ANALYST REPORT

Global Benchmarking Study Scouting for Innovation in 2009Written by: Kristy Lutz Ulmer and Margaret Fiore Nerac Analysts September 30, 2009

In the Publication Executive Summary Introduction Respondent Demographics Usage of Innovation Scouts Innovation Scout Programs In Practice Metrics Successes and Failures Conclusion

A N E R A C P U B L I C A T I O N

Table of Contents Executive Summary ................................................................................................................ 2 Introduction .............................................................................................................................. 3 Respondent Demographics .................................................................................................... 4 Respondents by Title .......................................................................................................... 4 Respondents by Industry .................................................................................................... 4 Respondents by Revenue ................................................................................................... 5 Respondents by Number of Employees ............................................................................. 5 Usage of Innovation Scouts ................................................................................................... 5 Observations ............................................................................................................... 5 Scouts by Industry .............................................................................................................. 6 Observations ............................................................................................................... 7 Age of Scouting Program ................................................................................................... 7 Size of Scouting Program ................................................................................................... 8 Innovation Scout Programs in Practice ................................................................................ 8 Objectives of Scouting Programs ....................................................................................... 8 Sponsorship of Scouting Program ...................................................................................... 9 Observations ............................................................................................................... 9 Scouting Resources ......................................................................................................... 10 Observations ............................................................................................................. 10 Scouting Methods ............................................................................................................. 11 Knowledge Gaps of Scouts .............................................................................................. 12 Metrics ................................................................................................................................... 13 Existence of Program Goals ............................................................................................. 13 Individual Performance Objectives ................................................................................... 14 Successes and Failures ........................................................................................................ 15 Opportunities to Improve .................................................................................................. 15 Conclusion ............................................................................................................................. 16 Bibliography ........................................................................................................................... 17

About the Authors ................................................................................................................. 17

About Nerac............................................................................................................................ 18

Executive Summary In many industries, innovation is generally recognized as a critical ingredient for corporate suc-cess. Until relatively recent times, most companies used internal research and development as their only method of innovation. However, companies are now proactively considering all sources of innovation, both internal and external, to remain competitive.

Many companies that are aggressively looking outside their walls for new technology are using Innovation Scouts, specialists tasked to identify new opportunities for partnership, co-devel-opment, licensing or acquisition. Innovation Scouting is a key element of Open Innovation, but the practice of scouting for innovative products and services has been around much longer and has an established place in traditional business practices as well.

Nerac’s survey was designed to benchmark current practices of innovation (or technology) scouts. We sought to better understand several elements of innovation scouting programs such as size, scope, sponsorship, skill sets, and objectives. We also hoped to identify any discernable trends or common practices in scouting for external innovations, as existing data on this is limited.

ANALySIS oF thE SURvEy DAtA LEADS to thESE CoNCLUSIoNS:

— Innovation scouts acknowledge a general lack of formal knowledge of the process of scouting, including how to find and evaluate ideas.

— The more integrated a company’s products are into other companies’ products, the higher the likelihood that scouting is considered important.

— There are many different approaches for implementing innovation scouting, with companies using internal innovation scouts, external partners, third party scouts, and consultants.

— Most companies operate with a small cadre of scouts, usually fewer than six resources.

— The scouting role is not always confined to internal R&D departments within an organization, but instead is often jointly sponsored across multiple business units.

— Innovation scouts use many methods for finding new ideas, with competitive intelligence the most prevalent source of ideas.

The report that follows reviews the survey results upon which these conclusions are based in more detail.

2

3

Introduction The survey upon which this report is based was conducted during the month of June 2009 using an online questionnaire. Nerac invited both clients and non-clients to participate. No incentive was offered. 594 responses from 528 distinct companies were collected over a period of two and a half weeks. Market sectors, detailed in the Demographics section of this report, included a wide range of industries from around the world.*

With a response of almost 600 participants, this study sheds light into how innovation scouting is performed across many companies around the world.

