problem.
Legendary carmaker Henry Ford identified inventoritis in his description of an inventor as one who "frequently wastes his time and his money trying to extend his invention to uses for which it is not at all suitable." He asserted "Edison has never done this." Inventoritis is associated with depressed or non-existent product sales and defects in marketing programs, caused by excessive reliance on the assumed idea that one's product or idea is an excellent one.
A 2005 Booz Allen Hamilton study of the global top 1000 R&D spenders found no direct correlation between R&D spending and sales growth, operating profit or shareholder return. However, the study did find a single useful correlation between R&D spending and performance that would be expected in view of Edison's pioneering work in the area. They found a strong correlation between R&D spending and higher gross profit margins although the correlation was lost when expenses not directly related to creating the product were included. Product design improvements through both lowering costs and increasing consumer value perceptions led to these higher margins.
Edison did not invent the light bulb. He produced the world's first commercially viable incandescent lamp by improving upon existing technology. Edison worked hard at driving down the costs of his early light bulbs to meet his market research based 40-cent target price, while increasing lamp longevity, brightness and efficiency. He applied the same type of R&D effort to that specific market-based purpose as was found to be the successful driver in the recent Booz Allen Hamilton study. Over a few years, Edison managed to drive the costs down from $1.25 to 22 cents while keeping his selling price at 40 cents. He did so by setting up certain kinds of machinery, changing the processes, improving work flow, and standardizing the number and type of parts while continually experimenting with different materials and suppliers.
Edison was a great product marketer, the world's best ever. He knew his customers and competitors, the competitive landscape and his place in it. He was an excellent networker and had a diverse network he could influence or ask for feedback, including world-class advisors Henry Ford and Harvey Firestone. He executed his projects brilliantly and invented or improved upon many marketing concepts and techniques. He was extremely teachable, had a strong commitment to self-improvement and attracted world-class talent. He controlled credible distribution and media channels and knew how to price products and opportunities well. He managed his brand effectively through public relations, media photos, kits and show rooms with his image as an inventor being part of his carefully cultivated and controlled public relations and media strategy.
A century later, there are emerging examples of companies following Edison's true example and beginning to place their marketing strategies ahead of product R&D such that the company is not being led from the rear in determining its product offerings. Microsoft and Procter & Gamble are among them. In January 2000, highly market-savvy Chairman and CEO Bill Gates of Microsoft, the world's biggest R&D spender, stepped down as CEO and took over as Chief Software Architect. Global consumer brands giant Procter & Gamble through its 2000 appointed CEO A.G. Lafley, created its Connect & Develop strategy to replace its old bricks and mortar R&D infrastructure ‘invention model' with a more open market-led innovation system.
To make your R&D dollars count, the R&D initiatives must be led from within the marketing strategy center and the resources applied rationally, not speculatively. A marketing expert, free of inventoritis and highly tuned to the market like Edison was, should be one to direct the research and development efforts with the technical specialists close at hand.
Peter P. Roosen has an engineering background and founded numerous companies including firms involved in locomotive and plastics manufacturing, computer software and marketing.
Tatsuya Nakagawa is president and CEO of Atomica Creative in Vancouver Canada, a strategic product marketing company. He has assisted numerous companies in diverse industries with their early stage deployments and product launches in North America, Europe and Asia
Atomica Creative Group is a specialized strategic product marketing firm positioned to help companies assess their R&D processes relative to market drivers and establish a marketing strategy led approach so that R&D spending can be applied rationally for greater returns on these important investments.