Making money from Improving existing products

If I come up with an improvement to an existing product, how do I protect myself when sharing it, and get some of the revenues the idea generates?

There are many times when I look at an existing product, and have an idea of how it could be better. I start thinking about how, had I owned the company making this product, I would incorporate this idea into the existing product, and make the company much more successful. The problem is of course, that I don't own the company, and that if I contact them and offer the improvement I came up with, the best case scenario is that they would thank me, and do it themselves, and I would not get anything out of my idea.

Filing a patent application is an expensive and long process, and many times the ideas I have are not patentable. Starting a competing company usually doesn't make sense, since it is also a very long and risky process... If I come up with an improvement for a car, it makes no sense that I build a car factory.

There are businesses that make it very easy for others to contribute to their product, be it web2.0 companies (even this site, that lets the crowd answer the questions) or companies like Facebook and Apple that let outside developers create applications, and share the revenues they generate. In most cases, the everyday ideas I come up with don't help companies like that.

Starting a consulting firm is a possibility, but they way consultants are compensated seems inappropriate in this case. A consultant is paid a fixed amount of money, regardless of the potential benefit that business will gain from the advice that was given. In addition, consultants are chosen by their clients, and not the other way around.

This has been bugging me for many years. One example I always use when asking people this question is: if I was the one to come up with the idea of adding a remote control to air conditioners, when both air conditioning and remote control technologies existed before, how would I go about talking with air-conditioning firms about cooperating, when they can just thank me for the wonderful idea and do it without me?

You suffer from the inventor syndrome. You believe that the idea is 99% of the solution, and the execution is just stuff that others do.

Let's revisit one of your scenarios. Let's say you just tell an existing company about this great idea you have that would make their product so much better. My guess? They would laugh and not care to implement your idea. What does that say about its value?

One possible route for you is to become a consultant. If you think you can generate enough such ideas, then give away a few to get the consulting gig, and continue giving great hindsight.

However, be very aware that you are shooting for a dream job that 99% of us are unable to do. Everyone wants to be the Idea-Man who shares his wisdom in 6-word sentences, and then sits back and watches as the world is changed by the wisdom... It doesn't work that way.

More likely, I'd recommend that you actually execute on one idea. In your example of the remote and AC unit, someone had to build the first. You'd just OEM AC units, retrofit them with remotes, and start selling them. Sounds like a lot of work? Well, yes, but that's where value (money) is created.

Let's look at it from the other side: You are a successful air conditioner manufacturer, and you've fought your way in this tough industry for decades. You have a successful line of products and you know why: because you have done a great deal of awsome work and you deserve success.

Now here comes some guy, telling you that if you add some fixtures to the air outlet unit, the soft whistling sound produced will create a feeling of being outside in the open and promote a spirit of freshness. He also wants x% of your future profits on such units. What would you think?

I would probably say:

1. Who said the whislting sound will create a sense of freshness? Isn't it just an annoyance?
2. Are customers willing to pay for the feeling of freshness?
3. Is it technically doable anyway?
4. How do I know it won't create unwanted problems in, say, cleaning or maintenance?
5. Who is this arrogant stranger who thinks because he's got some crazy/risky "idea" he can share the profits of the product line we worked so hard to create?

The problem with innovation is not having ideas. There are all sorts of ideas in this world. It's the developed idea that matters. For an idea to reach the conveyor belt, it must be run through many cycles of refinement and redefinition. The concept must be proven on many fronts, technically and commercially. It must be supported with evidence from customer surveys and interviews. A good reference on this is Anthony Ulwick's book "What Customers Want".

Tessera Technologies are idea providers, but they go as far as building and running whole factories just to prove the commercial viability of their products. Then they work with their clients very closely on intergrating the concept or technology into their stack. Only after years of development followed by many months of on-site consulting and engineering do they claim the hefty royalties. Check this study Carrot or Stick? Getting Paid for Innovation at Tessera Technologies. Another great case study is What's the BIG Idea. BIG buy small ideas, develop them, then sell them big.

Idea development is a business in itself. Build a reputation and the customers will seek your business. Start by giving to the world. Blog. People will see what you've done and they will say: "I like your idea about the whistling AC. It turned into a block buster too. I wonder if you could help us with our heater line." Then you sign a contract with these folks, bring up your "trembling stove" idea, get busy developing it, and you know, live happily ever after.

Whatever form of IP protection you seek, if you are not perceived by your potential clients as true value provider, you will be seen as the equivalent of a patent troll.