This report is organized into five sections:

― Respondent Demographics,

― Usage of Innovation Scouts (level, industry, size and length of program, etc.),

― Innovation Scouting in Practice (objectives, organizational sponsorship, techniques, etc.),

― Metrics (organizational and individual), and

― Successes and Failures.

Within each section, we present the survey data first and then discuss observations on the data.

* The findings of this survey remain the property of Nerac, Inc. and users of the results from this survey must reference Nerac as its source.

4

Respondent Demographics RESPoNDENtS By tItLE

Of the nearly 600 respondents, roughly half were in a research or research and development role. Only 6% had either “scout” or “open innovation” in their title. (Figure 1)

Figure 1. Job Titles of Respondents

RESPoNDENtS By INDUStRy

The top industries responding to this survey were medical devices, chemicals/specialty chemicals, pharmaceuticals, and advanced materials.*

Figure 2. Survey Respondents’ Industries

* Notes: Figure 2 represents all survey respondents, not necessarily companies using innovation scouts. These industries are also reflective of Nerac’s customer base and do not necessarily represent in-novation scouting adoption levels. See Figure 6 for a breakdown of scout usage by industry.

1.9% (11)

2.5% (15)

3.4% (20)

3.9% (23)

5.4% (32)

6.3% (37)

6.4% (38)

7.1% (42)

13.6% (80)

19.8% (117)

29.7% (175)

0 20 40 60 80 100 120 140 160 180 200

Attorney

Open Innovation Manager/Director

Marketing Director/Manager

Technology Scouting Manager/Director

Consultant

Business Development

Product Development Manager

Executive

Other (please specify)

R&D Director/Manager

Research Engineer/Scientist

1%2%2%

2%2%

2%2%

4%4%4%4%4%

5%6%

7%8%

9%10%10%

11%11%

11%13%

14%

0% 2% 4% 6% 8% 10% 12% 14% 16%

PlasticsUniversity

Pulp and paperManufacturing

Construction/building materialsTextiles

Consumer packaged goodsComputers/SoftwareMilitary/Government

Optics/Imaging/LasersAgriculture

Aerospace EngineeringPackaging

Electrical EngineeringAutomotive

BiotechnologyCoating/Adhesives

Energy/PowerOther (please specify)

Food ScienceAdvanced Materials

PharmaceuticalsChemicals/Specialty Chemicals

Medical Devices

By Industry

5

RESPoNDENtS By REvENUE

Nearly one third of the survey respondents came from companies earning in excess of $1 billion a year. The smallest slice represented companies with $500 million - $1 billion in revenue. (See Figure 3)

RESPoNDENtS By NUMBER oF EMPLoyEES The majority of responses came from companies at the small and large end of the scale, in terms of numbers of employees. Only 10% of the respondents were from mid-size companies.

Usage of Innovation Scouts Of the nearly 600 companies surveyed, approximately 30% of the respondents knew that their companies use innovation scouts. Another nearly 8% were aware of plans to begin using innovation scouts. Surprisingly, just over 42% were unsure whether or not their company employed scouts, so the usage rate could actually be higher. (Figure 5)

observations

― Close to a third of the companies are actively looking for external innovations to advance their firm's business objectives.

― Only slightly more than a fifth of the companies (20.5%) clearly reject scouting for out-of-company innovation.

― The companies that use innovation scouting or plan to use it in the future add up to nearly twice the percentage (37.6% total) of those that do not and will not (20.5%).

< $10 million18%

$10 - $100 million20%

$101 - $500 million18%

$501 million- $1 billion

11%

> $1 billion33%

What were your company's total gross sales in 2008?

Figure 3. Sales Spectrum

What were your company 's to ta l gross sa les in 2008?

Figure 4. Company Size by Staff

1- 49942%

500 - 99910%

> 1,00048%

What is the total number of employees at your company?

