Smart technology scouting – Part 2

Finding "potentially interesting" technologies is easy. Finding great business opportunities is not.

by Jennifer Ernst, PARC - Technology scouting has been happening for many years. But as companies increasingly look outside for opportunities, it becomes even more important to have clear practices associated with each step of the process. One popular technology scouting framework to address this is "Want-Find-Get-Manage", which I've expanded below for the purpose of sharing advice.

THE WHY & THE WHAT: A refresher on how to define what you want

In part 1 of this post, I shared some advice for ways to define what you're looking for, and adding the crucial first step of defining why you're scouting at all.

Just a refresher: I believe that technology scouting mandates should be defined as part of a company's technical and product roadmaps. At that level, leaders can concretely say what they will invest in creating internally, what they want to get from partners, and where they want to place multiple bets as a risk-mitigation strategy.

THE WHO & THE WHERE: How do you find what you're looking for?

The amount of available technology has exploded. At conferences like TechConnect and World's Best Technologies (WBT), scouts can see hundreds to thousands of technologies in just a few days. Pharmaceutical companies' technology scouting offices are used to seeing several thousand submissions per year. One veteran technology scout from the aerospace and defense industry told me he wish he'd known, when he started years ago, "just how much technology is out there".

Finding "potentially interesting" technologies is easy. Finding great business opportunities is not.

There is an important difference between the role of a corporate venture group and that of the scouting organization:

  • A venture group is looking for a complete story — a relatively proven technology and a tested, validated market proposition of clear relevance to the strategic investor.
  • The technology scout that needs to see such a tidy bundle is missing the point. A technology scout can add more value to the company by seeing nascent opportunities than by only serving as a filter.

Here's why. Like many technology resources, as PARC develops its own technologies, we identify specific market opportunities that can be served by the new approaches. For example, we've invested in new forms of networking. We've identified distinct market opportunities, such as alleviating congestion on the telecom backhaul and improving in-home connectivity for IPTV. Once we identify these pain points and a way for our technology to address them, we will be talking to every major company in that space, as well as evaluating the spinout potential. If you're a telecom vendor hearing from us about a telecom opportunity, most likely your competitors are hearing from us too.

Compare this to a technology scout who "wants to hunt where my competitors don't," a phrase I heard recently from one of my potential clients. The opportunities and application spaces we can come up with together are going to be much more robust and differentiating than what either of us would have come up with on our own. More importantly, the scout will have discovered and honed a unique proposition that his/her competitors aren't even thinking about.

Fertile hunting grounds for finding technologies

Below is a list of places to find technologies that came up when I posed this question to a panel of scouts last year; I've added my suggestions for each.

Technical staff. Look for the internal people that are connected to applied research in adjacent industries. If working with universities, seek the technical staff's help in understanding which professors and institutions are more "commercial friendly" than others.

Retirees. The fact that they know your company internally and your market externally can make this group a surprise asset. Particularly valuable are those that have gone on to consulting and/or sit on advisory boards that enable them to keep their fingers on the pulse of the landscape.

Start-ups. Your marketing team is watching the competitive landscape, and will likely be able to point to smaller emerging companies that may be interested in mutually beneficial technology exchanges. When working with start-ups, though, remember they need to stay focused, particularly if they are venture-backed and looking for an exit.

Search. Some people have come to us through patent searches and technical publications. Some scouts tell me Google is their best resource for such research.

Specialists. At PARC, we have had good success with Visiting Technologists, individuals steeped in a specific industry who are able to help precisely map technologies with application spaces in a domain (they have what I call the "Industry Instinct"). They also see opportunities to pair our technology with other technologies that we might not be aware of.

Existing suppliers/customers/partners. This works best when you are making incremental advances within a market segment, but is less useful for forward- or backward-integration, or if you want to enter new markets.

Intermediaries/matchmakers. These are good resources for what I described as "horizon 1″ needs (usually < 12 months) that can be succinctly and specifically described. Since such intermediaries tend to have an industry or discipline focus, be sure their network of solvers is aligned with the type of problem you want solved.

