Personal Finance

Licensing your innovation for key source of revenue

There is a need to mentor innovators in
There is a need to mentor innovators in managing their creations. FILE PHOTO | NMG 

Organisations that have vibrant research and development (R&D) departments have been found to yield higher returns than those without. Indeed a lot of organisations are investing heavily in R&D. In today’s business world, companies that constantly innovate and rebrand to attain a competitive edge over those that do not.

Innovation is a key resource in an organisation, which should be well managed. Some innovations can be considered to be intangible assets of your organisations and therefore ought to be valued and reported in the financial statements. While it is difficult to value innovation, there are principles upon which the same can be professionally valued for purposes of reporting. It is, therefore, clear that innovation increases the value of your organisation.

Where possible, innovation ought to be protected through the proper intellectual property rights accruable to it. Legal protection of your innovation makes it easier to enforce against infringers, as you cannot sustain an infringement cause without protection.

The new Moveable Property Act recognises that assets such as intellectual property can be used as collateral for loans. There are a few financial institutions that lend against intellectual property rights as security.

It is important to have an innovation strategy. It is not enough to just innovate but your organisation should have a strategy on how best to manage its innovations. Intellectual property lawyers call this commercialisation. You need to consider how to earn revenue from your innovations.


From my past experience, I have concluded that a lot of innovations fail at this stage. While the innovation is new, novel and sound, it fails due to a lack of a strategy.

Some innovators do not have the proper business skills to come up with sound strategies for commercialisation.

Those who fall in this class, focus on the technical side ignoring the business aspect that will enable them to gain from innovations.

Such innovators should get a board to enable them to manage their innovations because if the whole concept of risk failing in the absence of a strategy.

There is nothing wrong with relinquishing a bit of power and control over your innovation in exchange for expertise and funding.

A few innovators are willing to pursue this due to the misconception that they may end up losing their innovation. This is a misrepresentation because, with the right board and experts, your innovation can go a long way.

Global giants, especially in the technology field, took this route — the innovator was willing to put in place a board that constituted his financiers and other experts.

While they managed the technical side of the innovation, the rest of the team handled the strategy. In the end, such organisations have been very successful.

Innovation strategies are wide. They can include selling your innovation to third parties to raise funding. There are organisations that only engage in research in diverse areas as the main source of revenue.

Such research is then sold to third parties. In some places like the US, there are people who innovate and file several patents for sale to third parties. Innovations may be licensed.

This is where you maintain ownership of the innovation but allow a third party to use it in exchange for revenues. There are several commercialisation strategies.

There is a need to mentor innovators in managing their creations.