What is the tota l number of employees at your company

6

― The fact that 42% of respondents are unsure about their company’s scouting practice may indicate that the message of “we engage in innovation scouting” has not been sufficiently communicated by the management team, particularly given the titles of the respondents. Most of these respondents are people one would expect to be in a position to know whether or not their company used scouts.

Figure 5. Usage of Scouts

SCoUtS By INDUStRy

Certain industries appear to be using innovation scouts more than others. As illustrated in Figure 6 below, among the survey respondents with scouting programs, companies in the packaging, textiles, and optics/imaging/lasers industries answered that they are using innovation scouts the most.

Figure 6. Respondents Using Scouts - by Industry

7.7%

20.5%

29.6%

42.1%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

No, but we plan to in the future

No, and we do not plan to in the future

Yes

Not sure

Does your organization utilize innovation scouts?Does your organizat ion ut i l ize innovat ion scouts?

26%26%27%

29%29%30%30%

32%33%

35%40%40%

42%42%43%

45%50%

55%

0% 10% 20% 30% 40% 50% 60%

Aerospace EngineeringFood Science

Other (please specify)Computers/Software

PharmaceuticalsMilitary/Government

Energy/PowerAgriculture

Medical DevicesElectrical Engineering

AutomotiveAdvanced Materials

BiotechnologyCoating/Adhesives

Chemicals and Specialty ChemicalsOptics/Imaging/Lasers

TextilesPackaging

% within each industry using scouts% wi th in indust r y us ing scouts

7

observations

The companies that operate in the top nine industries (with the exception of biotechnology) are all highly integrated with their client industries. These industries supply core technologies or materials to other companies. Companies in these sectors work in a highly collaboratively way with their customers. For example, a packaging company must work closely with its customers on a variety of elements in order to develop the desired product such as package dimensions, product protection, regulatory issues related to labeling, etc.

This is also true in the optics and advanced materials industries whose products typically have many different form factors that can be combined or deconstructed for various applications. The automotive industry is highly integrated as well, with longstanding relationships between a multitude of vendors that provide materials, components, and finished products to a handful of automobile manufacturers.

The biotechnology field depends on significant levels of research that can typically best be accomplished by collaborative communities. So, as compared to the other industries who are integrated with their end users, the biotech companies are usually integrated with their peers and suppliers. These are all industries that fundamentally import and export their technologies throughout their supply chains.

This level of collaborative relationship is not typically found in industries towards the bottom of the graph, in particular, agriculture, energy, pharmaceuticals, or food science. Interestingly, these industries also tend to be more heavily regulated. Power companies, military contrac-tors, pharmaceuticals companies, food and aerospace all operate in highly regulated markets.

AgE oF SCoUtINg PRogRAM

When asked how long scouts had been in place, 37% reported their companies have used in-novation scouts for over five years, followed by another quarter that have used scouts between two and five years. (Figure 7) Interestingly, the chemicals companies have used scouts significantly longer than any others, with 54% of them having used scouts for more than five years. The packaging companies followed closely behind at 53%.

Figure 7. History

8.3% 7.6%

12.4%

25.5%

36.6%

9.7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

< 6 months 6 months to 1 year

1 - 2 years 2 - 5 years > 5 years Don't know

How long has your company used innovation scouts?How long has your company used innovat ion scouts?

8

SIzE oF SCoUtINg PRogRAM

Most companies operate with only a handful of innovation scouts. Our survey found that of the respondents who use innovation scouts, nearly one third have fewer than three employees in this role. Only 14% have more than 25 scouts. (Figure 8) The optics companies lead the pack with 44% of these respondents having over 25 employees in this role, followed by 36% of chemi-cals/specialty chemicals companies reporting 25 or more employee scouts; further evidence of the importance of innovation scouts and their function in these industries.

