Strategic Alliance - The Underused Option

You are an entrepreneurial inventor with marvelous ideas in your area of expertise. The ability to create models, prototypes and concepts flows easily from your fertile brain. Nevertheless, all you have to show for your creative efforts is a garage full of dead end stuff, despite all of your efforts.

Many creative people have an area of knowledge in which they excel. They are in their comfort zone there and can appear to be a master of this precise universe. However, taken just a bit outside the protective lines of this tight little planet, they are lost souls. They can not communicate their brilliance, demonstrate their value and commercialize their creativity.

This is all too often a loss for the economy and society at large. A great invention that does not arrive in a timely fashion to the marketplace is a huge loss on many levels. Innovation is the juice of life for a vibrant economy. To be deprived of any source of ingenuity, no matter the reason, is to limit the range of possibility so vital for discovering big, new ideas.

A relatively little used option, for inventors and entrepreneurs, with limited ability to fund or license their product, is the Strategic Alliance. A Strategic Alliance enables a product, invention or service to become absorbed within the structure of a going business. The business handles all aspects of production, sales, marketing and finance as if the item was invented in house. In return, the inventor receives an income stream for a defined share of the profits generated by the product, a consulting agreement or employment working in his area of expertise on the project.

Many successful Strategic Alliances occur when an inventor, recognizing his areas of weakness, is knowledgeable about industry conditions, patterns and networks within this universe. Software writers, engineers, chemists and technicians often utilize this narrow gauge form of networking. It is a strategy available to any inventor having specific industry experience with application to their novel product.

The Strategic Alliance approach minimizes the need to approach strangers from outside your area of expertise. You know your field, you know the players (good and bad), you know the industry trends and you, better than anyone, know the innovations craved within this area of business. Familiarity with these factors gives the creative mind a leg up in pursuing an alliance that will enable a successful commercialization of their invention. Many people are immensely more confident when speaking the language of their trade than communicating in any other arena. Take advantage of this inside baseball edge!

The successful Strategic Alliance usually occurs much quicker than funding or licensing. The parties to the alliance, typically coming from the same business category, communicate in terms that are direct, and short circuit the usual learning curve required when negotiating with outside, less than knowledgeable investors or bankers.

An added benefit to the partners is the minimization of investment funds required to ramp up a new project. The business side of the alliance usually has specific experience in the product category. Most, or all, of the infrastructure needed for successfully marketing the invention is already in-house. From secretarial help, to warehousing, to manufacture, to finance, this is a going business with a complete set of assets. The lead-time from agreement to actual shipment of the item is often greatly reduced.

Strategic Alliance can be a win/win for both parties, and in my experience is usually the result offering the best outcome for the acquirer of rights and the inventor when they come from the same business category. The shoe fits well here for both parties.

It is important for the creative, but inexperienced, inventor to seek professional assistance when negotiating terms and conditions of the Strategic Alliance Agreement. The excitement of making a deal, and working with people from within their specific industry, should not get in the way of prudence. Contracts are often complex, and it is important to circumvent disagreements later, so clearly define each parties full range of obligations and conveyance.