According to the U.S. Patent and Trademark Office (USP-
TO), there were approximately 225,000 utility patents and
21,000 design patents granted in 2011, thus implying that over
200,000 new product ideas could potentially enter the market-
place. And this doesn’t even include non-patented new prod-
uct introductions.
However, only a small percentage of granted patents ever
reach commercialization—specifically, the USPTO estimates
that only two to three percent of patented ideas ever make it
to the market. Of those that do, it is estimated that 90-95%
of all new products entering the marketplace fail. There are
many potential reasons as to why this happens. One key rea-
son might be that no real market existed in the first place. An-
other might be that there was not enough research conducted
about the competition. In order to be successful, you need to
have a realistic picture of the competition. Many times, inven-
tors believe that their product idea is so unique that no com-
petition exists. This is rarely, if ever, true. All of these types
of activities are key to doing your homework in the sense of
performing detailed market research to see where you product
idea fits.
A very insightful characterization of the nature of the
product market environment that an inventor will encounter
first appeared in the article entitled “Blue Ocean Strategy” in
the October 2004 issue of the Harvard Business Review, by
W. Chan Kim and Renee Mauborgne. This later became the
foundation for a bestselling book by the same name that was
published in 2005 by the Harvard Business School Press. The
authors defined the business universe as consisting of two dis-
tinct kinds of space, referred to as red and blue oceans. Red
oceans represent all the industries in existence today.
Furthermore, “In red oceans, industry boundaries are de-
fined and accepted, and the competitive rules of the game are
well understood. Here, companies try to outperform their ri-
vals in order to grab a greater share of existing demand. As
the space gets more and more crowded, prospects for profits
and growth are reduced. Products turn into commodities, and
increasing competition turns the water bloody”.
If you have an idea for an invention that will compete
with existing products and a well-defined market space, then
you’re navigating the red ocean where it will be more diffi-
cult and challenging to be successful. Examples would include
inventions that are marginal or incremental improvements to
already existing products.
When you’re in the red ocean, the “nfrastructure already
exists for products like yours in the sense that there are al-
ready established distribution channels, the market space is
generally well-defined and understood, the customers/users
are known, the suppliers and developers of like products are
known, patents and claims are already documented, like or
similar products are available for analysis and comparison, the
value (sales and orders) of the market space is well document-
ed, and licensing candidates are generally more easier to find.
If one or two companies that dominate the market space
are already producing similar products, then you’re in the red
ocean. Someone is already there. They’ve beaten you to the
market. They now own it.
If the total market value (sales and orders) for products like
yours is relatively small and/or there are already numerous
companies providing products in this market area, then you’re
in the red ocean.
If you have the “mine is better” mindset and the market
space, i.e. the users of like products don’t really care or need a
better way of doing it, then you’re in the red ocean.
On the other hand, according to Kim and Mauborgne,
“Blue oceans denote all the industries not in existence today—
the unknown market space, untainted by competition. In blue
oceans, demand is created rather than fought over. There is
ample opportunity for growth that is both profitable and rap-
id.”
Depending on the nature of your invention idea, you may
have the opportunity to be more successful and reap greater
profits if you’re navigating the blue ocean.
When you’re in the blue ocean, you are in potentially un-
charted territory. The market niche is not necessarily totally
understood and/or well defined. You’re not sure who the po-
tential competitors may be and how these entities might react
to the introduction of your product idea. It is, however, a great
opportunity for first to market entry, but as a consequence, it
may be more difficult and/or challenging to find licensing can-
didates.
To navigate the blue ocean may require thinking outside
the box. Come up with an idea that isn’t necessarily a better
way to do something that is already being done and where
you must compete in a defined and limited market space. A
number of years ago in an issue of Business Start-Ups, Nick
D’Alto suggested, “Imagine a restaurant with no waiters, no
tables and no silverware. (You just described the first McDon-
alds.) Imagine a bookstore with no books. (You just created
Amazon.com.) Imagine glue that hardly sticks at all. (You just
invented Post-its.)”
The difference is that in the red ocean your invention will
be competing in existing market space and exploiting existing
demand whereas in the blue ocean you are creating an uncon-
tested market space and creating and capturing new demand.
You really need to know whether you are in the red ocean or
the blue ocean as you “chart the course” for your new idea or
invention.
If you believe you’re in the blue ocean when in reality
you’re in the red ocean, then you’re in for a real surprise!
That’s why market research is so critical in the invention de-
velopment process. You need to know where you are (that is
the color of the water you are trying to navigate) and what you
need to do in order to be successful as there is a different set of
challenges in each ocean.
If you’re conservative and not a “risk taker” then follow
the advice of Jo-Anne Hayes-Rines in her “Editor’s Voice”
article in the July/August/September 2006 issue of Inventors
Digest in which she says, “Invent in an industry you know and
understand; that is advice all inventors should heed”.
On the other hand, if you are truly looking for that idea that
no one has ever really thought of and you sincerely believe
that you could create a need for it, then move forward. Think
outside the box! But be careful, as a need is not synonymous
with someone will buy it! Bon voyage!
