There’s a seismic shift underway in the nature of innovation management. All the momentum that was once with the wealthiest, most resource-rich enterprises has changed hands; it’s now at the command of organizations that pay the closest attention to externally originating innovation opportunities.
The best ideas no longer spring from the imagination of one inventor or business. They come into focus as patents, emerging research, clinical trials, licensing opportunities from universities, startups and other ingredients of enterprise innovation are assembled in a precise, calculated manner.
We’ve referred to this “assembly” of intangible innovation ingredients as the Knowledge Supply Chain. And one of the most important aspects of this supply chain is the ability to identify said ingredients and capitalize on them before the competition. It’s a tall order considering you never know when or where they’ll will be discovered or created.
This means that innovation competition today is really about who develops the best, most cost-effective processes to monitor the many sources of innovation opportunities. Diligence and resourcefulness, not dollars and cents, will win the day.
Pulling ahead in innovation competition
Innovation teams must be incredibly circumspect in how they scout innovation opportunities. This means going beyond the obvious sources such as patents, research and startups that align with your enterprise’s market goals. Technology scouts also need to be attentive to:
What the competition is doing
Enterprises need to stay abreast of progress being made by market rivals and nascent disruptors. One of the best ways to do this is to closely monitor Securities and Exchange Commission (SEC) filings. The purpose of quarterly SEC filings, after all, is to give the U.S. government a glimpse into a company’s future. This information, which is in the public domain, can clue your innovation team into what the competition has planned from an innovation standpoint.
Consider the cautionary tale of A123 Systems, a company that creates lithium ion batteries for automakers. For all their ingenuity, A123 couldn’t match the development efforts of established battery makers. A product defect in 2012 ultimately set them back $55 million, forcing the business to declare bankruptcy.
The moral of the story? If you can’t keep up with your competitors – whether that’s a disruptive new startup or a deeply entrenched industry veteran – you’ll fall behind, and most likely stay behind.
360-degree situational awareness
Innovation demands total situational awareness of market conditions, and not just in the obvious forms (e.g., a window into researchers and startups in your field and the activities of competitors). There are other ways to miss out on opportunities that will ultimately push back a product’s launch date and create a window of opportunity for a competitor to catch up.
One of the obvious culprits is failing to be acutely in tune to the regulatory climate of a vertical you’re attempting to penetrate. Ideally, your innovation team will have workflows that are organized, but still versatile enough to track the lateral aspects of its innovation projects. Without doing so, they can miss market opportunities on otherwise brilliant products.
Take the example of 23andMe, the consumer DNA-testing business. The now-successful company had to wait two years to market its genetic screening services to the public. Why? Because it failed to acquire permission from the FDA to screen for 10 specific genetic diseases.
If you think two years is bad, just consider the fact that it can take up to 14 years for a pharmaceutical company to get a new drug to market, regulatory hiccups notwithstanding. Managing innovation in a market where it takes nearly a decade and a half to see dividends from a new product demands extraordinary precision and situational awareness. Miss a beat now, and it may come back to haunt you in a decade.
An investment in innovation is an investment in your future
Perhaps the most obvious aspect of innovation management is an enterprise’s bottom line. A business might be funneling millions, tens of millions or even hundreds of millions of dollars into research and development at any given time. Sometimes you only need to be right once to become the next Google or Maersk. But how many times can you afford to be wrong?
Here’s a fun fact to illustrate just how easy it is to take a wrong turn: Steve Jobs (yes, that Steve Jobs) was a champion of the Segway. The man who is credited for building the most profitable brand in the world thought that the automatic scooter now used almost exclusively by out-of-towners and mall cops was the next big thing. Thank goodness, for Jobs’ sake, that there wasn’t much overlap between Apple and transportation at the time.
This is all to say that the innovations you choose to invest in now, and the method (or lack thereof) that you architect to gather, assemble and develop said innovations will make or break the future of your enterprise.
Be vigilant. Be process-oriented. Be collaborative. Be circumspect. And you’ll be successful.