Tech Sourcing: A Practice You Can’t Afford to Ignore
Technology sourcing is a practice critical to your business and ignoring it can cost you more than you might imagine.
First, it is critical to understand the fact that the accumulation of technologies is necessary to the growth of your business. Not only does this help build new revenue streams, but it can also help protect your current market position. In the former case, technology sourcing can enable you get to market faster. In the latter case, you are building defensive positions against competitors and potential litigants. In either case, you need to be aware of what is in your portfolio and what might be missing.
The practice begins with identifying needed technologies, which means understanding your patents in the context of your business. If you have technology that serves one market, you might be able to extend or deepen your market reach with additional complementary technologies. This enables your IP strategy to drive your business strategy by helping you to make better expansion decisions.
When you identify a needed technology, the next step is to understand the best way to acquire it. You can either build the technology or acquire it from somewhere else. The time horizon is a significant factor in this decision process. If the opportunity is near term, obtaining the technology through M&A, partnerships or licensing is probably the better path. If the time horizon isn’t critical, you can establish core technology platforms to help protect future market landscapes. Effectively, two questions must be answered:
- What does the landscape look like?
- What is the likely time horizon to commercial viability?
You should assess the landscape to understand who has technology related to the identified need, and determine whether it is suitable to meet that need. There are two ways to accomplish this objective: either perform searches for existing patents or solicit feedback from open innovation networks to find opportunities.
Patent Search can yield immediate, actionable results. Looking for patents with similar classifications and performing patent citation mining are two good places to start. Using Innography, for example, you can quickly view patents with similar technologies and then perform a detailed citation analysis (like a social network algorithm) on patents you have found. By looking at which patents cite those in your initial search and which patents they cite, you can find more relevant patents that might not seem related in your initial classification search.
Open innovation networks represent a better long term investment. They are similar to forums that enable you to source new technologies from outside your company, which is very useful. You can’t possibly develop all of the technology you need internally because no company ever has enough resources to do that.
Procter & Gamble provides a good example of bringing open innovation to bear as a resource for technology sourcing. The company extended its innovation process to include 1.5 million people outside the company. They devoted a significant amount of time to defining the external assets that could support its various science and business areas and then set about developing, in different regions of the world, assets and hubs that developers and strategists could link into. This effort, by default, created a network of individuals who could contact others in different parts of the world.
However, the force multiplier these networks represent is only one advantage. An even more important advantage is being able to monitor technology investments by other members in the network. Monitoring these investments can give you a better idea of how to direct your own technology investment strategy both internally and externally.
You can then couple data from identified technologies with market data and factor in respective time horizons. These types of technology sourcing practices enable reasoned decisions about which technologies to accumulate, in what order, and an optimal ratio of internally developed and externally acquired technologies. Ultimately, this enables you to translate that advantage to more business opportunities and a more sound business strategy.