LISTENING TO ENTREPRENEURS: LESSONS FROM THE WORLD INTELLECTUAL PROPERTY DAY 2021 CELEBRATIONS
- Galma Godana |
- May 10, 2021 |
- Intellectual Property
They got to the Market: How did they do it?
Introduction to the World Intellectual Property Day
Every year on the 26th day of April, the World Intellectual Property Organization (WIPO), intellectual property (IP) offices and other stakeholders in the IP value chain celebrate the world intellectual property day (WIPD). The day was designated in 2000 by WIPO’s member states to mark the day in 1970 when the Convention establishing WIPO came into force. The goal behind the celebration is to increase understanding of IP by raising awareness and to encourage creativity and innovation.1 To guide the celebrations, WIPO designates a specific theme each year aimed at drawing emphasis on topical areas of discussion. In 2021, the WIPD theme was ‘IP & SMEs: Taking your ideas to the market’. In celebrating the day, CIPIT hosted a public webinar under the theme ‘Taking Ideas to the market: Listening to Entrepreneurs.’ We focused on the experiences of three Kenyan entrepreneurs as the major players in taking ideas to the market. The speakers were drawn from different industries differentiating their experiences despite the relation in the entrepreneurship journey. In the coming days, we will share the lessons we learnt from this conversation in a series of blog pieces with specific focus on the issues that were discussed that day.
This week, we shall in a series of blogs, bring to fore the lessons we learnt from the conversation we had with the entrepreneurs on 26th April 2021. We will single out specific areas we consider to have been the highlight of the event. In this piece, we focus on the journey by the entrepreneurs, how they commercialized their ideas, how they approached the market and the major characteristics of the models they adopted.
SMEs in 2021 and Commercialization
The importance of SMEs in achieving economic growth and development is well known. SMEs play important role in terms of promoting economic efficiency and facilitating a healthy business environment.2 Regionally, it is estimated that SMEs account for about 90% of all businesses in Sub-Saharan Africa (SSA).3 A number of African nations therefore place heavy reliance on these enterprises as tools for employment creation, alleviation of poverty and drivers of economic growth. As such, a number of developing economies are increasingly focusing attention on the ways to offer support to SMEs.
In the 21st century, markets are changing rapidly due to reasons such as globalization and digitization.4 This places the burden on SMEs to not only have innovative products or services but also ingenious ways to approach the market. These different approaches are often termed as commercialization models5 and they tend to vary in nature.
Commercialization has been defined as the process of transforming business ideas, knowledge and inventions into greater wealth for individuals, businesses and/or society at large.6 It describes the complex process through which a product or production method is introduced into the market. For the conversationalist entrepreneurs, their commercialization models were in the form of business models which were characterized by flexibility and collaboration between parties.
Characteristics of the Business Models as Innovations
The process of developing unique organizational structures and processes in order to bring business concepts to fruition and improve product value is called business model innovation (BMI).7 BMI supports an organization’s financial viability by tailoring the manner in which the products or services are offered to satisfy market needs.
Alex Kamau (co-founder, Lets Drift) mentioned that the original market ‘problem/need’ that he sought to address was the expensive nature of hikes and other outdoor experiences. He thus began with ‘a scrappy idea’ of simply offering affordable outdoor experiences. With time, he packed this ‘scrappy idea’ as an enterprise which later became a community of people who love outdoor activities. Using the enterprise, he later made adventure accessible to others by structuring it as a subscription-based service. To become members of the ‘Lets Drift community’ and access the adventures, adventurers pay an amount-subscription fee on a monthly subscription fee. In this manner, the business model was tailored to serve the market need i.e. accessible outdoor experiences. The flexibility of this model is that an adventurer pays the subscription fee and accesses the adventures at their own convenience.
For Nature’s Touch LLP, the start was necessitated by Caroline Mutabacho’s need to have responsive personal skin care products. They then started by developing and selling their own products to a small number of people. However over time [and owing to their flexibility], they expanded their activities to include manufacturing products for other corporations on a contractual basis. In an ideal market, these corporations would be their competitors. However, through the contractual arrangement between them, they are able to collaborate and manufacture products for them. Such collaborative models allow parties to leverage on different capacities e.g. expertise and brand name, in order to work together to serve market needs that neither party would be able to address efficiently.
Collaborative modelling allows two or more organisations that may differ in terms of their nature e.g. profit and non-profit, industry or position in the value chain, to work together to develop a value creation system.8 Collaboration may take many forms but the associated general benefits include facilitating access to new technology and entry to new markets,9 sharing of costs and risks and increasing innovation capacity amongst others.10 As a standalone mode of BMI, collaboration leads to the creation of new or alternative revenue sources for an organization and a diversification of the ways in which product value is created or improved as in the case of Nature’s Touch LLP.
