The Innovation Factor: Inside the Idea Mill

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Rock followed his curiosity to the Minneapolis Public Library, where he took a course on searching patents and then studied the subject on his own. The more he understood, the more he worried that Augustine Medical's portfolio was becoming too unwieldy. The company risked filing duplicate claims or repeating terminology that created vulnerability in a line of patents. If a claim term were construed narrowly, all inventions described using that term might suffer, as happened with some of the Bair Hugger patents. So Rock put aside his drills and hammers, sat down at a computer, and graphically mapped the company's patents and patent applications. The resulting family tree -- which over the years has become a small orchard of family trees -- in combination with a patent database, meticulously lays out every iteration of every technological innovation Augustine has ever patented, as well as its antecedents and descendants. "If an R&D person comes to me and says, 'Here's an idea. I have to know whether we've already [disclosed this in a patent application] and how it relates to what we're doing now,' I can show them in the model where it would fit," says Rock. "It's also helpful as we start to think about licensing, so companies interested in a technology can easily see all the patents we have related to it."

Consumed by the growing demands of the business, Augustine gratefully ceded patent-wrangling duties to Rock, naming him director of intellectual property in 1998. Rock is now the go-to guy for staffers who think they may be onto something and need to know if someone else was onto it first. Engineers are adept at explaining their ideas and often show up in Rock's office armed with charts and test results. But others -- particularly those in sales and marketing, whom Augustine has urged to think like inventors -- may have trouble describing just what they have in mind.

In those cases Rock plays innovation midwife, helping tyros flesh out their ideas enough so that he can either research and file patents on them or point their creative thinking in a more fruitful direction. "Someone says they have an idea for a better connection on our blower [used to inflate the surgical blankets]," says Rock. "And I'll get them to step back by asking 'What made you start thinking about this?' And they'll say, 'I heard one of the clinicians complaining about the noise.' So it turns out it's really a noise problem they're trying to solve. And then I ask them, 'Are there alternatives? If you didn't use this metal foil, what else could you use?' So their idea starts to blossom into a more well-rounded picture."

Rock also plays a competitive-intelligence role. He tracks competitors and potential partners by scanning the titles of as many as 400 U.S. and 350 international patents every week and reading the full text of a dozen or so. Those documents alert Rock to technologies to steer clear of, technologies that might be worth licensing, and technologies whose mere existence makes possible a new set of innovations for Augustine Medical. In addition, he'll come to the aid of his former R&D colleagues by searching patents from unrelated industries for nonobvious solutions to knotty problems. Recently, for example, a company scientist was talking to Rock about ways to get heat into deep tissues. Rock looked up patents relating to microscopes because "optical products and microscopes manipulate waves, and heat is a waveform like light," he explains. "Patents are an amazing teaching tool."

"John makes sure our patents are covering the waterfront the way we'd like them to," says Augustine. "It's a very complicated game to play. You can use outside patent attorneys and experts, but for us it's too important."

Prospects

Such sophisticated husbanding of intellectual property, Augustine hopes, will reflect well on his own leadership if the company goes public, as he expects it will in 12 to 24 months. He is aware that scientist and physician founders often get the hook if their management skills don't equal their research feats. But Augustine has studied business diligently on his own -- he has read more than 100 books on the subject -- and over 15 years has parlayed $5 million that he received from a group of disparate investors into a $64-million company. "After the IPO, I'll stay on as chairman, and not a wallflower chairman," he says. "I don't want to spend my days doing investor relations. If I give up the CEO job, I'll become chief technology officer. The innovation piece is what I enjoy."

It's also where he's most needed. One potential problem for Augustine Medical is its lack of an intellectual-succession plan. Augustine is the only one on staff with both a medical background and experience in R&D: the company's big ideas, to date, tackle bugbears from his years behind the mask. "You do need ideas, and in this case the ideas come from Scott," says Arthur Kydd, president of St. Croix Management Group, in Minneapolis, and one of Augustine Medical's earliest investors. "One of the criticisms I've pushed on him over the years is the Not Invented Here syndrome, and he has started to look elsewhere for ideas and bring them in. But you're not going to find many people out there who are as innovative as Scott is."

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Leigh Buchanan

Leigh Buchanan is an editor at large for Inc. Magazine. A former editor at Harvard Business Review and founding editor of WebMaster magazine, she writes regular columns on leadership and workplace culture, and she contributes Inc.'s capsule book reviews, "A Skimmer's Guide to the Latest Business Books."

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