Hasta La Ideas

The designers at Orange22 landed a multi-million-dollar licensing deal for its Grid-It™ elastic storage technology, which is now in over 200 different products.

This is the first in a series of columns on product licensing for product designers.

Product Design students and recent graduates from across the country contact me for career advice. At some point, the conversation inevitably turns to entrepreneurialism. When I float the possibility of doing some product licensing, I have always gotten the same response: “What’s that?”

After explaining that it’s when you design a product, let someone else make and sell it, typically in exchange for royalties, I get: “Oh, yeah, of course.” Then there is a pause followed by: “So…how do you do that?”

Despite design education’s predicament of ever-expanding content areas within an already distended discipline, this seems to be a missed opportunity. But it’s certainly not a new omission. I was never exposed to product licensing as a design student, nor had any other designer that I have known over the past 20 years. Design education has basically ignored it. In the Comments section below, I welcome readers’ examples to the contrary (I do know of some recent guests/lectures at Art Center in Pasadena). And as a full-time educator for the last 7 years, I am also culpable; neither of the institutions where I have taught has dealt with the topic. That is until this fall when I will run a dedicated course on product licensing specifically for product designers at the University of Illinois at Chicago.

ABC’s television show, Shark Tank, mostly follows the venture model. The Food Network’s, Invention Hunters, follows the licensing model.

Usually during the last semester of the senior year, design students take a “professional practice” class to ready them for what lies beyond. These courses involve developing portfolios, visiting local design firms, and having design-related professionals come lecture. Sometimes design entrepreneurship is taught, but from the perspective of going into business yourself (venturing). Most design students and young professionals are not aware that there are two fundamental modes of entrepreneurial practice—venturing and licensing. Those who watch the television shows, Shark Tank or Invention Hunters may have a leg up, as the bleak economy has sparked the popular imagination.

The tragedy of education’s licensing lacuna is that the business world has entered an era of “open innovation.” Over the last decade, companies have realized that they do not have a monopoly on the best ideas, and/or that it is really expensive to keep research and development teams in house. Overcoming their hubris, laziness, ignorance or risk-aversion, manufacturers/distributors are increasingly welcoming new product ideas from individuals outside of their corporate walls. For example, since 2008 over half of Procter & Gamble’s new product offerings have come from outside the company. A powerful, new opportunity awaits independent product designers.

You may be thinking, “This is nothing new. Designers have been getting royalties from companies since the mid-20th century!” Certainly this is true, but there are some key distinctions. Early on, designers often received royalties in addition to work-for-hire design fees. As such, they were really consultants, and the royalty was a way of sharing the risk between designer and manufacturer especially when the start-up costs were high. Also, these designers were of some repute and the companies went looking for them.

Another common method, still today, is for less-well-known designers, to pitch their capabilities to a company in hopes of receiving a project brief. If successful, they are tasked with designing products that the company is already looking to produce—not necessarily a new idea or direction from the designer. And increasingly these briefs are done on speculation (no fee, just royalties if the idea makes it to market) because of an increasing supply of capable designers. So, yes, royalties have long been a means of recompense, but open innovation makes this more accessible because you do not have to have a big design name—or even a portfolio. And you don’t need to try and schmooze your way to a brief (but it still is fun to go to Milan Design Week anyway).

Based on his award-winning Endo magnets, Scott Amron licensed his idea to OXO

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