You should be aware that for many reasons, companies could just want not to be better. For example, making product A better might canibalize sales of the (more expensive) product B. Even if product B is from another vendor! (Because sales channels might want A as a cheaper but inferior alternative to B)

Making it better might be just too expensive. Or it makes the product more complex, but the company focuses on making it as simple as possible. (Consider Apple's products)

If you think your idea is so great that the world absolutely needs it, why not start a company that creates an improved clone of the product?

Intellectual property laws provide for the creation of limited
monopolies. To the extent they do comprise a monopoly, the air
conditioner manufacturers of the world often have more incentive to
stifle innovation than to pay for it. Unfortunately, you don't have
much power to change that.

Your best bet is to trust that you're so good at ideation that you can
apply it to any business. Then go start a business in a promising
area, and use your mad skillz to out-execute the competition.

Post ideas about businesses you cannot influence to a site like
halfbakery. Or blog about them to build your personal brand. Or
write them down, keep them to yourself in case you can use them
someday, and provide for them to be passed on or publicized when you
die.

Interesting thought... that all of us idea folks have. My suggestion: try contacting the companies and asking about submitting ideas. I've done it a few times. Fastest way to get over that thought! I totally agree with Alain.

1. they will laugh at you (though they'll send you a nice message declining your offer).
2. even if you gave them the idea, it's all about execution - and especially big companies are wedded to the path they're already on, so your idea will get lost in seconds.

Find your passion with 1 (ONE) idea, and work on an execution plan after validating that someone might want to pay for it.

Moving to the marketing department? That's a good one. I don't know of any company that lets marketing people market their own version of the "improved" product. If that's your plan, you will likely be disappointed when you get there, plus bomb with whatever real job they want you to do, and then be out of a job. It's quite possible.

Some fortune 100 companies are beginning to actively reach out to the outside for new ideas: search for "submit innovations" - no quotes. (Big companies call ideas "innovations" btw.) The problem is that they often go to established consulting companies anyway (and pay huge fees).

I like the remote for AC idea, but if it's too big for you, how about tweaking it? A remote plus controller - where the controller replaces the thermostat. That way you've increased your potential market to every household - not just people buying new replacement AC units or building homes. Is that patentable? You bet (unless the patent office thinks it's a no-brainer to put the two together). That's why a remote controlled basketball will never sell, but is patentable. Actually I guess it might sell to special olympics or recovery hospitals. [sorry - idea man again!]

Why am I sharing these? Because I'm comfortable working to execute what I'm already doing. (Plus I would just walk over to change the thermostat anyway). Again (like Alain said), the idea part is only 1%. I will add that the patent submission is 1%, real patent 3%, funding is 3%, first customer 7% - what do you think the rest is?

Good luck!

I have the same issue that you do, Ron. My mind is constantly going, at times I wish it had an off switch.

This is my suggestion, and I will be attempting the same idea. I plan on having a lawyer involved for reasons you will see and understand below. The following is what I plan to say.

Obviously start by contacting the company. Inform them you have innovations pertaining to their products to possibly improve or upgrade them. I'm guessing that in response they would ask what they are. (Here is where the lawyer will come in.) Sign something stating no information will be given to any competitors that are discussed between all parties. Inform them no innovations will be given on your end unless they discuss any innovations that are already in the works. There is no point to waste anyone's time if the idea is already in the works.

Not sure if it will work but anything is worth a shot. I can only hope that with a lawyer in the mix it will help in my cause. I see you left this quite some time ago but I was searching for ideas myself and happened across it. Hope it helps and works for both of us. If not just have to keep trying until every avenue is relinquished.

There's something else to consider, and that is this --

What makes you think that your idea really is better? Remote controls have been applied to all manner of things for decades, do you really think no one thought -- "Hey, remote controlled A/C?" Actually they have -- Carrier ComfortChoice, plus a ton of others. Most of which don't sell all that many of them.

The next question is this -- what makes you think this great new idea is commercially viable? Okay, you and five of your closest friends think this is a great idea ("Hey, I can turn the A/C down when it gets hot in here because 10 of my closest friends are watching the big game on TV!"). How many people need to do that and how often?

Another way to earn money on such ideas is to start a capital fund (maybe this has other names too). You could start by buying a small company, improve it and sell it. I have a plan to try this field at some point in the future.

When you have an idea that improves the existing product then you need to figure out a design for that improvement and then you need to patent that design (check this if its possible). Once you patent it market it through a patent marketing firm. They charge you little commission on what you earn but its really helpful as they have a bigger network of clients with a provn positive implemented examples.