An interesting new concept is cropping up these days, according to the Wall Street Journal. In a nutshell: large consumer product companies are looking for the inventive ideas many small business owners and entrepreneurs have–in order to gain an edge. Let's face it: in increasingly competitive, slowing markets where a continual pipeline of new products is called for, this is an interesting proposition. In exchange: a piece of the action.


In a recent WSJ article, "My Brain, Your Brawn," Kraft is cited for implementing a program that seeks out innovative ideas from small business people. Steve Goers, VP for open innovation and investment at Kraft shrewdly pointed out: "The world has gotten much smaller, and innovation is happening at small businesses."
The trade-off: entrepreneurs get exposure and distribution for their product ideas. . ."usually in return for handing over autonomy, naming rights and marketing control, and a good chunk of the profits". Still, for most cash-strapped entrepreneurs and idea-hungry CPG companies, this could be a win-win.
According to Kraft, for example, various kinds of agreements can be struck, from partnerships to licensing agreements to joint developments. Of course the company is most interested in working with entrepreneurs whose ideas are patented or protected as proprietary.
With the marketing and testing capabilities of companies like Kraft, as well as their deep pockets, products can be slightly amended so that they have a higher percentage chance of success in the marketplace. These are assets the average entrepreneur cannot afford.
And this idea is catching on. Procter & Gamble is soliciting ideas from outside sources. General Mills launched its Worldwide Innovation Network in early 2007 to call for inventive new ideas from entrepreneurs, as well. According to General Mills Senior VP for innovation, technology and quality, Peter Erickson, 300% more ideas have come into General Mills since it launched this initiative.
According to consultant Cheryl Perkins, who helps entrepreneurs in these kinds of ventures with large CPG companies, these inventors should seek patents for their ideas, or at the very least, trademarks for their own protection. It also signals to large companies that "you have an intellectual asset that's worth buying from you."
Questions:
*
What do you think of the idea of large companies soliciting ideas from entrepreneurs and small businesses?
*
What are the advantages/disadvantages for both sides?
*
Would you consider approaching a large company if you had a great idea you couldn't finance, as long as you secured patent protection?
*
If not, what would you do to realize your dream idea?
I'd love to hear from you.