Tech Scouting: Rapid Decision-Making – Scoring for Value



Article #8:  Rapid Decision-Making – Scoring for Value

In making decisions about opportunities, speed of review is essential. Not only is it essential for staying on top of inputs, it maximizes external interest and keeps your team’s focus on the best prospects.

Examples:

  • At Corning, ideas that pass pre-screening are given preliminary assessment through internal white papers that reach their conclusion in four to six weeks; in-depth analysis by market-and-technology teams concludes within six to eight months.
  • Avery Dennison devotes fewer than five days to initial screening. Second stage evaluation can take up to 100 days.
  • In the venture capital industry, initial analysis often occurs in ten minutes.
  • Kraft reaches ‘go-no go’ decisions within 30 days, at each screening phase with end-on-end cycles of three to four months in its supplier process.

Here are some ways to speed up decision-making:

  • Build simple business cases that are both easy to understand and easy to execute. Make sure the case links your company’s objectives with the lead under review, shows strategic fit, predicts revenue paths, considers strengths and drawbacks, and points to long-term considerations.

Scoring for Value

Scoring varies widely among companies. There are no simple plug-in formulas. While companies may develop grading scales, they tend to be somewhat subjective.

Examples:

  • In its early evaluation phase, Nokia uses only yes/no answers.
  • Corning‘s initial assessment approach relies heavily on “gut feeling” about a prospect. Later, it evaluates leads that survive pre-screening by means of  specific questions, but without using a scoring scale.

Whatever evaluation system you employ, use it aggressively to reduce the number.  At best, only between 5 and 10% of ideas and leads submitted make it through to commercialization.  For many companies, the numbers are even less, making even more compelling the case for a robust, well-managed tech scouting process.

Remember that short vetting periods help make open innovation much more dynamic and tend to increase kill rates at a stage when investment has been minimal.  At the same time, beware of discarding ideas entirely rather than finding a way to recycle them. Ideas rejected today may become strong competitor products tomorrow.

Evaluation in the Absence of Hard Numbers

A common dilemma facing organizations is choosing and justifying innovative projects when hard numbers are unavailable.  The more innovative the opportunity, the more is typically unknown.

Technology innovation expert Jay Paap suggests a risk-sensitive approach to evaluating projects without numbers — a 6-step approach he calls NOMMAR:

N:    is there a customer need? (someone will want it)
O
:    are their technology options? (someone can meet the need)
M:    is there a potential market? (someone will pay)
M:    is there a business model? (someone could do it)
A:    do we have a realistic approach? (we could do it)
R:    is it relevant? (we should do it)

This approach has recently been used successfully by Emerson/Therm-O-Disc in its quest for transformational innovation.

Overall, the key to rapid decision-making is a combination of intuition, clear business cases (tied to strategy) and simple scoring techniques.  The importance of moving quickly should be stressed at this early stage, both for the sake of the project as well as team effectiveness.

Further reading:
Evaluating & Choosing Opportunities When ROI is Unpredictable

This article published in conjunction with MRT’s workshop series:
Technology Scouting to Accelerate Innovation – Implementing an External Sourcing Program – check our website for the latest dates and locations of this popular seminar.

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