A few months ago a manufacturer of automotive composite components asked us to help them develop a framework for their innovation strategy. The firm had a robust technology roadmap and strategies, yet they did not have the resources to execute it within their desired timeframe.
The composite manufacturer wanted to pursue three technological paths; (1) evolution of their current technology, (2) development and application aerospace processes at automotive cycle times, (3) breakthrough technology identification and assessment.
The firm resources, both financial and technical staff, limited the ability to pursue all these technology strategies at in parallel. Due to the lack of resources they had to put aside two of the three strategies and pursue just one, expecting to continue the other strategies at a later time. They asked us to propose a framework to improve the innovation strategy.
This is a dilemma most innovation executives face when selecting and executing on their technological and product roadmaps. We proposed a framework that leverages their current internal resources with open innovation networks and enabled them to execute on all three strategies. The framework is based on collaboration and open innovation allowing the firm to cost-share R&D expense, decrease technology development risk, while acquiring know-how.
The framework we propose for strategies (1) and (2) was one of collaboration. Historically all innovation programs within the firm were completed internally, increasing the commercialization costs and risks. We proposed an external looking three-step process. First, identify the IP or know-how to be gained by the project, the goal of the project. Second, identify non-core tasks that have significant cost impact to the project requiring partners. Third, form innovation consortia based projects to commercialize the technology, sharing cost and risk with the partners.
The methodology proposed dramatically decreases innovation cost and commercialization risk. Consortium partners are usually willing to incur the cost of materials, labor, or tooling. Often partners create value to their firms by being involved throughout the research phase of a project, increasing the probability to be the commercial supplier. This approach lowers the learning curve, of bringing a new supplier during the commercial stage. In highly technical projects, where significant know-how is required from the partners, these can request for first right of refusal during the sourcing of the commercial project.
Strategy (3), the identification and assessment of breakthrough technology that is not quite developed but poses a significant risk to incumbents require a different approach. This strategy requires the scouting of technology throughout the innovation ecosystem, specially the hubs, such as research institutions, startups, and technology development firms.
With the top prospects identified and the technologies assessed, we can structure different teaming agreements, to enhance our know-how and secure funding through research institutions and start-ups. There are three types of partnerships that can be established; (1) Commercial partner during fund raising leading to the sharing IP development; (2) Can purchase “a call” on the technology, a small amount provided the rights of the technology for a period of time with no obligations to license; (3) a small equity stake on the start-up for in-kind technical or industry support, while the technology is developed. These types of partnerships, properly managed, can provide significant value with very little cost upfront.
Kinetik’s case study present the dilemmas faced by innovation executives and offer real world proven solutions.
For Further Contact:
Pedro Guillen
Managing Partner
Technology & Business Innovation
Kinetik Partners
Tel: +1 248.924.5436
