How can companies foster innovation?
05/01/2004
Corporate executives load up on stock options, especially in high-tech companies, hoping that future sales of their companies' products — or the company itself — will make them super rich. Meanwhile, the scientists and engineers back in the labs struggle to invent the next round of innovation that will propel their organizations upward in future years. They may have been the same people who invented the products now enriching top management, and perhaps, the lawyers protecting the company's intellectual property (IP). But, unless those tech types move into top spots themselves, the only benefits from their past and future inventions may be a steady job and a paycheck, just like all the other employees receive.
Not surprisingly, this lack of strong incentives can have some undesired effects. Yes, there are geniuses who learn to adapt to a corporate culture that may be quite alien to their free-wheeling style (a few companies give them their own labs and make them Fellows). Some research labs, however, find that their most inventive employees leave for greener pastures, while among those that stay may be plodders, good at calculations and making measurements, or those adept at playing corporate politics. The politically correct mid-level managers may even make life tough for inventive types they see as a threat to them. Sometimes whole development teams run off to start their own companies (funded by what are sometimes called "vulture capitalists"). Occasionally, stolen IP is involved, but more often the knowledge they need to push the frontiers is in their heads, and they know they can gain much richer benefits outside a big corporation.
Some companies, however, do offer incentives for useful inventions, such as bonuses. A good example of this is Nichia Corp., in Japan, where Shuji Nakamura developed the blue-emitting laser diode — a highly sought device that enables CDs to carry thousands of times more data. Mr. Nakamura received ¥20,000 (about $190) as a bonus when the company patented his invention. Feeling under-rewarded, he sued to get a share of the profits, potentially hundreds of millions of dollars, and, amazingly, a district court in Tokyo agreed, awarding him ¥20 billion (about $190 million)! Emboldened by this ruling, Fujio Masuoka, now at Tohoku U., is suing Toshiba for ¥1 billion for his invention of flash memory many years ago, according to Lee Bromberg of Bromberg & Sunstein in Boston. As a result of such rulings, Bromberg believes that companies — not just in Japan, but also in the US and elsewhere — will even further tighten their control over the IP developed by their employees.
In our view, this would be a move in the wrong direction. Instead, large corporations might be wiser to increase the benefits to those responsible for the key inventions with great potential. We are not referring here to more mundane patents, covering mechanisms involved in a planned new product, for example. At a recent Microlithography Symposium panel session, for example, a comment was made about a patent application from a tool company that included over 6000 claims covering just about every imaginable use of automatic process control. Patents like these are likely to be aimed more at creating litigation than launching new technology.
By contrast, we are reminded of meeting a very bubbly inventor at a major press conference some years ago. He had worked at an aerospace company that asked him to sign a form giving the company rights to anything he invented while he worked there. He pointed out to his boss that this would even include something he was working on in his garage that had nothing to do with the company. Too bad, he was told — sign or get fired. He didn't sign and he was fired. When I met him, he had struck it big, selling the rights to his radar-like intrusion detection system to Diebold, the safe company. He indeed HAD been working on something in his garage. If the employer had offered him even a modest royalty or licensing arrangement, he may well have helped that company get into a whole new growth market in security systems.
 |
They say "you get what you pay for," and in the case of innovation, that may very well be true.
Robert Haavind
Editorial Director