The world is growing smaller.
In a globalized economy, companies cannot sit back and rely on local market dominance. The opening up of capital and talent for startups and the removal of barriers to competition from foreign firms means that today’s established leaders are facing a market assault both at home and abroad.
Long-gone are the days when the most innovative work was done within corporate labs. With global R&D expenditures reaching 1.6 trillion USD in 2014, companies can't afford to solely focus on internal research. Business lore is full of examples of large companies being brought down to their knees by upstarts when they failed to capitalize on new market developments. Even if a company discovers revolutionary technology, there’s no guarantee that they can commercialize effectively to justify the effort.
Kodak and Xerox are famous for their failure to see coming disruption despite creating it; Kodak held back on digital photography and Xerox lacked the internal structure to fully capitalize on the invention of modern personal computing. For these firms, the traditional internal-focused R&D strategy did not pay off.
Time is running out.
Since 2001, 52% of the Fortune 500 have disappeared; the average lifespan of a F500 firm has dropped from 75 years in 1955 to 15 years in 2016. This alone should stand to reason that depending on internal R&D is a losing strategy.
Startups are great at rapid decision making, corporations, on the other hand, are focused on defending their current business model. As such, corporations can rarely innovate in a meaningful way without undermining their profitability. Under these realities, companies will block any innovation that disrupts their internal status quo.
Even under the best-case scenarios, scientists do not have the bandwidth needed to exhaustively create, test, and evaluate, every possible technological angle to a solution.
Don’t trust the Crowd.
As a result of these pressures more and more companies are adopting an open innovation model that relies on robust networks of external partners, suppliers, customers and experts. This approach has proven successful for many of the world's largest and most competitive firms. However, the implementation of open innovation can be tricky. Too often, organizations rush to crowdsourcing as a simple way to generate new ideas and products.
Crowdsourcing may work well for organization struggling with basic ideation, but crowds do not help when it comes to the complex technical problems that most organizations deal with. Sourcing innovation via “crowd challenges” often ends up being more costly, time consuming, and difficult than organizations expect at the outset.
A way forward.
Fortunately, there’s no need to re-invent the wheel. External technology scouting serves as the solution to the time-honored dilemma of being out-innovated. While there has been an explosion in the number of competitors in a market, this is more an opportunity than a challenge, as companies can engage and partner with competing and complementary firms to test ideas and implement their findings within their own products.
However, the number of opportunities is great and resources are limited. In this fast-paced reality, ad hoc solutions like spreadsheets, emails, task reminders, and calendars do not give the rigorous visibility and process management needed to be successful. While your first instinct says otherwise, others have had this idea and have failed again, and again, and again. Excel is not a business platform, and over-relying on spreadsheets leaves organizations vulnerable to mistakes.
To succeed in open innovation and technology scouting, companies need an effective process, culture, and platform to allow for collaboration between disparate business units.