In the 1980s, James Dyson developed revolutionary, bagless, cyclonic vacuum technology. He attempted to license it to vacuum manufacturers, but the companies rejected his ideas. The technology was indeed better but this product would remove the recurring revenues from bag and filter sales.
Dyson didn’t give up and manufactured his own vacuum in 1993, fighting off several patent infringement lawsuits along the way. Subsequently, Dyson’s business portfolio grew by continuing to manufacture superior products from patented IP. The company expanded into hand dryers, fans, air purifiers, hair dryers, robot vacuums, and even electric cars. Each product is the result of a leap in technology (with patented IP).
Invest Heavily in R&D
Dyson’s ambition is to produce the best in class or nothing in each product range it enters. The company reinvests approximately 20% of its earnings into research and development.
Dyson protects its product innovations with many patents. For the development of the Supersonic Hair Dryer, Dyson spent $71 million and filed 100 patent applications. The company reportedly spends over $6.5 million per year on patent litigation.
Differentiate with the Best Products and Services
Dyson uses its IP to create the best product within each category it competes. Its vacuums, for instance, include technologies that have never been incorporated into its competitors’ products.
Sell at a Premium
Dyson sells its home appliances at a premium price point. With a $700 price tag for its upright vacuum, Dyson is the most expensive vacuum on the market, with the cheapest alternative selling for $40.
Dyson developed a strong brand by transforming the sleepy home appliance market into one filled with cutting edge technology and sleek industrial design. Dyson has often been dubbed the “Apple of home appliances,” as the company strives for perfection before releasing a product.
In 2012 Tesla envisions a large untapped market (high-end electric vehicles) where nobody else sees one. With the Model S they create the right value proposition to unlock the opportunity.
In 1956, IKEA introduces “flatpacking” and turns customers into a free workforce that takes over part of the traditional furniture manufacturing value chain. Customers buy furniture in pieces in stores and assemble it in a DiY fashion at home.