Now IS the Time for Innovation! 12-15-08

 

There is no doubt that our current economic problems are serious, but, in order to get a sense of where we’re at, let’s compare today’s problems with another period of economic turbulence.  In late 1980, we experienced the “misery index” when inflation was at 13%, interest rates were at 20% and unemployment was sky rocketing.  Currently we are not experiencing this kind of trauma.  What is interesting is how fast the country recovered from this economic downfall.

 

What about the stock market?  Toward the end of the third quarter (2008) it lost 40% of its value.  Keep in mind that in the early 1980s the U.S. economy had huge problems.  Many people panicked and put their money in Treasury bills or bought gold in search of a safe haven.  A $10,000 initial investment in gold would now be worth $22,525;  the same amount in T-Bills would be worth $37,778.  What about investors that bet on U.S. economic progress by investing in the Dow stocks?  Their initial $10,000 would now be worth more than $288,000—even after the stock market crash of 1987 and including today’s problems.

 

The health of the U.S. economy depends heavily upon the vitality of our industrial and manufacturing base.  America‘s future hinges on maximizing innovation.  U.S. investors have traditionally been willing to take risks on new ideas;  consumers embrace new products and this country protects and rewards research and innovation through intellectual property rights.  Throughout our 225 + year history, ingenuity has been a hallmark of America’s strength.  The pioneer spirit of entrepreneurship is the foundation of our economy.

 

The many wonderful products that make our lives easier and more productive did not just happen by accident.  Someone took the trouble to invent them and someone found a way to produce them at a price most of us could afford.  Traditionally, these inventions are a product of U.S. innovation, and the engine that transforms innovation into affordable products is manufacturing. 

 

Historically, it is the achievements and creativity of individual inventors that have powered the dynamo of innovation.  According to McConnell’s and Brue’s classic textbook Economics (Thirteenth Edition):  “A pioneering study of sixty-one important inventions made from 1880 to 1965 indicates that over half were the work of independent inventors disassociated from corporate industrial research laboratories.  Such substantial advances as air conditioning, power steering, the ball point pen, cellophane, the jet engine, insulin, xerography, the helicopter, and the catalytic cracking of petroleum have this individual heritage.”

 

The individual inventors who work independently to create novel innovations that help improve the human condition all share a common trait:  they are strong-willed individuals determined to seize their own destiny.  Independent inventors are not only an important source of creativity, they are a national asset.  In today’s fast-paced market, American manufacturers are subjected to relentless competition.  Any new product source that can save them money in research and development is strategically very important to them.  That is why American manufacturing companies attend trade shows and industrial promotions all over the world.  They are seeking that new product that can expand an existing product line or create a new marketing base.  Licensing this intellectual property is your key to prosperity.

 

American manufacturers have made strident gains in productivity through advancements in technology.  Licensing patented technologies and products has also made American firms more competitive because the practice of licensing saves them valuable research and development funds.  Because licensing is so efficient for manufacturers, small to medium-sized companies can compete on a level playing field.  In fact, a well managed, medium-sized manufacturer who is hungry for innovations may offer a more lucrative licensing contract than a super-large industrial firm would.  Small and medium-sized companies can be a gold mine of opportunity.

 

Manufacturing continues to have the strongest pull on U.S. economic growth compared to any other business sector in the country.  This phenomenal resiliency has important implications for licensing patents.  It demonstrates that even when the manufacturing base is contracting, American industry aggressively seeks opportunity for new products and innovations that will help propel them back to prosperity.

 

So rest assured, if the economy is in a period of slowing down this does not mean that an independently patented product is at a disadvantage.  To the contrary, a product that has market potential can be very attractive to a manufacturer when the economy is slowing because it saves them valuable research and development expenses at a time when money is tight.   A product that can command the confidence of the public is very valuable to manufacturers during times of economic turbulence.  Did you know that during the past 60 years the manufacturing base has been the most vulnerable to recessions?  The good news is, on every occasion, manufacturing recovered the fastest and helped lead the economy to recovery.  Even when the economy slows, American manufacturers aggressively seek new opportunities and new products to stimulate their recovery.  No time like the present to get your idea out there.  CARPE DIEM!