The Business Side of Innovation and Technology
By Dr Gordon McConnachie, Founding Chairman of Scottish Intellectual Assets Centre and Chief Technology Officer of Asia Pacific Intellectual Capital Centre
Innovation
Innovation can be considered as the activity of creating something new with commercial value, from the moment at which the first idea is born until the moment the new product or service is successfully placed into the market.
In any company innovation and renewal is the lifeblood of sustainability. Some companies have fast moving development cycles and others more leisurely ones; some innovations are incremental and some are breakthroughs: some innovations come from the outside driven by customer needs or new technology advances, while some come from within a company driven by that company’s own vision.
All successful innovations have one thing in common: the business side of innovation has worked together with the designers, technicians and experts to create something new and to place it in the market where customers value it enough to pay money to have it or to use it.
The Business Side of Innovation
The most important factor in a successful innovation process is that all the main decision makers in the business are kept informed of what is taking place with regards to progress of the innovation project they have supported. This means the innovation process must be owned by the business and that other company functions are supporting the achievement of the business plan.
In most companies there will be some formal innovation system but frequently this is not imbedded in the business process. In Dow Chemical we created a “Develop and Commercialise Technology” process which brought all these elements together and was owned by the business.
The process involved some five stages with hurdles to be overcome to progress from one stage to the next. If I remember correctly the stages were:
(i) ideation,
(ii) concept shaping,
(iii) proof of concept,
(iv) development and
(v) commercialization.
The hurdles that required to be overcome to progress to the next stage of development and secure funding depended on the particular project details. The stage gate review was conducted by a business oriented team and one of the measures that was required was an estimate of the ten year net present value (NPV10) which the project was likely to return. It was also essential for the company to have access to all the “soft technology” of ideas, expertise and intellectual property required for the project.
As companies move more and more into participation in open innovation the need for such an innovation process becomes greater, if simply in order to stay in control and drive towards the best critical success path in selecting and carrying out projects. My personal experience in this respect relates to my responsibility for bringing new technology into Dow Chemical from various sources including academia both in Europe and post USSR Russia. The amount of effort required to explain how the technology fits into the receiving company and to explain in detail the developments in technology required by the receiving company should not be underestimated. Open innovation requires an open information passing between the development partners and it requires an understanding on confidentiality backed up by legal agreements.
In ensuring clear communication the importance of perception, by which I mean from which viewpoint does the decision maker come, cannot be overstated. Most individuals have a key focus be it financial, technical, management, legal, etc: in using the total spread of tangible and intangible assets to advance a project or company it is important that we ascertain the viewpoint of the decision maker being addressed and talk to that person using language and arguments which resonate. In addition I remember one of the first principles we applied in Dow Chemical.
Our director of intellectual capital management Gordon Petrash, an architect by training, one day said “First you must visualise what you want to do, then you must be able to measure before you have any possibility to manage.” It is a principle we always applied. The main role of intangibles is in promoting innovation and economic development: the world of finance is the necessary support.
While large companies have the resources to develop powerful innovation systems and dedicate people to ensure that they function, this is often not the case for SME type companies. My experience in co-founding the Scottish Intellectual Assets Centre and my personal experience working with clients has brought home to me that often SME companies require a business coach available to help them work out the steps they need to take, and to be available from time to time as they build their innovation capability. The aim should always be to assist the company develop its own unique innovation system. Support of SME companies often falls to government as is the case in Singapore, Scotland and Syria.
A main danger for all companies is that they become fixated on a pre-determined path and forget to look sufficiently left and right at what other companies in the market place are doing. This potential danger can be addressed through fore-sighting, market intelligence and simply listening to customers. The innovation process is not necessarily linear: at times it will require to address issues coming from competitive action, regulatory action or indeed changes to the world economy.
A Checklist for the Business Side of Innovation and Technology
- Have a well thought out business plan.
- Have a clear and quantifiable idea of the product or service which needs to be developed.
- Have and apply a well thought through innovation process.
- Communicate well within the innovation team but be sensitive to giving away confidential knowledge outside this team and provide appropriate training.
- Obtain and manage the required mix of fixed assets and knowledge resources within the partner companies well.
- Agree before commencement on background intellectual property owned by project partners and on access and use rights.
- Protect newly developed ideas with appropriate intellectual property.
- Drive the innovation process under business control until a successful commercialization.
A Simple Conclusion
Successful innovation does not directly depend on how much money you put into R&D and Technology but rather depends on communication of objectives and goals in order to develop and execute intelligent plans followed by a successful placement in the market. This can be simply stated as value creation, value extraction and value release.