Good Ideas Aren't Good EnoughBy Gerard Fonte
Engineer and Author
Turn your product idea into business legendGood ideas are not rare. We have all had an idea that was potentially profitable. Therein lies the problem. Everyone has good ideas. You have to compete with everyone else! How can you sell your idea to your boss, when your boss is trying to sell his idea to his boss? How can you get an outside company interested in your idea when hordes of its own employees are clamoring for research funds to develop their own ideas? The short answer is that you aren't likely to, but, hope is eternal.
Be Brutally HonestFirst of all, is your idea good? In order to determine this, talk to others who are in your field. If your idea is not in your field, don't waste your time. Be objective and brutally honest in your evaluation (a hard thing to do). Identify and examine at all the weak points. What makes your idea good? It must clearly, repeat CLEARLY, show a significant, repeat SIGNIFICANT, technical or financial advantage over all existing ideas. If it can't show this, either abandon it or improve it. It won't succeed as it is.
It is important to realize that probably very few people will love your idea. Everyone will have something to say, suggest some way to improve it, or find something wrong with it. Use this information to make your idea better. Don't fall in love with it! Criticism of your idea is not criticism of you. If you invest feelings in your idea you almost certainly will make bad decisions.
The White Paper ProposalThe formal way to present your idea typically starts with a " White Paper Proposal " – a document that provides an overview of what the idea is and does. It does not say how the idea operates, nor does it include any sensitive or proprietary information. It is simply a teaser created to sell your idea technically and financially in general terms. Typically a couple of pages long, its sole purpose is to get you an in-person presentation.
If you can't express yourself in a way that clearly describes how the company can make money with your idea, no one will be interested or even try to understand you. You must demonstrate why their particular company is most suited for developing and marketing your idea. Be technical enough to be clear but don't use technical jargon if you can avoid it. Be simple and clear and professional. Write so you can't be misunderstood.
Like getting a resume to the hiring manager, getting your White Paper into the right hands depends on who you know. There are a number of ways to find an inside contact. The best is to attend a seminar or trade show and talk to company representatives to find out if your idea interests them. If so, they will give you a name to contact and you could use the rep as a reference. You can also talk to a sales person from the company of interest. Just viewing the company's web site to find the right contact is usually a miss.
The Personal PresentationYour personal presentation is just like an interview. Be prepared for any questions ranging from conceptual, technical, financial and maybe even legal. Be able to address development, production and testing concerns. You certainly are not expected to be able to answer every question on every topic (and indeed they will test you); however, you must appear competent. Don't ever fake an answer. Simply say "I don't know, but I'll find out".
Product Development is Risky BusinessEmpathize with a company's natural reluctance to accept outside ideas. It takes lots of time and money to develop an idea into a product and market it successfully. As an example, let's use a simple test instrument that consists of a single PCB with a few switches and a microcomputer. How much do you think it will take to develop it into a product? Let's work out a rough estimate. The company will need a design engineer for the hardware, a software engineer for the programming, someone to lay out the PCB as well as overhead in the form of engineering and support staff.
Let's assume it takes 3 weeks to design and test the hardware and 4 weeks to write and debug the software with 1 week for PCB layout and miscellaneous odds and ends. This is about 8 weeks or about 320 hours. It can often cost 2 to 4 times this much, especially for new products that require learning new techniques or procedures. Figure out the direct labor costs and your estimate will still likely be short.
Develop a Prototype to Improve Your OddsYou can make a huge improvement in your chances for success by making a model or prototype of your idea, thereby eliminating the need for the company to incur those costs. It's also much easier to sell an idea if someone can see how it works and it provides you with some credibility. The better the model, the better the odds that there will be interest. Sometimes a computer model is sufficient. A working prototype is better. The best prototype is a production prototype – a product sample.
A production prototype is functionally identical to the expected product. The only difference between this and a true product is that the "tooling" (case, cover markings, and other custom non recurring costs) is simplified. A production prototype should also include the operator's manual, testing procedures, parts list, assembly procedures, software listings and so forth. Of course, this is a lot of work, but more work means better odds of selling your idea.
The Return on InvestmentAs a company goes into production, they will need to train people to test, assemble, inspect, troubleshoot and package the product. In addition, they'll have to market the product, meaning advertise, train salespeople, get feedback from customers and so forth. All of this requires time and money. It is not at all unusual for a company to spend hundreds of thousands of dollars after product development to get the idea ready to sell.
Now we add a very practical consideration. How many units must be sold to recover the development and marketing costs? How long will that take? Typically, if a company can't recover those costs within a year it probably won't pursue the idea. And remember, many new products fail. Now, if you were running a company, would you invest in some stranger's idea?
ConclusionGood ideas take a lot of work to be successful. This is because there are so many good ideas and because they need money and time to develop into real products. Companies are reluctant to risk time and money on an unknown individual. But, by developing your idea, on your own, you can greatly increase the likelihood of making money from it.
Gerard Fonte has been an engineer for over 35 years and has had the opportunity to work on a wide variety of state-of-the-art commercial and military projects: gravity navigation, missile guidance, electronic warfare and things that "don't exist". He's held the positions of microprocessor specialist, senior engineer, and principal scientist and is currently semi-retired as the principal engineer for The PAK Engineers (a small product design and development company near Buffalo, NY). As an author, Gerard has written numerous popular and scientific articles on many diverse topics as well as the book, Building the Great Pyramid in a Year: An Engineer's Report . "Gerard's Columns" is found monthly in Elektor magazine. He and his wife, Nellie, live in a geodesic dome that they designed and built by themselves.