Hence a firm focusing exclusively on R&D as a source of innovation would probably miss threats and opportunities emerging from the first two categories outlined above (challenges and evolutions) while only partially leveraging the third category (revolutions).
Developing the skill of identifying innovation opportunities therefore requires firms to combine, leverage and balance various internal and external sources of innovations proactively, beyond R&D. This aspect is described next.
Combining internal and external sources of innovation
An innovation opportunity, whether triggered by a challenge, an evolution or a revolution ( see above) may be initiated either inside or outside the organization.
In the first case, a new solution or a new technology is conceived within the organization, either by finding a new way of using an existing piece of technology, by exploiting new offers from suppliers, or by inventing something new. This new solution is then “pushed” towards the firm’s market and environment, to successfully implement or commercialize the resulting innovation.
This traditional way of developing an innovation, derived from the way that R&D activities used to be managed, can still be very original and creative. Indeed, it has led past to breakthrough innovations such as the laser, the disposable shaver and light emitting diodes (LED).
However, such an approach can also lead to a great deal of wasted effort and resources, if products that do not meet any relevant or significant needs are developed. It is therefore in general better suited when the objective of the firm is to identify radical innovation opportunities, where firms attempt to create or tap into new needs.
Let us stress that, in this first case, the new solution or technology can be initiated through various technology trajectories within the firm, and not only by its internal R&D department. Indeed, the emergence of new technology solutions can be driven by the development of complex production systems and infrastructures or by specialized suppliers active in niche markets, such as healthcare or heavy industry. It can also be driven by technical changes among suppliers, in particular suppliers of information technology systems, such as in the financial or retail sectors, where such new technologies have led to radical process innovations such as online banking or automated trading.
As a consequence, such an approach should be supported by the development of technology intelligence capabilities beyond one’s own R&D, product roadmap or experience curve. This includes tracking publications and patents (both in terms of frequency and content) and attending open technical meetings. It also includes benchmarking and reverse engineering, acquiring and licensing in technologies, and hiring or interviewing competitor’s employees.
But innovations do not only emerge from inside the organization. The starting point of an innovation can also be a new need, or a new idea about what could be offered. In the latter case, the innovation opportunity is “pulled” by the organization, either through trendspotting, market research or needs analysis techniques such as quality function deployment. In this case the challenge for the firm is to identify new market needs better and/or faster than others and to implement effectively relevant technological solutions.