The Right Time Horizon for Technology Development
Patents are the currency of technology and profits are the currency of business. And as it turns out, if you focus on creating technology you’ll get technology (and patents) and if you focus on profits you’ll get profits. But if no one buys your technology (in the form of the products or services that use it), you’ll go out of business. And if you focus exclusively on profits you won’t create technology and you’ll go out of business. I’m not sure which path is faster or more dangerous, but I don’t think it matters because either way you’re out of business.
It’s easy to measure the number of patents and easier to measure profits. But there’s a problem. Not all patents (technologies) are equal and not all profits are equal. You can have a stockpile of low-level patents that make small improvements to existing products/services and you can have a stockpile of profits generated by short-term business practices, both of which are far less valuable than they appear. If you measure the number of patents without evaluating the level of inventiveness, you’re running your business without a true understanding of how things really are. And if you’re looking at the pile of profits without evaluating the long-term viability of the engine that created them you’re likely living beyond your means.
In both cases, it’s important to be aware of your time horizon. You can create incremental technologies that create short term wins and consume all your resource so you can’t work on the longer-term technologies that reinvent your industry. And you can implement business practices that eliminate costs and squeeze customers for next-quarter sales at the expense of building trust-based engines of growth. It’s all about opportunity cost.
It’s easy to develop technologies and implement business processes for the short term. And it’s equally easy to invest in the long term at the expense of today’s bottom line and payroll. The trick is to balance short against long.
And for patents, to achieve the right balance rate your patents on the level of inventiveness.
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