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SPIE Professional April 2010

Innovation Scouting

Optics and photonics firms use scouts more often than most.

By Kristy Ulmer

The open innovation train: Are you on it? Does your firm practice innovation scouting? Do you know what these concepts mean?

There is a lot of talk about open innovation, technology scouts, and innovation scouts but there isn't a lot of understanding of what these concepts are, whether they make sense for a particular company, or how to embrace such practices.

Nerac, a global research and advisory firm, recently conducted a study to benchmark current innovation scouting practices to understand more about scouting programs, including size, scope, sponsorship, skill sets, and objectives. We also wanted to identify any discernable trends or common practices in innovation scouting, as existing data on this is limited. The study was conducted in June 2009 and the results were published in September 2009.

You may be asking how this research is relevant to your organization.

Would it surprise you to learn that companies in the optics/imaging/lasers industries reported some of the highest usage of innovation scouts?

It surprised us.

Scouting Terminology

But first things first. Let's establish a few key terms to avoid any confusion or ambiguity going forward.

What is open innovation? Open innovation expert Henry Chesbrough defines it in two ways. He says it is the readiness to use both internal and external ideas to advance technology and the willingness to consider both internal and external paths to commercialize a firm's offerings.

Open innovation is not a strategy of working with external parties instead of leveraging internal R&D. Rather, it encourages companies to expand their pool of resources in order to achieve their growth objectives.

Technology scouting refers to the practice of looking for technologies that fill specific gaps in the firm's technology portfolio. A company may have been working hard at solving a particular problem and decide it is better off buying a solution (in the form of a technology license, for example) than spending the resources to build its own.

Innovation scouting, on the other hand, is an expanded version of technology scouting. Many companies looking outside their walls for new technologies use "innovation scouts," specialists tasked with identifying new opportunities for partnership, co-development, licensing, or acquisition.

While innovation scouting is a key element of open innovation, the practice of scouting for innovation has been around much longer and has an established place in traditional business practices as well.

Innovation scouting is more mission-oriented. For example, a company may want to improve the customer experience on its Web site (a mission-oriented challenge for an innovation scout) and will actively look for ways in which to achieve this goal. The ultimate solution may consist of ideas, inventions, technologies, outsourced content, new processes, marketing techniques, etc.

industries using scouts

Diverse Approaches

The research study we conducted sheds light into how innovation scouting is performed across many companies around the world, and some of the findings surprised us. Analysis of the survey data led us to these conclusions:

  • Innovation scouts acknowledge a general lack of formal knowledge of the process of scouting, including how to find and evaluate ideas.
  • The more a company's products are integrated into other companies' products, the higher the likelihood that scouting is considered important.
  • There are many different approaches for implementing innovation scouting, with companies using internal innovation scouts, external partners, third-party scouts, and consultants.
  • Most companies operate with a small cadre of scouts, usually fewer than six resources.
  • The scouting role is not always confined to internal R&D departments within an organization, but instead is often jointly sponsored across multiple business units.
  • Innovation scouts use many methods for finding new ideas, with competitive intelligence the most preferred source of ideas.

We also learned that some industries use innovation scouts more than others (See chart above). The optics/imaging/lasers companies are practicing innovation scouting more than most, with 45% of respondents from these industries indicating they have scouting programs. The only companies using innovation scouts more were from the packaging (55%) and textiles industries (50%).

We have hypothesized that the companies using innovation scouts at higher rates are the same companies who are highly integrated with their client value chains. In fact, the industries reporting the highest usage of scouts are the ones supplying core technologies or materials to other companies.

Companies in these sectors must work in a highly collaborative way with their customers. For example, a packaging company must work closely with its customers on a variety of elements in order to develop the desired product such as package dimensions, product protection, regulatory issues related to labeling, etc. This is also true in the optics and advanced materials industries, both of whose sets of products have many different form factors that can be combined or deconstructed for various applications.

Most Scouts in Optics

Taking a closer look at the responses, the optics/imaging/laser respondents stand out from the pack. Companies from these sectors have used innovation scouts longer than most, with half of these respondents using innovation scouts for more than five years. Only two other industries reported using scouts longer (chemicals at 54% and packaging at 53%).

Not only have optics/imaging/laser companies been performing innovation scouting for quite some time, they have more employees in a scouting role than any other industry. Some 44% of the optics/imaging/laser respondents have more than 25 innovation scout employees. This is significant given 40% of all respondents have fewer than three innovation scouts.

But do quantity and perseverance equate to results? Yes. In fact, 100% of the optics/imaging/laser respondents report their innovation scouting efforts have been either very successful or moderately successful. These various data points further underscore the importance of innovation scouts and their function to optics/imaging/laser businesses.

So if you are among those who are not practicing innovation scouting, perhaps now is the time to ask why. Does it make sense for my firm? Would it be consistent with our corporate strategy and could it contribute to our objectives? What can we hope to accomplish? Where would we start?

There is much we can learn from our peers both inside and outside of our industry. I have spent years working with innovative companies and most of these companies are still trying to "get it right." Very few (perhaps none) have proven or systematic processes by which they execute this function.

Innovation scouting isn't a linear thing; rather, it is progression that sometimes circles back, makes U-turns and hits a lot of dead ends. It is an evolving practice—some would say journey—in search of best practices and role models. Until we have those, let us learn from one another.


See for yourself how and why companies are scouting for innovation by reading the full Nerac report, Global Benchmarking Study - Scouting for Innovation in 2009.

Scouting Practices

Many companies that are aggressively looking outside their walls for new technology are using innovation scouts, specialists tasked to identify new opportunities for partnership, co-development, licensing, or acquisition.

Innovation scouting is a key element of open innovation, but the practice of scouting for innovative products and services has been around much longer and has an established place in traditional business practices.

Nerac's 2009 survey on innovation scouting was designed to benchmark current practices of innovation (or technology) scouts.


Kristy Lutz Ulmer photo

-Nerac analyst Kristy Lutz Ulmer advises clients on how to leverage open innovation models and deploy technology scouting initiatives throughout their organizations. For more than 18 years, she has worked with clients on a variety of other strategic questions including how to bring a product to market, how to exploit a competitor's weakness, how to capitalize on an organization's strength, and how to differentiate the organization in a way that resonates with customers.

Ulmer holds an undergraduate degree in political science and philosophy and an MBA in marketing from Vanderbilt University. Nerac Inc. is a global research and advisory firm for companies developing innovative products and technologies.


Write to us at spieprofessional@spie.org  

DOI: 10.1117/2.4201004.06

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