Companies with complex products or processes are frequently engaged at a given moment in a number of activities which can be described in terms of technology development, open innovation or both. In my experience, it is advantageous to link some of these by implementing a technology development process in such a way that it will manage several such activities.
Projects of this type are typically aimed not only at developing a new technology, but also at delivering new knowledge or new technical capabilities. They may lead to a whole new platform which can give rise to a new set of products, or lead to a new technical capability which can add a new dimension to existing products.
The outcome of this work is highly unpredictable, and although the Stage-Gate TD (technology development) model insists that it is necessary to make an early estimate of the commercial possibilities of the technology being developed, it is normal to have little in the way of hard figures. Exact planning or scheduling is also difficult. This makes the project difficult to report on. Not everyone in the organization will be convinced the company should be spending effort on this.
It is therefore important to make a clear assessment of the costs for each stage. How much time will the internal R&D people be spending on the work? If the company is working together with a university, how much of the PhD participants’ costs will we need to cover? Working together with a university, for instance, makes higher claims on a reliable planning for a given period of time (e.g. a study year). For this reason, the stages, gates, and deliverables of the TD process help all concerned to have a clear view of:
- The work being done,
- What the scientific level should be of all participants,
- What shape the financials are in (costs, government subsidies, etc.),
- The contractual documents, including non-disclosures, and
- The general aims, including the general fit of the activities with the company strategy.
Working in a well-documented process will keep it clearly in view for executives and help prevent the TD from being sidelined by other tasks.
The complexity of product innovation means that companies will frequently work with a number of partners such as suppliers, business customers, government agencies, educational and research institutes, and inter-organizational networks. Working together with others means that the company’s own R&D resources are used most effectively. This is particularly the case for SMEs with limited resources that need to concentrate on their core competencies and therefore depend on relationships with others. Pullen, et al. (2012), describe a number of factors which can lead to success in interactions of this kind. One central factor is for instance goal complementarity, which means that cooperating organizations have non-competing, complementary goals (not identical).
An example of this is when an important customer makes specific demands on the further development of an existing product, or attempts to promote the development of a new product that it requires. Although the company will listen carefully to these customer requirements, the risk is obvious. Going down this road may make us more dependent on this important customer and will also place a big claim on our (limited) R&D resources. The importance of strategic alignment is obvious. If the company’s strategy is clearly documented in the TD process, and the use of R&D resources is being tracked, it is easier to objectively assess prior to doing any product development whether there is sufficient alignment of goals and strategy to enable us to carry this out.
Which Open Innovation Initiatives Can We Track in the TD Process?
Open innovation initiatives can vary considerably. Working with a supplier whom you need to carry out a specific development task for a carefully calculated budget is best carried out in a regular product development project in the NPD process. However, carrying out joint exploration with a supplier in order to estimate the possible value of a new technology, could well be done as an activity within the TD process.
The following are further examples of using the TD process to clarify the goals and costs of an interactional activity:
- Tracking technical market requirements with partners,
- Working with academic forums to track and give general direction to new research,
- Exploring the potential of new materials with manufacturers and/or research organizations,
- Formulating new regulatory requirements with government organizations, and
- Participating in public debates with industry partners.
All of these are open in the sense that:
- They involve working with organizations outside the company,
- Do not normally have a clear set of commercial outcomes, and
- The resource requirements are not tightly defined up front.
On the other hand, they enable
- Careful tracking of resource and finance actually being used,
- Attention to aspects of intellectual property,
- Avoidance of domination by big customer requirements,
- Focus on our own requirements, and
- A tight watch on the alignment of activity goals with company strategy.
Annemien J.J. Pullen, Petra C. de Weerd-Nederhof, Aard J. Groen and Olaf A.M. Fisscher (2012) Open Innovation in Practice: Goal Complementarity and Closed NPD Networks to Explain Differences in Innovation Performance for SMEs in the Medical Devices Sector. Journal of Product Innovation Management.