Smart technology scouting – Part 1

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Because of intrinsic time factors in the technology acquisition process, a technology scout needs to be looking ahead. At the same time, he or she has to be realistic about when an internal team can pick up new options, or even has the bandwidth to consider them. A few of the more progressive companies I've worked with have started incubation functions, often to pilot small projects that integrate internal and external technology. These provide an interim holding tank, so the time matching can be better managed.

Another piece of this is individual personality. Some people are wired to see opportunity. They look at new ideas and are continually thinking, "What could I do with that?" Others are wired to be heads-down focused on executing what's at hand.

At the practical level, this translates into questions like, "How mature does the technology need to be for our company to pursue it?" Some organizations are better at seeing exploratory concepts and molding them; others are better at taking proven technologies and executing quickly. There is no right or wrong. A smart technology scout, though, knows the players and strengths/weaknesses in his or her company and selects opportunities accordingly.

Expected time horizon for intended impact of investment

If a scouting organization's mandate is to "keep a pulse on what's out there", the team will need to build a very different network than if they are looking for products to fill gaps in a near-term roadmap. They will invest their time differently.

I have come to believe there are natural fits between sources of technology and the time horizons for impact — each of these comes with a different threshold for investment. Smart technology scouting includes scouting the right sources that are matched to the delivery horizon.

Horizon 1 – specific short-term needs for existing products or near-term launches. The needs can be clearly defined and succinctly communicated. The need is also unlikely to be a primary source of competitive differentiation. Good resources tend to be companies within your existing value chain (suppliers, partners, customers) and intermediaries like NineSigma, Innocentive, and Yet2.com. I've seen a few companies begin to create relationships with companies in "Sister Industries". These are usually informal channels of communication between key individuals, in organizations that tend to have similar problems but different ways of solving them. Because technology scouts generally have broad organizational context, they are good people to have as the interface between companies.

Horizon 2 — needs for the mid-term horizon, evolving product opportunities. Commercial intent is present, but the shape of the final offering can still be shaped. The field of options can be wider. You're less likely to find an existing technology that's an exact match, so an investment in co-development may be necessary. The solution may, itself, provide a source of competitive advantage. This is an area where PARC has proven valuable, having developed an arsenal of technology and bringing experience in migrating technologies between industries. National labs are another alternative. Partnerships with start-ups can sometimes provide opportunities to address these needs, but the scouting company's needs can't become a diversion from the start-up's primary revenue track.

Horizon 3 — exploration. The charter here is simply to "keep a pulse" on what's possible. Universities and pre-competitive consortia are among the most popular resources.

The technical needs

The most obvious aspect of defining what you're scouting for is technology needs, which vary depending on what horizon the scouting organization is focused on. Fortunately, every scouting organization I've worked with has some methodology for identifying needs, though they are varied in how they prioritize. Three common approaches:

Go out to all the different groups of the business and ask what they need. I'm not a fan of this approach, as it tends to generate lists of many small, non-strategic needs and has a lower success rate.

Use broad corporate strategy. In theory, corporate strategy should be a better starting point than the individualized needs of technical leaders. In practice, strategy is often too amorphous to be useful to a technology scout.

Use strategic product roadmaps. This is where rubber meets the road. I've come to believe this is the most effective approach. Internal teams know what they are committed to developing themselves and what they are willing to depend on partners for. Companies and scouting organizations that start from their roadmaps are usually better at engaging partners in how the pieces of a puzzle can come together.

The best opportunities are created when internal and external parties are willing to have candid discussions about what they are trying to accomplish and what each party believes they can contribute. This degree of openness does not come easily for many companies, but I believe it's an essential factor when dealing in emerging technologies. [See my earlier post on "Opening communication for open innovation: Should you share your strategy?"]

But where do you look? What happens once you find it? Get rights to it? Acquire it? Manage it? For more suggestions and advice, please see part 2 of this post.

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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