Leaders of technology and innovation-driven companies always look to reinforce their position and capitalize on their existing assets. But in order to sustain a company’s growth, the R&D must be bolstered along with IP innovations. One potential pitfall for companies that rely on IP innovation and invention is overlooking the need to incentivize talent within the organization. 

More often than not, the Intellectual Property (IP) strategy is included in the overall strategy of tech-driven companies, but rarely does it get developed into an IP value chain. If your company plans to scale with time, a culture that encourages IP innovation and fosters talent must be created. To lay out key strategies for incentivizing IP innovation and inventorship in your organization, you need to consider certain factors.


Creating a Culture of Innovation

Most tech companies are aware of the long-term potential of their IP portfolio. Not only do innovations strengthen a company’s reserves, but they can also be positioned as a source of profit from companies who require the assets for their own operations. This can generate a positive impact on a company in two ways — a robust strategy of IP innovation solidifies a company’s value in front of investors and shareholders, and also transforms it into an attractive place to work for top talent looking to innovate and grow.  This results in a culture within the enterprise that promotes invention and expansion of the IP portfolio at a rapid speed. 

But cultivating an innovation-first environment and inspiring talent to push themselves requires expert managerial skills. While leaders often expect their employees to innovate happily and tirelessly for the IP portfolio of the company, employees are people and have complex motivations and morale independent of company expectations. The key then is to create a system that makes talent feel valued and rewards those who create the IP that can be commercialized to expand the market capitalization of the company. This, however, demands having a refined strategy in place, a strategy that incentivizes innovation within an organization to accelerate its growth.  


Financial Rewards

One way companies attempt to incentivize innovation is with financial rewards for the successful development of IP. As employees are hired (and are paid a wage) to innovate for the company, this practice might appear to be redundant for some. But most enterprises miss an opportunity right here. The focus should not be on stretching an employee’s capacities too thin, but on recognizing the extra yard being put in by the employee. Individuals engaged in the development of IP can become demoralized if they produce more than their peers, or if they see that the technologies that they have personally developed are used to further the company’s profitability and performance, but don’t receive any recognition for it. Everybody works for some form of profit, and by offering innovators a small share in the potential profit of IP they develop, companies can prove to them that their work is noticed and valued.

While many companies have found success with this strategy, it isn’t always straightforward. Financial rewards depend on the potential of the IP. The reward can be a fixed amount or a certain portion of net sales directly achieved with the invention, however, the latter is often hard to determine in real-time. Financial incentives can also be broken down by stages, with a small incentive given for producing invention disclosures, another larger incentive for those inventions which move forward as patent applications, and finally, the largest incentive given for when a patent is actually granted. This strategy helps promote a culture of innovation without wasting resources on unrealistic or unrelated inventions. 

However, vaguely worded and unclear provisions of a reward program can create confusion leading to entitlement or frustration in employees. This is counterproductive to the company’s IP development, so if you choose to offer financial rewards, they need to be fair, specific, and continually readdressed to make sure they are achieving the intended result.



Another strategy to incentivize innovation is peer recognition, because not all profits are financial. An employee can have a greater drive to reach a goal if social validation and peer recognition are involved. This is what economists call “psychic profits.” An employee is working for profits, but most employees are far more eager for satisfaction in their work and pride in their job than they are for purely monetary recompense. Though a plaque, certificate, or a celebratory dinner are often minor events for an enterprise, they go a long way in building trust and showing encouragement.

Innovators with a history of creating groundbreaking IP can also be encouraged with a timely promotion. Even though this doesn’t involve a direct financial reward, the gesture of promotion shows that a company takes invention seriously and is willing to place qualified individuals in positions of power and decision-making. 

When Google quietly stepped back its Founders Awards’ financial prizes in 2007, they didn’t simply offer less to employees of whom they expected more. They found a more efficient mixture of peer recognition and financial reward and have moved forward with that strategy since. Recognizing your employees’ achievements is something that every good manager should be doing in the first place, but formal recognition in front of peers and coworkers can be a way to incentivize the right kind of innovation that is particularly beneficial for company culture.


Innovating for the Future

There are many ways to encourage innovation within your company. Developing a culture of success is never a straight line, however, and no two companies are the same in their journey. If you want to know how to develop a solid strategy for fostering IP development and innovation in your workplace, or want to integrate a robust IP value chain, feel free to contact us at Dilworth IP, and together we can develop a strategy to encourage a brighter future for your IP portfolio and your company.


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This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. The opinions expressed in this article are those of the author only and are not necessarily shared by Dilworth IP, its other attorneys, agents, or staff, or its clients.