Most companies are always looking for opportunities to grow their product portfolios, move into new markets and make a significant impact on business. Whether transformative or expansionary, the key questions are: How do you focus your search? Where should you look?
While new and/or disruptive technologies can give you a competitive advantage, other reasons to go outside include market access (customer base, distribution, brand, etc.), competencies (technical, marketing, business) and funding –as well as ideas related to serviceability, sustainability, and other attributes. Increasingly, companies are exploring open innovation partnerships in emerging markets such as China and India where growth opportunities are greater.
Regardless, the most important driver is customer need. Ideally you will match a new technology or idea to a large, unmet and compelling need. (Remember that invention is not the same as innovation.)
At a 2009 Management Roundtable Tech Scouting Workshop attended by Innography, workshop leader Jay Paap advised companies pursuing open innovation to: 1
- Seek problems, not solutions – identify the gap(s), don’t presume the answers
- Think generically
- Look everywhere
- Manage internal experts
- Keep options open
A great example discussed at this workshop was a cosmetic company looking to create a makeup for women to make wrinkles disappear, discovered that the material used to coat stealth fighters worked by causing diffusion making them invisible to radar. On further exploration, they discovered that the same principle worked for diffusing reflected light, essentially removing shadows from under wrinkles making them “disappear.” A similar case involved a pet products company that was seeking to identify a non-clay cat litter product. They discovered a material used in burn bandages that had all of the right properties—highly absorbent, odor controlling, anti-microbial, light weight, etc. Further investigation showed that it could be pelletized and made a perfect material for a lighter weight, more absorbent cat litter which is now on the market.
The higher the potential value of an innovation, the further and deeper you may need to look. You must keep an open mind and be willing to look at unconventional sources. The search should be both internal and external, span different industries and geographies, and be multi-disciplinary. At this stage, the goal is to identify as many viable candidates as possible. The next stage will be to effectively screen to narrow the list to the best fit.
The spectrum of potential partners and resources is vast, the choices are numerous: brokers and intermediaries, industry supplier networks, universities, government labs, science parks, entrepreneurs, industry associations, conferences/trade shows, online databases and more. It is important to cultivate multiple networks and hunting grounds – your goals and corporate culture will fit better with some more than others.
Evaluating and Screening Opportunities
While many opportunities seem promising, ultimately not all can or should be pursued. Successful scouting programs rely upon rigorous, clear processes and criteria for evaluating submissions and leads.
Some industries and applications have more opportunities to screen than others; for example, consumer goods companies such as Kraft, General Mills, P&G, etc., receive thousands of submissions through their websites and other channels – other highly technical industries and applications may only solicit a handful.
In either case, it is important to know what you are looking for. Breakthrough ideas come in many forms whereas specific technical solutions are more straightforward. You may be evaluating emerging or disruptive technologies, product concepts, new markets, prospective partners, more.
Basic Screening Criteria
Here are some criteria that can apply to every screening process:
- Uniqueness/competitiveness: Is this idea/technology original and well-differentiated? How easy would it be for competitors to copy or work around?
- Need fulfillment: Does it meet an identified customer need or gap?
- Feasibility: Do you have the capability to develop and commercialize it? Is it cost-effective? What is the current level of development?
- Impact: If the idea is realized, how will it affect your organization?
- Scalability: Can a technology or business model succeed in different markets or respond positively to repeated demand cycles? Are incremental costs and demands on the organization likely to decrease over time and volume?
- Strategic Fit: Does the idea/technology/partner mesh with corporate direction, expertise and culture?
Or boiled down even more simply, is the idea/technology applicable (technology fit), is it available (partnering fit), affordable (economic fit). For example, Corning uses internal expert groups to conduct “ideation,” a process that considers market dynamics, hypothetical value and whether a problem definition fits within Corning’s business strategy. They winnow hundreds of white papers down to a key few to be considered for funding. The preliminary assessment takes 4-6 weeks.4
In the next post, we’ll be discussing models for Open Innovation. For more information, please visit our resources section to view other open innovation materials.