Figure 8. Numbers of Scouts

Innovation Scout Programs in Practice oBjECtIvES oF SCoUtINg PRogRAMS

We asked companies what objectives they hoped to achieve through their scouting efforts. The most important driver cited by 70% of respondents was “early identification of disruptive technologies.” (Figure 9) This is followed closely by building the product pipeline, leapfrogging the competition, and creating something novel. Respondents cited other objectives as well, but not to the same degree.

These organizations are engaging in innovation scouting to grow their business by finding something unique, creating something new, or commercializing an idea in a different way. Cost reduction does not appear to be the leading driver for many companies engaged in innovation scouting. One could speculate that the emphasis on identifying something disruptive may be driven as much by fear as by opportunity. Knowledge of the development of a disruptive technology offers the opportunity to either adopt the new technology at ground zero, or to begin defensive strategies.

39.3%

23.5%

11.5%

6.0%

5.5%

14.2%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

< 3 employees

3 - 5 employees

6 - 10 employees

11 - 15 employees

16 - 25 employees

> 25 employees

At your company, how many employees operate as innovation scouts?At your company, how many employees operate

as innovat ion scouts?

9

Figure 9. Scouting Program Purposes

SPoNSoRShIP oF SCoUtINg PRogRAM

Of those who responded to this question, 38% said that scouting was sponsored by their R&D organization. Another 24% reported that it was sponsored by Business Development followed by 21.8% respondents that indicated their scouting was jointly sponsored by several executives or groups. An additional 5.1% of respondents report using a skunk works type of program (Figure 10).

observations

― Technology or innovation scouting can be logically viewed as a development cost, as new business development, or as an overhead cost, allowing it to be tailored to fit various budgeting structures and philosophies.

― If a company regards scouting as part of their R&D program, it is likely to be funded in the same manner as the entire R&D effort, which classically is better-funded in times of prosperity and less well in times of economic distress.

85

118

157

196

199

207

207

215

244

0 50 100 150 200 250 300

Decrease manufacturing or supply chain costs

Decrease development costs

Reduce time to market

Sustain market position

Enrich the value proposition

Build product pipeline

Create something novel

Leapfrog the competition

Early identification ofemerging/disruptive technologies

How would you rate the importance of the following objectivesto your company's scouting program?

Point scoring for responses: "Very important" = 2, "Somewhat important" = 1,"Neutral" = 0, "Not very important" = -1, and "Not important at all" = -2

How would you rate the impor tance of the fo l lowing objec t ives to your company 's scout ing program?

Numbers on the X axis show the number of responses times the point score

10

Figure 10. Departmental Breakdown

SCoUtINg RESoURCES

Our survey sought to identify norms regarding how scouting programs are staffed. We found that the most common staffing approach (at 63%) is to tap company employees on a part-time basis. However, over 25% have full time employees in this position.

Over a third of the respondents characterize their scouts as technically oriented, and over one quarter as business/marketing oriented. The respondents were allowed to pick multiple answers to this query. The BT Group, recently named top for innovation in a Forrester survey, advocates a multi-faceted approach. According to BT Group technology and innovation vice-president Jean-Marc Frangos, the scouting team members are handpicked for their ‘double competencies’. “Each scout has to be able to not only understand the technology–but they must also be experts in the innovation priorities of BT’s lines of business so that they can select the right technologies for the strategies.” [1]

observations

― There is no single, dominant way to scout for innovation.

― Companies value both technical and business skill sets in this role.

― Innovation scouts are most likely to work as scouts part time, and have another, technical function in their company.

― Only 3% are attorneys. Presumably, legal assistance is called in as needed.

― Some firms appoint direct employees as innovation scouts, while others use outside parties such as consultants, universities, and strategic partners in this role.

0.6%

1.1%

5.1%

9.0%

21.9%

24.2%

38.2%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

It is sponsored by our Manufacturing/Production organization

Other (please specify)

It is a skunk works initiative

Don't know

It is jointly sponsored by several executives/groups

It is sponsored by our Business Development function

It is sponsored by our R&D organization

Where does your company's innovation scouting effort reside?Where does your company 's innovat ion scout ing ef for t res ide?

