Take a risk on intellect

The true worth of intellectual capital can only be realised in a big way if it is turned into a commercially viable product. You may use your super-brains to provide bespoke solutions; and while the value of those solutions may be intrinsic, their profitability can only be realised if they can be duplicated, packaged and sold to an extensive customer base.

Don`t rush it. Draw up a business plan, research your market and don`t be afraid to spend money on the research.

The first step to maximise intellectual capital, therefore, is to identify a market with a big enough need for a particular solution. The market is by no means saturated with niche applications and there are many opportunities waiting to be exploited. Similarly, it would be inadvisable to tackle a market where the larger companies provide solutions, such as operating systems and databases, typically to a broad market, which is why Ixchange stays out of these markets.

Don`t rush it. Draw up a business plan, research your market and don`t be afraid to spend money on the research: it`s probably the most important investment. It may be a minuscule expense in the light of a failed investment. Show clearly how the project will be funded. Don`t believe that it can be achieved on a shoestring -- cutting corners has never resulted in a commercially viable product.

Make sure the application you have decided on has universal appeal, not only in terms of volume of demand, but also exportability. Ensure the systems conform to international standards, or can be easily tweaked to suit the needs of other countries.

Once you have decided on your direction, remain focused and devote all your energy to achieving your goal. It reduces the risk significantly by increasing your chances of bringing a product to market faster. Don`t be tempted to dabble in other solutions that do not fit in with your goal. You do, however, need to remain flexible to the process of dynamic feedback/research that has to be incorporated into the design continually in parallel.

The question commonly asked is "how long does it take for a product to take off in the market?" The answer, in the Ixchange experience, is around three years. During that period one has to campaign to create awareness for the product, educate the market, establish an appropriate distribution channel, and settle on branding and pricing. After that you should be pretty certain as to the success or failure of the product, particularly if you`ve been modifying the blueprint as new information arrives: keeping the business plan/blueprint up-to-date as a dynamic document. Should the product prove successful, you have successfully entered the realm of leveraged intellectual capital.

Despite the risks, the benefits of selling intellectual capital products are manifold:

• Every application of intellectual capital always creates at least three or four additional product opportunities. In this way the demand for intellectual capital continues.
• The cost of developing a successful product is relatively low, but frightening if you get it wrong. Software products are regarded as high-ticket items, and the more products emanating from an intellectual source, the lower the costs and higher the margins. In this industry, one can double earnings with only a 30% to 40% increase in turnover. The major cost rests in marketing, as no product sells itself.
• One of the biggest pluses is control. When you own it yourself, you have to report to nobody except your stakeholders. You decide the destiny of the product and business, who you choose as partners, where you operate and how you operate. This may be a huge risk, but then the reward is also huge.
• Because you are the owner of your product and the means of marketing, you can respond to market demands a lot quicker than resellers, who have to wait for the next version to be released.
• To effect simple changes to a product, you do not need to spend large amounts of money on changing the infrastructure, as you would in a classic manufacturing environment. Intellectual capital has a universal application in adapting to different market needs.
• Export potential is huge. Your product is unique, it fills a distinct niche and the world is waiting for it!
• As a small operation, if you have the intellectual capital you can compete more easily with a bigger operation. There are many examples of how "upstarts" in the industry (such as Microsoft) eventually make it big.
• The cost of distribution is minimal. Software can be distributed on a disk or over the Internet. Whether distributing locally or internationally, the difference in distribution cost is negligible.
• Similarly, the cost of duplication (the business multiplier) is also relatively insignificant.

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