May 2010 Invention Evaluation

Jerry Carlson of Service Core of Retired Executives (SCORE) presented Over The Transom, A Product Development Executive’s Perspective on  Outside Inventions and Ideas. Jerry's presentation focused on how idea evaluation is conducted in large corporations. He discussed his experiences as an evaluator and purchaser of outside inventions and described the general process used to evaluate an outside submission. A copy of Jerry's slideshow is available here.

Gerald L. Carlson, Ph.D., has spent nearly 40 years developing chemical specialty products ranging from drugs to household cleaners. As an R&D executive at S.C. Johnson & Son, he lead the development of new products for brands including Raid, OFF!, Edge, Pledge, Windex, Drano, Glade, and Curel in the US and internationally. At Johnson, he was responsible for business unit technical strategy including the assessment and acquisition of external technologies. His focus after Johnson has been on technology transfer from industry to startup and small chemical specialty businesses. 

Jerry provided information on how corporate invention evaluators think. He described the stage-gate model that is commonly used. The stage-gate model is a is an invention evaluation and development process where, after each stage or step of evaluation of an invention, the invention must meet specified criteria before moving to the next stage or step. The invention is subjected to successively higher and harder hurdles. Those inventions that make it through all stages eventually launch as new products.

The first stage of invention evaluation is the raw idea stage. In this stage, ideas are quickly evaluated and about 90% of them are discarded. The evaluation effort is small and the cost for the company is low.

The next stage of invention evaluation is the focused idea stage. In this stage, ideas are screened and the needs are defined. Some market research is performed and possibly the patent process is started. The evaluation effort includes about 1/10 to 1 work year with a typical cost of $20K to 200K. About 45% of the ideas from the focused idea stage make it to the next stage. Jerry said that this is a good entry point for inventors.

The next stage of invention evaluation is the small project stage. In this stage, the market opportunity is evaluated, the consumer need is validated, the technical feasibility is evaluated, and the manufacturing fit is evaluated. Typically, the evaluation effort involves about 1 to 3 work years at a cost of $100K to 500K. Only about 8% of the ideas at this stage survive to move to the next stage.

The next stage of invention evaluation is the significant project stage. In this stage, the quantitative business hurdles are considered. Prototypes are made at this stage. The significant project stage involves about 1 to 10 work years of effort at a cost of $500K to 2 million dollars. About 50% of the ideas at this stage survive and move to the next stage.

The next stage of invention evaluation is the major development stage. This stage includes pilot production with the product being test marketed. The major development stage involves at least 20 work years of effort at a cost of more than 2 million dollars. About 50% of the ideas at this stage survive and move to the final stage.

The final stage of invention evaluation is the full launch stage. In this stage, the marketing sales plan is complete, the full manufacturing capability is in place, and the proprietary position is established.  The full launch stage involves about 20 to 50 work years of effort at a cost of between 20 and 100 million dollars. Survival after full launch depends upon the marketplace and the product acceptance by the buyers.

Jerry said that a good entry point into a corporate stage-gate process is at the focused idea stage. The inventor should show that the invention has value and has been validated. It is an opportunity for the inventor to earn buy-in by the corporation and find a champion to push the invention through the remaining stages.

Another entry point into a corporate stage-gate process is at the significant project stage. Entry at this stage is more difficult because the corporate resources have already been committed and there will be corporate resistance. The advantage is that the majority of screening has already occurred and there is a greater probability of making it to full launch.

Jerry presented two evaluation worksheets. The first worksheet was a chart developed by Ray Odioso. The chart has a column of boxes in which various factors are graded from -2 to +2. The factors include the financial, research and development, production and engineering, and marketing and product aspects of the invention. The chart provides a graphical representation of the viability of a product embodying the invention.

The second worksheet was the Opportunity Recognition Scorecard (ORS). The ORS is good for assessing a start-up venture because it includes entrepreneurial elements. It also is good for evaluating business plans.

Jerry closed his presentation with two war stories. He described the development history of the Edge piston. An independent inventor created the piston for dispensing Edge shaving gel. He sold his patent rights for a fixed amount. But, the inventor did not stop there. He continued to work on improving his invention. When the inventor perfected his second generation piston, he licensed the invention. He makes much more with the licensing plan than he did with a straight sale of his invention.

The second story was about the mosquito magnet. This product seemed to fit the companies goals, but after the product was launched, the company realized that it was a poor fit. The mosquito magnet was the size of a backyard barbeque, which was much larger than Johnson's other products. This created manufacturing, distribution, and marketing problems. The product was dropped shortly after launch.

Everyone is encouraged to contact Jerry or another counselor at SCORE-Knoxville. SCORE has an office at 412 North Cedar Bluff Road, Suite 450, Knoxville, Tennessee 37923. Call to schedule an appointment (865) 692-0716. Their hours are 8:30 am to 1:30 pm, Monday through Friday except Wednesday ehen the office is closed.  Leave voice message at other times for a reponse within one business day.