11

Table 1. Who Are the Scouts?

how woULD yoU ChARACtERIzE yoUR CoMPANy’S INNovAtIoN SCoUtS?

answer options response percent response count

Company employees, part-time innovation scout 62.6% 114Technically oriented 36.3% 66Experts in your industry/technologies 30.8% 56Consultants 30.2% 55Company employees, full time innovation scout 26.9% 49Business/Marketing oriented 25.3% 46Strategic partners 17.0% 31Universities 14.3% 26Experts in other industries/technologies 11.5% 21Attorney(ies) 3.3% 6Don’t know 6.6% 12Other (please specify) 1.6% 3

SCoUtINg MEthoDS

We used a multiple choice question to identify major trends in how scouts perform their work. We found the most common techniques for uncovering external ideas include conducting competitive intelligence (76%), attending relevant conferences and tradeshows (72%), leverag-ing academic connections (71%), and exploiting their network of innovators (55%). Other, less common methods include the use of third party networks (41%), innovation “bounty” challenges (18%), and crowd sourcing (8%). (Figure 11)

Figure 11. Information Sources

5.1%

7.6%

18.4%

41.1%

55.1%

71.5%

72.2%

76.6%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Other (please specify)

Crowd sourcing strategies

Innovation challenges (“bounties”)

Exploiting 3rd party innovation networks

Maintaining and exploiting their networks of innovators

Connections into academia

Trade shows of target industries

Competitive intelligence

What methods do your innovation scouts use to uncover ideas?(select all that apply)

What methods do your innovat ion scouts use to uncover ideas? (se lec t a l l that app ly)

12

Gathering information on competitors (competitive intelligence) and attending conferences/tradeshows helps scouts to stay current on the technologies, companies, and industry dynam-ics relevant to their business. Some firms analyze competitors to provide a baseline of infor-mation on what’s available, who the players are, and what technologies/trends are emerging. Other firms practice more sophisticated competitive intelligence to identify market risks and opportunities before they become obvious. Innovation scouts also find information about new developments from non-competitive sources such as academic institutions, or companies with complementary functions.

In contrast, some organizations use intermediaries such as InnoCentive and NineSigma which provide access to communities of innovators (scientists, engineers, entrepreneurs, etc.) to problem solve and generate ideas for the firm. Some companies tap their broader consumer base for ideas on how to innovate a particular good or service. However, there can be disad-vantages to using these outside entities. Companies may not be willing to disclose a specific problem (often to unknown parties) that could reveal a competitive weakness. Companies also may not want to reveal the nature of their internal development efforts to an external audience, possibly informing competitors of a next move.

KNowLEDgE gAPS oF SCoUtS

Our survey asked an open-ended question regarding the biggest knowledge gaps or primary training needs for innovation scouting. Respondents named a variety of different challenges, but the vast majority easily fell into one of four categories which have been displayed in Table 2. This list has been prioritized according to number of responses, in decreasing order. The most common response, by a measure of over 3:1, was a lack of understanding the “process” of scouting, that is, how to actually go about doing the job. A representative sample of the verbatim responses has been included, without any identifying data.

Table 2 . Knowledge Gaps

KNowLEDgE gAPS vERBAtIM RESPoNSES

the “Process” of Scouting “Consistent process”

“We don’t know what we don’t know”

“ Roles and responsibilities of an innovation scout”

“ Training on what the job involves and the best means to scout for technology”

Evaluating opportunities “ Knowing how to evaluate potential opportunities quickly and reliably”

“ How to methodically investigate new technologies or applications”

“Opportunity assessment”

technical Expertise “ Lack of expertise on the pertinent technologies”

“Technical and digital platforms”

“ The necessary scientific knowledge to cover a broad range of technologies and approaches”

IP/Licensing Expertise “Quick modeling of IP valuation”

“Patent and licensing info”

“Training of use of patent literature”

13

Metrics Companies are still developing approaches for setting goals and implementing metrics for measuring the success of their innovation scouting programs. This is also true for evaluating the performance of individual scouts.

