Article #6: Assessing Potential Partners
The past two articles provided an overview of opportunity evaluation criteria and intellectual property considerations. However no technology or opportunity will succeed if the partnership isn’t right. And while the previous article focused on patents, other reasons for partnering include market access, brand equity, know-how, and already-developed products.
Still, partnering isn’t necessarily the way to go – depending on your needs and objectives, other arrangements (such as acquisition, licensing, or internal development) may be more advantageous.
So, when should you partner? What should you look for and how do you decide if the fit is right? Continue reading
Article #5: Thinking About Intellectual Property
Assessing the value of intellectual property is one of the most complex and dynamic aspects of open innovation and technology scouting. In today’s value-crazy world, IP may be worth very little — or worth more than entire companies!
Take Kodak, for example: “Despite its $576 million market value, the company’s digital imaging patents are worth $3 billion on their own,” according to an expert interviewed in a NY Times article.
The same article discusses Google’s $12.5 billion offer for Motorola Mobility. “Patents are now driving mergers and acquisitions and that’s driving up valuations.”
On the other hand, just a couple of years ago, Amy Achter (Kimberly-Clark’s Director of Corporate Intellectual Asset Management at the time) said:“While intangible assets (including patents) comprise an increasingly high percentage of corporate value, only 30% (at best) of patents actually provide profitable returns.”
So how do you value your IP or the patent(s) of prospective partners? Should you even consider co-innovation if you’re potentially sacrificing company value? Continue reading
Have you ever wondered what it would be like to work in an industry that never has a problem with demand? What would happen to your state of mind, currently shocked into submission by your on-paper worth, if you only had to be concerned with making customers happy and finding more of them, rather than wondering where all the customers went and if they’ll come back? These are remarkably different business problems. Some people thought they lived in the happy “more orders than I can handle” place just a few years ago*, but we all know how that story panned out, we just don’t know yet what kind of ending we’ll get.
Part of the problem is that America’s marketing engine doesn’t slow down in a poor economy – it accelerates. You get more spam, not less, as people work with smaller marketing budgets. Companies are afraid to not market, clinging to hope that the next campaign will benefit from the eventual recovery, regardless of poor returns from other recent efforts. Those lucky companies big enough in the wallet to weather downturns pump up their advertising, taking advantage of lowered rates for primetime placements. People try things they wouldn’t ordinarily, like telemarketing or door-to-door cold calling, simply because they’ve either exhausted or lost faith in their normal channels. Of course, the person who loses is the consumer, already barraged and overmarketed to with messages that are confusing enough on their own, yet reduce to noise when lumped with all the other too-similar voices. Continue reading
Article #4: Evaluation and Assessment
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, and more.
Basic Screening Criteria
Here are some criteria that can apply to every screening process: Continue reading
This seems like a good time to post about corporate culture and it’s effect on product development initiatives (see here and here). So another won’t hurt.
If you’ve attended MRT and PDMA’s annual Open Innovation conference, you’re likely familiar with the standard drumbeat on the importance of culture change to successfully start using externally sourced ideas in product development.
Kevin Stark of NineSigma has recently published the following article in IndustryWeek: “10 Steps for Creating an Open-Innovation Culture“. Continue reading
One of my favorite fortune cookie fortunes goes like this: “Many shall receive advice, but only the wise will profit by it.” This is relevant to all corporate improvement initiatives and especially anything labeled “Lean.”
The biggest mistake that most make when implementing any big system changes, be it lean product development, six sigma or open innovation, is not sufficiently planning for the cultural impact. These changes can be both physical and psychological. The reason they are often under-considered is a simple one — it’s too hard to deal with and filled with risks. But as we’ve experienced many times, it pays to sweat the soft stuff.
Many more companies are successful with lean manufacturing than they are with lean product development. A lot of this happens for the same reasons, mostly having to do with staff buy-in. If you have not convinced and sold the proposed procedural changes to those who must experience them, you will not go far. Manufacturing has it a bit easier as shop floor personnel are more used to and inclined to cooperate if given precise direction whereas engineering, R&D, marketing, etc., are staffed by those trained to challenge ideas and scrutinize intellectual pursuits.
When trying to implement Lean Product Development, in general, people will focus on the technical issues first, such as how to reorganize work, and if trying to stick to a Toyota-type approach, how to adapt and implement shop floor tools such as a Haejunka box. But tools are really the lowest hanging fruit of such pursuits. If you have not changed your culture to be one where the tools are accepted and uniformly followed, then you are basically doomed. And there are often A LOT of new tools to introduce. It’s not enough to change how you do things, you have to also change how things are done, otherwise, after the honeymoon, things will quickly revert to the old methods. Continue reading
Article #3: Winning Over Internal R&D
Internal resistance to tech scouting initiatives is not uncommon. Strong centralized R&D cultures may initially view ‘not invented here’ ideas as representing a dilution of brand. However, firms can share the innovation challenge with R&D and demonstrate the benefits of tech scouting solutions as a complement to internally-generated innovation, as well as ensure that open innovation is supported throughout the organization.
Ideally the push for OI comes from the top. Jeffrey Immelt, Chairman and Chief Executive, General Electric, was just quoted in the Wall Street Journal (Sept. 29, 2011): “We very much believe that we are never going to invent everything inside the company, and that we need to have the spirit of open innovation to be as good a technical company as we want to be.”
GE’s Ecomagination Challenge has grown into a $21billion business. AJ Lafley, Procter & Gamble’s CEO at the time, started a multi-billion dollar business with his quest for 50% of ideas to come from outside. Both organizations have made open innovation an integral part of corporate strategy.
At the implementation level, expert Jay Paap stresses the importance of managing the “3 Rs”: Resources, Risk, and Resistance. External sourcing must be promoted as a valued option, emphasizing the benefits of going outside such as accelerated development and growth. Continue reading