Companies are now proactively looking outside their walls considering all sources of innovation, both internal and external, to remain competitive, by using Innovation Scouts.
By: Avner Barnea*
Ten years ago a Japanese electronic company made a strategic decision to leave this business because the TV set industry turned to be a commodity with rapid declining profits, and to dive into the development of the next generation. After a few years this company became a world leader with its LCD TV sets and its revenues set sky peaks.
Fast changes in the modern era forced firms to be ahead of competitors and identify innovations early, otherwise they would not survive.
A few years ago the an intriguing study was published exhibited that a third of the world’s leading companies according to Fortune 500 list disappeared from the marketplace between 1970 – 1983. This evidence supports the assumption that without innovation companies would not exist.
Innovation – the key for survival
Until recent years, companies did not allow employees to promote innovative ideas and the focus was on performing daily tasks. Management was characterized by controlled processes striving to minimize the number of failures. One result was that the spirit of entrepreneurial thinking could not “rise”.
Tom Peters, the world leading thinker in the field of management, have said – “get innovative or die” – referred to the fact that the existing managements lead companies to continue the existing on the expense of new directions.
Innovation Scouting
Innovation scouting is a systematic search for innovation in any field bringing its findings to the attention of the decision-makers to decide whether and how to proceed with the idea to make it a product.
The historical roots of innovation scouting, when it was not called by that name, were among the lonely inventors who had a tremendous urge to discover and place innovations on the map of world knowledge.
Innovation scouting encourages existing employees for search innovation and ideas that would bring a competitive advantage. It is no coincidence that from its early days, Google has encouraged its employees to engage in some of their time developing new ideas.
Recently, more decision makers are confronting with two types of uncertainties- whether to continue the innovative direction and secondly whether to enter a new business line due to the innovation.
In recent years energy took an outstanding innovation direction, including renewable energies. An exciting example of innovation in energy use is the world’s largest cement producer Cemex which was searching for innovative concrete formula in order to bring a substantial reduction of carbon dioxide emissions worldwide, through the use of substitutes derive from the sugar industry and rice by-products.
An Update on Innovation Scouting
Successful innovation scouting is a combination of several factors – internal factors within the firm itself together with external partners including research institutions, mainly in the academy.
If in the past the Americans were leading the innovation field worldwide, in recent years the Japanese are winning this race as indicating by the registration of more new patents
One of the most significant moves in the automotive industry in 50 years was the development of the hybrid engine. This technological breakthrough was definitely a creation of innovation through systematic activity of the Japanese car producer innovation scouting teams. This innovation gave the company a technological advantage over the competition for almost ten years.
Pharmaceuticals are one of the leading industries of innovation. This industry is conducting systematic monitoring in medical innovation that can produce significant competitive advantage by early identification of new drugs.
Breakthroughs in innovations often come at the expense of existing products. Professor Clayton Christensen in his famous book “The Innovator’s Dilemma” has named them as – Disruptive Technologies – i.e. new technologies that often make the existing technologies not relevant.
Facing difficulties in absorbing innovations was also true in renewable energies. Alvin and Heidi Toffler noted in their book “Revolutionary Wealth” – “The main question is thus whether we will overcome the impending energy disaster. It is depended largely on the results of the conflict between the produce profits from the existing energies and industry researchers who struggle for alternative breakthrough “.
Characterizing “innovation scouting”
A global benchmarking study published in December 2009 by Nerac, a US research firm, characterizes the status of “innovation scouting”. It indicates that to obtain information from external sources, most companies (76%) made use of competitive intelligence tools by a massive gathering from the Internet, participation in conferences, leveraging relationships in academic research and the use of networks of personal relationships. 70% of companies stated that the main objective is “early detection of new technologies”.
Serving the local renewable energy industry
In Israel, promoting research in renewable energies have to be addressed by the larger corporations already in these areas working in close partnership with government ministries that will establish research foundations, legislate relevant laws and issue a master plan for this purpose, when innovation scouting is one of the tools to monitor new ideas
Conclusion
It seems that more companies are moving towards proactive and systematic activities to obtain early information about innovations. Althought in most companies’ innovation scouting has not yet reached a high standard of quality, it deserves a close attention, especially in competitive fields were capturing innovation can create a significant edge.
*The writer is a Competitive Intelligence strategic consultant and a lecturer at the MBA program in the Ono Academic College on Competitive Intelligence.
avnerpro@netvision.net.il