Industry trades, newsletters, meetings. Like the intermediaries, these help set you up for serendipity. Efficiency is key when using resources like these due to the sheer volume.

Independent centers & national labs. Ideally, look for organizations that you might do business with more than once. In the best scenario, these resources will do more than license their technology. Whereas a start-up or other company may make their technology accessible, it is harder for a start-up to make people available. The independent labs (like PARC) should be able to help in customizing a technology to an industry application, supporting tech transfer, and providing post-license consultation. You'll also usually have someone like me to help make the right connections and navigate both the available opportunities and processes for securing them.

THE WHAT NEXT: How do you get it, and manage it once you've got it?

This should be the easy part, because it's just about cutting a contract and acting on it, right? (I can hear the collective groan from all of you who've been through this!) Okay, here are some tips.

You've found it. Now what?

Centralize mentorship for the acquisition process. One of the common failure points for scouting is having responsibility for finding technology, yet no role in acquiring it. Although the scouting function doesn't own the business outcome, I strongly recommend centrally coordinated mentorship for the acquisition process so that you are not re-inventing the process from scratch every time. Note that I've chosen the word mentorship rather than management. Integrating outside technology is hard enough in most companies, without having a function that is seen as a bureaucratic barrier. A centralized team needs to be facilitators and experts in what to expect in such deals, to guide a variety of stakeholders throughout the acquisition process.

Involve stakeholders early. Gene Slowinski points out in Reinventing Corporate Growth that every alliance is really 3 separate alliances: the visible one between the companies, and the invisible ones that have to be built within each company between the internal divisions. Those internal alliances should be built at the same time or earlier than the alliance between the companies.

Avoid cookie-cutter contracts. The people putting together the agreement need to understand the business as well as technical and legal fundamentals, and will have to make trade-offs between those. Handing them a template and saying "you can do whatever you want as long as you don't change it" ties their hands and forces suboptimal deals. It also makes the company appear difficult to deal with. See next tip.

Seek to be the Partner of Choice. This applies throughout your interactions with a potential partner. In an open ecosystem, the company that genuinely seeks out win-win becomes the preferred partner for innovators. One of P&G's competitors shared with me that his primary metric for success would be getting to see a deal before P&G; clearly, within that segment, P&G is seen as the Partner of Choice.

You've got it. Now what?

Once you've acquired rights to a technology, the organization needs a practice for managing to the business results.

Create an integration team. One of the best practices I've seen is creating a cross-disciplinary team early in the process that creates the integration roadmap — a document that outlines what are you going to do once you have it. Usually involved in the technology evaluation, this team is setup to be the team that runs with the commercialization and integration processes after the contract closes.

Set intermediate milestones. These are especially important when a relationship requires working together. PARC contracts frequently have interim milestones that allow a company to evaluate their continued advancement of the technology, and the relationship, because both matter towards a successful end result.

Create an internal audit process so you know how the licensed IP is being used. Since in-licensing agreements frequently have field-of-use limitations, it's important to track what the boundaries are and ensure you are abiding by them. Similarly, if royalties are due on products that use the other party's IP, you need a mechanism for tracking not only the initial products that come from the relationship, but derivative products that may also require royalty payments.

Establish a review/check process. This is as important as the intermediary milestones for both parties and, if conducted as an honest health check, will help identify potential issues before they become serious problems. It can also help identify further opportunities.

It's more than what you see here.

Any treatment of this topic is going to be incomplete, and that's the beauty of this medium. I'd love for readers to add comments about other best practices you've seen and would recommend…

While I've written this talking largely about the formal technology scouting function, in reality, the principles apply for many people that help keep their companies connected to the rest of the world. As companies are developing more dependencies on external partnering, the models and standards are still very much emerging, which makes this a wonderful time for learning from each other.

Jennifer Ernst is Director of Business Development at PARC. She has developed partnerships with companies around the globe, helping conceptualize and implement new business opportunities.

This tip was republished with permission from PARC. View the original post here.

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