Invention
In 1989, a young English computer scientist named Tim Berners-Lee was working at CERN (the European Organisation for Nuclear Research) in Switzerland.
Every time new data was generated, Berners-Lee knew it would take an excruciatingly long time for it to reach its destination - even if that location was just down the hall. He grew frustrated at the inefficient tools for collaborating across different computer systems. Rather than throwing up his hands in despair, he put his thinking cap on.
The thinking cap worked. Berners-Lee came up with a "hypertext" system that would allow documents to be linked together, letting people navigate between related pieces of information seamlessly. On March 12, 1989, he submitted a proposal for the idea titled "Information Management: A Proposal" to his boss at CERN, which outlined the concept of what would later become known as the internet.
By 1990, Berners-Lee developed the first web browser called "WorldWideWeb" (later renamed "Nexus") and the first web server software. The technology was clunky, but it worked. His colleagues were using it often and uncovering bugs which were in turn ironed out. On 6 August, 1991, Berners-Lee shared the World Wide Web with the world, allowing people outside CERN to create websites for the first time.
Within a few years, the number of websites exploded as the internet evolved from a niche tool used by researchers into a global platform. Early adopters like Yahoo, Google, Amazon and eBay seized the opportunity to create entirely new services such as e-commerce, online search and social networking. The internet has since reshaped entire industries and revolutionised how we communicate and live.
As an idea, the internet wasn’t a guaranteed success. Sure, it seemed obvious in hindsight, but that’s true for any invention. A conference of factors needed to be in place for the internet to succeed. Subtracting just one of those variables could have led to CERN shelving the invention for another day. If that had happened, Berners-Lee’s idea would still have been an intangible asset, but a non-performing one – otherwise known as a liability.
Yet the idea was successful – enormously so. Although it’s a bit hard to quantify, it is possible to put a price tag on Berners-Lee’s invention. Bear in mind that the internet is in the “commons” – free to use – making it difficult to value at all. Nevertheless, people have tried to put a price on the internet.
For example, a handful of economists in 2017 calculated by looking at consumer surplus value (the difference between a person’s willingness to pay for something and the price they actually pay for it) that the internet may be worth $US8 trillion a year to the GDP – and that’s just in the US.
If that figure is correct, it would make the idea of the internet the most valuable invention of all time. Pretty impressive idea for a frustrated guy in the 1980s.
The world’s biggest invention shop
Think about it this way. The idea for the internet at one point existed only in a man’s head. After Berners-Lee made it real, that idea is now worth $US8 trillion.
There’s a lot of value in coming up with good ideas.
Some companies understand that ideas are important, but none more so than IBM (International Business Machines Corp.) IBM has been a trailblazer in technology for over a century. As of September 2021, IBM has filed over 100,000 patents, making it one of the top patent holders globally because it knows new ideas is the only way to survive.
From its earliest days, the company recognised the value of ideas as an intangible asset. IBM’s innovative spirit led to inventions like mainframe computers, magnetic storage, computer processors and others. These breakthroughs were achieved by nurturing a leadership philosophy that embraced open innovation with external partners and encouraging IBM staff to always be thinking of better ways.
IBM's dominance of innovation saw it capture a staggering 60-70% share of the global business computer market. However, it wasn’t all smooth running. While its market control waned over the years, IBM’s commitment to innovation has retained its position as the world’s biggest invention shop.
IBM takes ideas from genesis to commercialisation. In contrast, some companies do nothing but gather other people’s ideas – and then sit on them.
How valuable are your ideas?
I’m talking about patent squatters. No one likes these people. While they are an expected outcome of a patent system, that doesn’t make them any less hateable.
A notorious patent squatter is Intellectual Ventures (IV), based in Bellevue, Washington. Founded in 2000 by former Microsoft chief technology officer Nathan Myhrvold, the company's primary business model is acquiring patents and then licensing or enforcing them against other companies. It squats on tens of thousands of patents across various technology sectors.
Patent squatting, also known as patent assertion or patent trolling, is when a firm acquires a patent with no intention of developing products but rather to assert them against other companies for financial gain. Patent squatters often rely on the threat of litigation to extract licensing fees or settlements from other companies, even if the patents are not being used. Especially if they aren’t being used. You can see why no one likes them.
The way Intellectual Ventures operates has sparked plenty of debates about how patent trolls hurt innovation. Some argue they stifle innovation by creating legal uncertainty which saps resources that would otherwise go to R&D. On the other hand, patent squatters say they provide a way for inventors to monetise their inventions and unlock the value of their patents.
Many countries are reforming their laws to rein in patent trolls. Several countries, including the US, have already introduced reforms to strike a balance between protecting legitimate IP rights and preventing abusive patent litigation practices.
Here’s the thing, though: by some estimates, Intellectual Ventures turns over about $US290 million annually. That’s a lot of money. If a company can generate that much cash from sitting on people’s ideas and starting legal fights with real, productive businesses, then that proves how invention and innovation are amazingly valuable intangible assets.
If your company hasn’t come up with new ideas – or tweaks on existing ideas – then perhaps it’s about time to parcel some budget for R&D. You never know who might come up with an idea like the internet that could change the world.