It is also worth emphasizing that collaborative business modelling extends beyond organisations in similar industries or even of similar type. In the case of Lishe Living Nutrition Clinics (a biomedical research corporation), collaborations were concluded with a variety of institutions such as public hospitals, freelance nutritionists and university-based research centres amongst others. Their CEO, Sharon Olago, also underlined the value of collaborations when she stated that it is important for SMEs to be able to anchor on larger ‘established’ entities as a growth mechanism. This can be through innovative collaboration and partnerships.
Other than collaboration, Lishe Living Nutrition Clinics just as Nature’s Touch LLP, began with focus on one issue and then developed their model based on the market response. Sharon initially identified the issue as a food marketing problem. However, she later noted that the problem extended to that of nutrition. In response, she developed a software to digitize nutrition solutions. For implementation, the enterprise was founded as a health-based software company. However, the enterprise carries out a range of activities including food science research, offering individualized nutrition solutions to those living with diseases as well as providing freelance nutritionists with access to software enabling them to render evidence based therapy. Such flexibility in the models adopted allowed the entrepreneurs to reach their market and grow their idea to responsive enterprises.
Collaboration for Let’s Drift, an enterprise in the tourism sector, was engineered by the partnership between them and a granola manufacturer. The objective of the partnership was to provide a ‘power pack’ meal offering to their members. This enabled the enterprise to serve their members better and for the granola manufacturer to access a new market with their products.
In conclusion, the discussion uncovered key themes relating to the different ways in which enterprises can approach the market. From the conversation we observed that flexible and collaborative business models allowed the entrepreneurs take their ideas to the market. Whilst their background industries and the details of their models differed, the lessons were somewhat similar.
First, however small and unrefined the idea maybe, start putting it in motion. Second, adopt a business model that is flexible enough to allow changes on the entrepreneurship journey. Third, work with or be open to working others in the market. This way, entrepreneurs are able to reach the market or even increase their market share. This is because collaboration allows you, as an entrepreneur, to use other people’s networks, knowledge, time and financial resources that will take time to develop on your own.
Lastly, it is worth noting that there are a number of other commercialization models that did not arise in our conversation with the entrepreneurs. These include assignments, licensing, franchise agreements, merchandizing, research agreements, and material transfer agreements. We will discuss them in future.
This is a continuing blog series and in the next piece, we will address the value of IP to the entrepreneurship journey and the IP assets that the entrepreneurs exploited so far.
1 World Intellectual Property Day – April 26, 2021
IP & SMEs: Taking your ideas to market, WIPO, at https://www.wipo.int/ip-outreach/en/ipday/
2 H. Keskin, C. Senturk, O. Sungur & H.M. Kiris, The Importance of SMEs in Developing Economies, 2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo, at https://core.ac.uk/download/pdf/153446896.pdf
3 ‘SME Initiatives’ Sustainable Business Advisory, International Finance Corporation at https://www.ifc.org/wps/wcm/connect/REGION__EXT_Content/Regions/Sub-Saharan+Africa/Advisory+Services/SustainableBusiness/SME_Initiatives/
4 See discussion on how technology is drastically changing how companies operate and deliver services to customers as well as how stiff international competition caused by the global marketplace are forcing businesses to turn to business model innovation to stay competitive. B. Cole, Business Model Innovation, Search CIO, at https://searchcio.techtarget.com/definition/business-model-innovation
5 See discussion on how the approach that a business uses to commercialize an innovation is critical in determining how much revenue can be derived from the product. J.P Andrew & H.L. Sirkin, Innovating for cash, Harvard Business Review, September 2003, at https://hbr.org/2003/09/innovating-for-cash. See also J. Pellikka, P. Malinen, Business models in the commercialization processes of innovation among small high-technology firms, International Journal of Innovation and Technology Management 11(02), at https://www.researchgate.net/publication/263878447_Business_models_in_the_commercialization_processes_of_innovation_among_small_high-technology_firms
6 Innovation and Commercialisation— Concepts, Definitions and Metrics
8 R. Rohrbeck, L. Konnertz, S.F. Knab, Collaborative business modelling for systemic and sustainability innovations, International Journal of Technology Management 63(1/2), at https://www.researchgate.net/publication/235609440_Collaborative_business_modelling_for_systemic_and_sustainability_innovations
9 J. Pellikka, P. Malinen, Business models in the commercialization processes of innovation among small high-technology firms, International Journal of Innovation and Technology Management 11(02), at https://www.researchgate.net/publication/263878447_Business_models_in_the_commercialization_processes_of_innovation_among_small_high-technology_firms
10 A. Abreu, L.M.C Matos, A benefit analysis model for collaborative networks, at https://link.springer.com/chapter/10.1007/978-0-387-79426-6_18