To find out if the field is active the number of patents published per year is plotted as shown in the “Investment Velocities” figure. This is referred to as investment velocity because the work done at the Industrial Research Institute found that issued US patents correspond to approximately $1 million spent in new business development efforts. The metric is very rough but typically for companies in the same industry and market space the number of patents correlate well to the relative R&D and business development investment dollars spent.
In this example study, Competitor A’s patent velocity has been sporadic. They sustained a moderate level of activity for their size and industry during the mid-1970’s to late 1980’s. Through the 1990’s however their activity increased again. On the other hand, Competitor C has been around for several decades but there has been a sudden and large jump in recent activity. What can be concluded from this information is that for both competitors the significant change in activity indicates a potential change in management posture in the mid- to late 1990’s towards investment in this field. The sudden and large jump in activity is a new behavior and likely the result of corporate initiatives in a new hot business area that has spread across competitors. Note that for Competitor A the bursts of activity are typically associated with market problems or product upgrades that required new R&D to solve.