ExIStENCE oF PRogRAM goALS

As noted in Figure 12, less than half of all responding companies have specific, stated goals for their innova-tion scouting programs. It could be that companies find it difficult to determine how to measure the success of these programs, i.e. what should be measured (ideas, deals, incremental revenue, something else?), how often and by whom. Scouting programs in many companies may be run somewhat informally, and may not be included in regular performance review programs. It is also interest-ing that 15% responded that they did not know if their company had goals, another indication that there is a lack of executive support of innovation scouting at some companies.

In contrast, a model metric was described in an article in Strategic Direction.[2] BT Group has established a method for measuring the effectiveness of its scouting program. They call their metric the “innovation dividend.” This is a calculation based on a three-year effect of the innovations it provides for BT’s lines of business. In 2006, BT’s innovation scouting team delivered a dividend worth more than £500 million.

The data seems to show that the longer a company has used scouts, the less likely it is to have specific goals. As reflected in Table 3, only 45% of companies who have used scouts for over five years have stated goals, whereas over two-thirds of those using scouts just six months to a year have specific goals for their scouting programs.

Table 3 . Goals and Longev i t y

DoES yoUR CoMPANy’S INNovAtIoN SCoUt PRogRAM hAvE SPECIFIC, StAtED goALS?ANSwER oPtIoNS < 6 MoS 6 MoS to < 1 yR 1 yR to < 2 yRS 2 yRS to < 5 yRS > 5 yRS

Yes 50% 67% 57% 50% 45%

No 33% 25% 29% 44% 41%

Not sure 17% 8% 14% 6% 16%

Yes44%

No40%

Not sure16%

Does your company's innovation scout program have specific, stated goals?

Figure 12. Scouting Goals

Does your company 's innovat ion scout program

have spec i f ic , s tate goals?

14

New programs may start with clear intentions and plans, only to find that good innovation information is being produced, but is not conforming to their plans. Or perhaps clearer evaluation models are just beginning to emerge.

Another interpretation of the data presented in Table 3 may be that the more nascent innova-tion scouting programs have been rolled out “by the book,” so to speak. These companies could be modeling themselves after those companies who developed successful scouting efforts through their own trial and error. As previously noted, companies who have long pursued innovation scouting tend to be ones whose products are highly integrated with their customers’ products. These companies have incorporated innovation scouting into their business processes as a matter of course. Companies newer to innovation scouting may also have schooled themselves on the latest books on the subject, e.g. books from innovation experts Henry Chesbrough and Eric Von Hippel, which advocate the use of metrics.

INDIvIDUAL PERFoRMANCE oBjECtIvES

Almost half of the respondents stated they do not have individual scout performance objec-tives in place. However, for those that actually have defined objectives, the top three objectives were fairly evenly split among sales generated, ideas proposed, and deals executed.

46.9%

29.4%

25.6% 24.4%

15.6%

5.0%

0%5%

10%15%20%25%30%35%40%45%50%

No specific metrics are

in place

Sales generated

as a result of integrated innovation

Number of ideas

proposed

Number of deals

executed

Cost savings achieved

Other (please specify)

How does your company measure the success of its individual inovation scouts? (select all that apply)

Figure 13. Scout Performance

How does you company measure the success of i t s ind iv idual innovat ion scouts? (se lec t a l l that app ly)

15

Successes and Failures More than two-thirds of respondents rated their innovation scouting programs as just “moderately successful,” with only 12% rating their efforts as “very successful.” (Figure 14) While a majority of companies surveyed feel their scouting programs are successful, this indicates there is certainly room for improvement.

oPPoRtUNItIES to IMPRovE

Survey participants identified many ways in which they’d like to improve their innovation scout-ing efforts; those range from broad, strategic changes to seemingly more tactical adjustments. The most common response, provided by one quarter of the respondents, was “a lack of resources.” This insinuates these companies believe their scouting efforts may have produced positive results, but that there is still room to do more. Table 4 below summarizes a sample of verbatim responses, shown in decreasing order by number of responses.

