Proof Patents Directly Relate to Profits

I am often asked for some real world examples showing where patents really make a difference in a companyÕs upward trajectory. 

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Forbes recently wrote about the rebirth of Columbia Sportswear, an outerwear brand we are all likely seeing daily during these winter months. 

The company started in 1938 and by the early 2000s was a more than recognized brand.However, Columbia became recognized for being "that brand" that makes inexpensive fleeces for big name retailers. And at the time, it was likely appealing to Columbia.  In 2004, the company had sales of $1.1 billion, with operating margins of 19%.  That had to be making investors happy.

However, in a very short period of time, Columbia started losing.  They were not providing anything different and meaningful; anyone could make the same fleeces.  Essentially, Columbia began providing merely a commodity, and the numbers started to show it.

In 2007, the ColumbiaÕs operating margins dropped to 7%.

Rather than merely continuing to go down the commodity downward spiral, ColumbiaÕs CEO made a decision - Columbia would develop and deliver products that would be meaningful to the consumer and help distinguish the brand.  By doing so, it would reinvigorate the brand, the employees who would enjoy their work even more, and the investors who would get a greater ROI.

So, what did they actually do?

They internally created a process for developing and delivering new and different products; they created a new internal culture and raised the expectations of themselves.  And within just a handful of years, Columbia earned over 200 patents protecting its new products around the world.  In contrast, between 1938 and 2007, Columbia owned only a single patent. 

And at the same time as protecting proving the meaningful differences of its new products, ColumbiaÕs sales reached $2.1 billion with operating margins moving back upward to 10% for the first time in 7 years. 

Clearly they are moving away from being merely a commodity provider, and the proof is in the numbers.

How is your organization making concerted steps to ensure it is not becoming another commodity?  And as a leader, are you taking the steps to create a culture of innovation?

If you happen to be at the Consumer Electronics Show (CES2016) in Vegas stop by our booth 80661 Sands and say, "Hi," or set up a time to chat.

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