The Effect of Innovation on Sales Figures of Startups
Author: Shaidy J. Baltodano
This article examines the effect of innovation on sales figures for startups. For startups aiming to establish themselves in their industry, it is crucial to understand that innovation is the key to their success. It is commonly believed that companies that do not innovate are at risk of failure. Thus, when entering a market dominated by long-established companies, it is essential for startups to differentiate themselves from the competition through innovative practices to ensure their survival.
What is Innovation?
Innovation is the process of introducing and implementing significant changes into a company's products, processes, marketing, or organization with the goal of resolving known problems or enhancing the company’s performance. These changes can be developed internally, through external collaborations, or by acquiring modern technologies. In this aspect, companies might produce novelty items or processes while operating. A novelty item is a product that exhibits uniqueness and substantial differences in its functional features or applications compared to previously produced inventions. This innovation uniqueness within an invention may involve the utilization of never-seen technologies or the adaptation of state-of-the-art technologies for novel purposes.
Startups often find themselves in a challenging situation: aiming to break into industries dominated by long-standing, resourceful corporations. These well-established companies have already invested considerable time and money into research and development, making it incredibly difficult for startups to sustain their presence within such industries. For instance, if the sales of a startup are reliant on a product that is offered by other competitor companies, the market is more likely to trust and purchase from a well-known and reputable corporation than the startup. According to the Innovation Indicators from the Organization for Economic Co-operation and Development (OECD) there is a 44% of large firms in the United States that are considered innovative companies, while approximately 38% of all firms in the country are recognized as innovative. For this reason, startups are compelled to offer innovative and unique products to gain a competitive advantage and capture the attention and trust of consumers to survive and thrive. Similarly, by embracing innovation and protecting their novelty items or processes, startups can make their way to market success and capital investment opportunities.
Creating Innovation: What is Next?
According to the Intellectual Property (IP) and the U.S. Economy: Third edition report of the United States Patent and Trademark Office (USPTO) the companies that intensively use Intellectual Property services (“IP-Intensive Industries") accounted for 41% of domestic economic activity within the United States in 2019. Moreover, the companies that protect their intellectual property generate higher earning wages and benefits than the “Non-IP Intensive” industries. Additionally, the “Exports and Imports by U.S. IP-intensive Industries” economic note of the USPTO indicates that 18 out of the 20 leading exporting industries were discovered to extensively employ intellectual property, highlighting how protecting your innovation not only enhances business prospects domestically but also on a global scale.
These statistics from the USPTO indicate that startups with an IP-Intensive policy increase exponentially their sales figures and potentially attract high-value acquisition offers or investment opportunities for further growth.
The potential gains from innovation are too valuable to risk losing. Thus, protecting their intellectual property (IP) is a fundamental tool for the healthy development of a startup. When startups protect their innovations with a patent, they are granted with the right to prevent others from engaging in activities such as manufacturing, utilizing, presenting for purchase, or distributing the said innovation. This exclusive right, granted by the patent, serves as a protective shield against any unauthorized replication or exploitation of the invention. By acquiring a patent, inventors empower themselves to maintain control over their creations, ensuring that they alone obtain the benefits of the innovation.
Startups that engage in the research and development of innovative products, they utilize vital resources that are crucial for securing the longevity and success of their company. It is inadmissible for startups to have their hard work exploited by another entity that is benefitting from it.
If you are an inventor, creator, or brand owner, seeking guidance on developing and protecting your intellectual property, we invite you to contact us. Our holistic focus in the innovation process aims to optimize the value of growth strategies.
Sources:
Business Innovation Statistics and Indicators - OECD. Accessed July 14, 2023. https://www.oecd.org/innovation/inno/inno-stats.htm.
Toole, Andrew A., Richard D. Miller, and Nicholas Rada. “Intellectual Property and the U.S. Economy: Third Edition.” United States Patent and Trademark Office. Accessed July 14, 2023. https://www.uspto.gov/sites/default/files/documents/uspto-ip-us-economy-third-edition.pdf.