August 05, 2010, 8:03 AM — by Jennifer Ernst, PARC - Technology scouting has been happening for many years. Yet the models for how best to find and secure opportunities are still emerging as companies increasingly look outside.
My role at PARC (part management consultant, part matchmaker) and encounters with various organizations have given me a unique vantage point into the strategies and common pitfalls of technology scouting functions. I've shared here some advice for effective technology scouting, including defining the Why and the What. The followup post tackles the Who, Where, and How within the popular "want-find-get-manage" framework.
THE WHY: Why are we doing technology scouting?
This is the first question anyone involved in technology scouting needs to answer. It sounds obvious when I write it here. In reality, though, this is not a straightforward question.
Inconsistent answers to the "why" question are a recipe for frustration
When I asked audience and panel participants at Frost & Sullivan's Growth, Innovation, & Leadership 2009 why they cared about technology scouting, the diversity of the answers was telling:
- Speed — let's create new offerings by integrating or adapting technology that has already been used elsewhere
- Aggressive growth objectives — with corporate growth goals too high to achieve through purely organic growth, let's mine earlier stage technologies that might not yet be on competitors' radars
- Resource restraints – let's work with partners to amplify what can be done with limited internal resources such as funding, people, or facilities
- Access to expertise — let's work with innovation partners to gain access to market or technical expertise not present in the company
- Diversification/ back-up plans for internal programs — let's treat external technologies as the most viable sources of a Plan B
- Trading cards — let's buy patents for defensive use
- Freedom to practice — let's keep out of trouble with non-exclusive rights in intellectual property
Each of the above answers sets different requirements for the technology scouting function. Unfortunately, many scouting organizations are set up with vague mandates such as "not all smart people work for us, so…" and "90+% of research relevant to us is done outside our walls, so…" These may be useful motivations for adapting open innovation practices, but they don't help the corporate scouting organization direct their activities.
Lack of organizational alignment means different objectives
The result of lack of focus is conflicting objectives among technology scouting team members and acquisition functions. For example: picture Bob, a technology scout who is attempting to serve multiple objectives at the same time. He thinks he's looking to help the company enter new markets, and therefore looks for things outside the domain of current businesses. Bob brings some opportunities in for review, but Amy, the technical leader, thinks she's evaluating Plan B options for the company's major technical programs. Her criteria will be almost exactly the opposite of Bob's.
Next, imagine both Bob and Amy have somehow identified something they want to pursue. They end up in negotiations with the technology's inventors. Bob thinks he's trying to corner a new market, Amy thinks she's negotiating options for something they may or may not use, and they're both working with a legal team that thinks the goal is amassing patents to use as trading cards.
Can you see a problem emerging?
THE WHAT: What technologies are we are looking for? What characteristics do they need to have?
Scope is a tricky thing. If a scouting team's "find" mandate is too narrow, you're likely to miss valuable options. If it's too broad, you end up exploring too many options that are never going to fly.
In addition to technical needs, the following factors should define what technology scouts should consider:
Organizational capacity to absorb external options
A smart technology scout focuses his or her efforts on the parts of the organization that can best absorb new technologies, based on a combination of timing and individual personality. For example, a business unit in the middle of an aggressive product launch is probably going to be less able to incorporate new technology than a division that is stable and looking to expand.