Get All Access for $5/mo

3 Ways to Create Successful Proprietary Tech Proprietary, non-replicated technology can help companies establish and sharpen their competitive edges.

By David Schwartz

Opinions expressed by Entrepreneur contributors are their own.

Bloomberg | Getty Images

Imagine a driverless car behaving more courteously than the driver sitting next to you. That's what is looking to do with its iteration of a smart car: It's experimenting with all forms of automated pedestrian communication.

Related: How to Know If You Need to Patent Your Product

The brand hopes to position itself as an interactive self-driving vehicle, experimenting with verbal commands and rooftop billboards capable of flashing messages, directions and even emojis. Even as companies like Audi and Mercedes continue to saturate the smart car market, is investing in the continued evolution of its product, adding in the necessary technology to differentiate it from competitors.'s vehicle is a piece of proprietary technology for the company, one it must continually invest in to keep consumer interest high -- because it's not enough for entrepreneurs to just create or patent something that stands out. They have to continue tweaking, tinkering and toggling with that new software product to parallel changes in customer needs.

That's where proprietary tech comes in.

The perks of proprietary software

Proprietary technology, in the form of patented products or services, allows businesses to develop customer loyalty and continuously build on their offerings. Proprietary technology is -- and has been -- a big part of my own water-conservation company's fabric since its infancy.

Externally, we've constantly tweaked and improved our trademarked residential water-conservation offerings in order to become the go-to choice in that area for property managers. Behind the scenes, we've outsourced engineers to develop software that, according to our own research, has expedited internal workflow by 50 percent.

These processes allow us to specialize the development phase and establish a level of control to maximize workflow efficiency. As massive an undertaking as ours is, we keep at it because we know that establishing and maintaining proprietary technology and processes will pay off in the end.

Developing proprietary technology is also costly and time-consuming; so companies must invest at the right time. Those that invest prematurely may end up scrapping the technology because it didn't meet the full range of a client's need or didn't align with the company's long-term strategy.

Once an organization creates genuinely innovative products, it must protect its ideas and invest in proprietary assets. At that point, the technology is worth the initial cost because it pays for itself exponentially once the infrastructure is in place.

When leveraged correctly, proprietary tech boosts revenue significantly, presents a unique market offering and limits the competition. Here's how companies can get it right:

1. Find some kind of fault.

A CB Insights survey estimates that 42 percent of products falter due to lack of market need. Research your audience's biggest struggles, and provide the answers to those problems.

Before you look to create a solution, evaluate common market problems that you could hypothetically solve. Identify a gap in the industry, and make it your technology's goal to fill it. In's case, it shifted focus toward pedestrian communication, something competitors apparently hadn't given a lot of thought to.

My company observed that our customers lost considerable amounts of money on pipe leaks and abnormal water usage. All of the existing market solutions were prohibitively expensive or impracticable, so we invested in a toilet-monitoring product that addressed 90 percent of the waste issues for a fraction of what other providers charged.

That investment showed us that our clients see much better returns on investment with our product when compared to our competitors. Offering a smarter, more cost-effective solution helps a business corner a section of the market and distinguish itself as a viable alternative.

Related: If Your Business Flops, It's Probably Due to One of These 7 Causes

2. Don't be a cog.

An estimated 10 percent of product costs are wasted on features customers either don't value or don't appreciate, according to the Marketing Research Association. Examine the common products in your field, and find ways to improve the tried-and-true solutions.

Innovate within established industries. Water companies have been around for a long time, but my organization wanted to avoid the standard approach of replacing toilets or showerheads. We wanted to do something that actually worked and had long-term benefits, so we invented products and solutions that filled the gap in the market.

Customers are thrilled when they encounter technologies that target the roots of their problems instead of acting as temporary Band-Aids.

3. Do more by doing less.

Google Drive acts as a hub for Gmail, Docs, Hangouts and all other Google products, which is why it's been so successful and retains more than 1 million paid customers. Build products and services that are intuitive and dependable.

Because consumers demand simple, easy-to-use products, proprietary technology should be accessible. On the back end, create platforms that are user-friendly to both clients and the in-house team.

Instead of referring to multiple spreadsheets and software programs, my company invested in one behind-the-scenes platform that acts as a central nervous system for water analysis and data aggregation. Being able to see all our client data in one place enables us to identify trends and create more accurate usage predictions for them. We've also established a customer-facing portal where they can view these metrics themselves.

Distinguishing your product from the competition never stops. Entrepreneurs who continually invest in their own proprietary technology help their companies stand out and give colleagues within their industries something to shoot for.

Related: How Startups Can Overtake Corporates in the Innovation Race

Businesses must offer exceptional products that no one else can replicate. Proprietary technology can help companies establish and sharpen their competitive edges. Whether you're enhancing a car's ability to drive on its own or developing ways to better conserve water usage, constantly investing time, money and creativity into a proprietary product is a good way for entrepreneurs to ensure customers keep finding your services useful.

David Schwartz

Founder and President, The Water Scrooge

David Schwartz is the founder and president of The Water Scrooge, which offers patented, maintenance-free water conservation solutions to homeowners and landlords. A native of Israel, Schwartz was inspired by his countrymen's water conservation techniques and realized that U.S. markets lacked such a tamper-proof conservation device for residential showers. His solution saves landlords an average of $500 per unit per year on water costs and has been installed in more than 40,000 apartments, to date.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Side Hustle

She Grew Her Side Hustle Sales From $0 to Over $6 Million in Just 6 Months — and an 'Old-School' Mindset Helped Her Do It

Cynthia Sakai, designer and founder of the luxury personal care company evolvetogether, felt compelled to help people during the pandemic.

Science & Technology

Get a Lifetime of Raspberry Pi and Arduino Lessons for $70

For businesses with development teams, this discounted bundle is a must.

Business News

Google's AI Is Now Appearing in Gmail and Docs

AI is being introduced to some of Google's most popular products.

Money & Finance

How to Leverage Credit Cards for Business Growth (the Right Way)

By being aware of the risks and embracing best practices, entrepreneurs can make the most of credit cards.

Business News

'Cannot Stop Crying': Hooters Employees Shocked After Dozens of Restaurants Suddenly Close Without Warning

The chain is the latest fast-casual restaurant to face difficult decisions amid inflation.

Business Solutions

5 Actionable Strategies to Improve Your Brand Reputation

For established brands or emerging franchisors wanting to connect with their base, here's actionable advice for improving industrywide reputation.