Analysis: Place Your Bets on a Process for Innovation

Some companies manage intellectual property as if it's an arms race, stockpiling patents and trade secrets that may never be commercialized. Johnson Controls approaches ideas for innovation with a process that makes the company more like a shrewd poker player, knowing just when to hold 'em and when to fold 'em.

"We started work on the process in 2001 with the philosophy of letting business drive intellectual property decisions," says Tom VandenBerge, director of intellectual property at the Milwaukee-based manufacturer of automotive components, batteries and environmental controls. "The business has to make the return on investment, so they should be responsible for figuring out potential returns and how much we're willing to invest in applying for and defending patents and maintaining trade secrets."

Johnson Controls used a process to develop the process itself. The company went through a Six Sigma program and hired a "black belt" consultant who helped it develop a 20-question survey submitted to business people, engineers, designers and managers involved in product development and manufacturing operations.

The process was largely complete by 2002. It began with a global disclosure form for capturing ideas, and it concluded with a decision on whether to hold, patent, define as a trade secret or publicly disclose those ideas. What the company lacked was a technology platform to enforce the process and track the ideas. After reviewing several products in the knowledge management category, Johnson Controls selected an idea management system from MindMatters Technologies (www.us-mindmatters.com).

Idea management — or "innovation management," as some call it — is a small but growing category that includes MindMatters as well as Imaginatik (www.imaginatik.com) and General Ideas (www.generalideasinc.com). A description of the technology sounds like an overlap with the many document management, content management and knowledge management products, but the difference is in focus and experience, according to Jonathan Spira, chief analyst at Basex (www.basex.com), a research and consulting firm in New York.

"You could take generic tools and develop a rudimentary idea management application, with workflow and collaboration and audit trails, but vendors in this category have focused on the flow of innovation inside a company," he explains. "They also provide expertise to help change a company's thinking about the process. Without that insight and experience, it's really just another set of collaboration tools."

MindMatters' system was rolled out to Johnson Controls facilities in North America in late 2002 and to plants in Europe and Japan in 2003. VandenBerge stresses that it's the combination — a technology-enforced process — that has made the difference. What was once an informal, regional paper-based activity is now a consistent process that ensures ideas and current patents are reviewed on specific (and very secret) business, legal and technical criteria. Because ideas are captured through a Web-based form and then tracked throughout their lifecycle, the company now has documented proof of when and how its ideas were developed so it can better defend its patents.

"It's very expensive to apply for and enforce patents, but we're making better decisions today because we're walking step by step through a process that we're using globally," says VandenBerge. "We avoided $750,000 in cost in North American alone last year because we're being more selective and going after better intellectual property. We'll avoid another $250,000 in cost this year because we're using the same criteria to get rid of existing patents that aren't paying off."

The system is now accessible to 2,000 users in North America and a total of 4,000 worldwide, 75 percent of whom are designers, engineers, manufacturing experts and quality control experts. But the company's external, intellectual property legal firm also participates, while business users drive the decisions in monthly review meetings.

"Before this was in place, the meetings ended up lasting for hours because they weren't focused. Now, decisions can usually be made rather quickly when we look at the evidence we've compiled," VandenBerge says, adding that decisions are usually made on ideas within one month. To encourage global collaboration, the company is experimenting with a translation module from MindMatters so engineers and managers who speak different languages can share ideas online.