Customers attentions spans are growing shorter. They need variety. Increasing their product portfolio, is a key growth source for most companies. However, developing a new product has it’s own inherent risks. Yet companies still need to come up with new innovations to keep pace with rapidly changing consumer tastes and technology.
Alan G. Lafley, CEO of Procter & Gamble, an industry leader in technology scouting and open innovation, has often been quoted as saying “Half the company’s ideas must come from the outside”. So, how does one effectively manage to garner innovation from the outside?
Technology Scouting Holds the Key
With reduced resources, time and expertise, companies can’t solely rely on internal idea generation. They are increasingly adopting open innovation in their new product development strategy. Businesses are trying out many ways – acquiring companies, getting patents or licenses to produce someone else’s product, and even motivating customers to come up with new ideas!
This kind of approach to finding technology solutions externally is called technology scouting. It’s a step-by-step approach that organizations take to identify and access technologies. Technology scouting also includes getting the right technical expertise onboard to derive value from these technologies.
Scouting helps to identify intellectual property and commercialize it by means of acquisitions, licenses, partnerships, contests or crowdsourcing etc. to drive home innovation faster. The process aids open innovation by opening up the challenge of innovation to a larger technical community, comprising of start-ups, SMEs or Universities. This benefits the organization by accelerating the innovation process. Technology scouting has increasingly become important for companies to analyze their capabilities and take critical business decisions.
Dyer, Gregersen and Christensen, stated in their book The Innovator’s DNA that good innovators intentionally seek out as many external stimuli as possible. Innovation is deliberate. Breakthroughs occur when different perspectives collide. Let’s take a look at how to use technology scouting effectively to discover potential opportunities.
Technology Scouting Best Practices
Cisco, the leading manufacturer of networking equipment, in its efforts to compete against Lucent, adopted a systematic technology scouting process called The Cisco Technology Radar. It clubbed some of these best practices from across industries to identify and acquire new technologies:
Align strategy with business
The scouting efforts must be in-line with customer requirements. It helps to have scouts from across functions like marketing as well as technical departments, come together to find commercially viable technologies.
Clear search criteria and maintaining a database
Scouting involves finding opportunities, noting down details of technology performance, patents and ownership etc., and deciding on a filtering capability. Further, all necessary information is maintained in a database to ensure that the involved team members do not duplicate efforts or miss an opportunity. Scouts must then review the database and apply the screening criteria to shortlist attractive opportunities. One can expect this to be around 20% of the opportunities that were initially found.
Involve all stakeholders in the decision-making process
All short-listed technologies are then analyzed thoroughly by experts from across all functional groups like marketing, finance, production etc. to conclude whether the technology fits the business needs. Involving all stakeholders helps in getting insights on the market potential, production costs, and other such critical factors. You would also require a complete understanding of things like ownership and existing licenses, technology characteristics and IP situation. Any other information that’s necessary but unavailable in the public domain must be acquired from the respective technology owners.
Capture technology quickly
Once you’ve found a technology that suits your criteria, it’s essential to capture it quickly. Delays in doing so could lead to missed marketing opportunities or unnecessary competition.
Structured technology scouting can be better managed with the help of software to collate, analyse and disseminate information across the parties involved in decision-making. Collaboration between scouts becomes easier and decision-makers can track the scouting activities thereby making them better prepared for quick decisions.
Technology Scouting a Complement to Open Innovation
Technology scouting has been successfully adopted by industry leaders like Procter & Gamble, Unilever, GlaxoSmithKline Consumer Healthcare etc. to herald new innovations. They have found that scouting not only helps boost the productivity of internal R&D resources but also helps reduce the employee resistance to external ideas, since they have been involved with the selection.
Companies that are leveraging open innovation strategies are rapidly finding out that technology scouting is a means to innovate better and faster.Technology scouting complements open innovation and helps manage the risks and uncertainties in new product development more efficiently.
Technology scouting and open innovation go hand in hand. And organizations are rapidly combining the two to increase their success rates in innovating for the future. Are you?