Become a Product Licensing Machine Using These 8 Strategies
Learn the reason why most product ideas get licensed and how to take advantage of it.
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Many inventors believe that the only way to be classified as a professional is by having licensed multiple inventions.
But after interviewing 30 experts on open innovation across 17 different industries for my book Become a Professional Inventor, I discovered that getting companies to perceive you as a professional inventor came down to just one thing: Your ability to build a solid relationship with them.
For companies that have made licensing inventions an essential part of their product development strategy, relationships with inventors are extremely valuable.
In terms of harnessing the creative potential of independent inventors, the toy and game industry is leaps and bounds ahead of the rest. At the leading toy and game companies, there are entire departments dedicated to inventor relations.
Brian Chapman, president and head of global design and development at Hasbro, described the company's relationships with inventors as "critically important" during an interview.
"We love inventors who are like an extended part of our team," Chapman said. "Once you establish a [relationship], you want to continue to work with that company. I think that's when you have the most successes."
As open innovation continues to flourish across industries, different approaches to engaging with independent product developers have emerged. One popular example is the online portal, a sort of black hole for submitting your invention in which you fill out a form and potentially upload some materials. A few large companies have admitted to me that they don't license very many of the ideas they receive that way.
Ben Dermer, senior vice-president of creative development at Canadian toy and entertainment company Spin Master, said that while it's important for inventors to know that online portals are fine, "Personal relationships matter the most."
Product ideas need champions to make it to market. In my decades of experience as a successful independent inventor, having licensed numerous ideas and inventions for recurring royalties, the reason most product ideas get licensed is because of the relationships you have with the people at those companies.
Here are my tips for how to build relationships with companies looking for ideas.
1. Truly understand their product line
First things first. Taking the time to really grasp what your client, aka the potential licensee, is selling and their goals in terms of creating new products for their customers is important. Many companies have complained to me that a high proportion of the ideas they receive don't fit their product line.
"The number one thing is to really understand the business," Dermer advises. "Know exactly where the toys are sold, what category they're in, and their price points."
2. Respect their time
Make sure you do your homework and only submit ideas for products that you know are actually new and novel! When you fire off a random idea without taking the time to study their product line first, you're wasting their time and yours.
3. Learn about their submission and product development processes
Every company has their own unique process for working with inventors. The best way to establish reasonable expectations is by educating yourself about when you can expect a response. Try to ascertain if there's an optimal time of year to submit your new product ideas in that industry. There usually is.
4. Follow up appropriately
The question of how long to wait before following up after you've submitted a product idea is a common one. Again, the best advice I can give you is to ask them about their process directly. Try to understand how they receive and begin evaluating new product ideas. As you wait for them to get back to you, focus on being helpful, courteous, and patient.
5. Be willing to learn
Having the right attitude and demonstrating enthusiasm when working with these companies is a big deal. Your willingness to listen carefully is crucial, because getting their feedback is key to your ultimate success. You are being given an opportunity to rework your original submission and gain insight into what's important to them, so please pay attention.
Successful independent inventor April Mitchell, who recently signed her third and fourth licensing agreements in the toy and game industry in less than six months, spent two years knocking on doors and building relationships before gaining traction. (Full disclosure: April is a coach for my company, inventRight)
"I've been amazed at the willingness to give feedback from most companies. They want us to pitch concepts that are a good fit just as much as we inventors want to pitch them concepts that are a great fit," Mitchell explains. "Having a good attitude and being willing to learn when you receive a 'no' or 'not a good fit' leaves the door open to pitch them new concepts in the future."
6. Act like you're part of their team
These companies need ideas from the outside. When you build a solid relationship of trust, you start to become part of their team, and this is when opportunities will really begin to present themselves to you. Discussing your product idea and how to make it better is critical for licensing success.
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7. Be reasonable
Every licensing agreement is different. Don't make an assumption about what your invention is worth. Make an effort to understand your licensee's perspective on moving forward with your product idea. Study the terms and conditions of licensing agreements from a business perspective.
8. Be consistent by continuing to submit new ideas
Companies take you much more seriously when you consistently submit new product ideas to them. Basically, if you invest in them, they will be willing to invest in you. No one ever knows for sure what consumers will embrace. Strengthen your creative muscle by challenging yourself to invent new concepts regularly.
Becoming a profitable inventor is really about who you know and what you know. If you stay in an industry long enough to identify, befriend and forge strong relationships with a few key players, your success as a product developer is going to increase greatly.