11.1%

67.9%

11.7%

9.3%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Very successful

Moderately successful

Unsuccessful

Not sure

In your opinion, how successful are the efforts of your company’s innovation scouts?

Figure 14. Success Rates

In your op in ion, how successfu l are the ef for ts of your company 's innovat ion scouts?

16

Table 4. Program Needs

vERBAtIM RESPoNSES

More resources (time, staff, financial)

“Making it a more full time pro active role.”

“Dedicated individual.”

“ Expanding the reach of resources available to our innovation scout. Adding additional scouts so the scope for each scout can be narrowed.”

“ More fully dedicated people and seed money to invest in early stage developments at Technological Top Institutes or Universities”

More focus/structure “Better definition of want briefs”

“ Focused strategy for next 5 to 10 years. Innovation in pharmaceutical industry, particularly in the area of developing therapeutics cancer drug takes significant time to take hold and come to fruition.”

“Stablish a system and metrics to evaluate the effort”

More experience/industry knowledge

“Training”

“ Better qualified people, technically qualified to analysis the intelligence.”

“ A better way to evaluate ideas and to avoid dropping ideas too early in the cycle”

More support from management

“ Executive appreciation/ acknowledgement of the time and effort put toward the activity.”

“Upper management support”

Open innovation expert Dr. Henry Chesbrough performed a limited study of open innovation practices in industry in 2006. Dr. Chesbrough found that early adopters of open innovation testified that executive support and direction was critical to the success of their programs. “The companies we spoke with reported that embedding Open Innovation principles into their organization began with top–down direction and clear alignment between the need to meet business growth objectives and the desire to look outside for technology.“ [3]

Conclusion This study was conducted to understand how companies from a variety of industries are using innovation scouts today.

While scouting is more prevalent in some industries than others, and in companies of certain sizes, there is common ground across the scouting community with respect to what they need to be successful–resources, focus, business discipline, and management support.

We look forward to continuing our research coverage of this evolving practice and helping our clients make the most of their innovation scouting efforts.

17

Bibliography [1] BT Group., ““Wild invention taming technology with BT’s External Innovation Team”.”

BT Group. [Online] [Cited: ] http://globalservices.bt.com/InsightsDetailContentAction.do?Record=wild_invention_article_all_en-gb .

[2] anonymous., “The era of openness: Open innovation is now a recognized management tool.” Strategic Direction, 2007, pp. 35-37.

[3] Chesbrough, Henry., “Beyond high tech: early adopters of open innovation in other industries”.” R & D Management , 2006, pp. 229-236.

About the Authors KRISty LUtz ULMER

Analyst Kristy Lutz Ulmer develops advisory services and processes to help clients make informed business decisions. She focuses most of her energies advising clients on how to leverage open innovation models and deploy technology scouting initiatives throughout their organiza-tions. Ms. Ulmer also works with clients on a variety of other strategic questions including how to bring a product to market, how to exploit a competitor’s weakness, how to capitalize on an organization’s strength, and how to differentiate the organization in a way that resonates with customers. Ms. Ulmer brings over 18 years of experience building

business and marketing strategies for companies such as Compaq, EarthLink Wireless, ChoicePoint, VeriFone, Per-Se Technologies, Bright Impact, Merge Agency, LK Industries, and db interactive. She has worked in a variety of capacities including product management, partner management, strategic consulting, and brand management for industries such as tech-nology, healthcare, manufacturing, professional services, and consumer goods. Ms. Ulmer has managed numerous primary and secondary research engagements to help clients better understand market perceptions, product and service requirements, and customer purchasing preferences. She developed a marketing plan that the CEO of an orthopedic medical practice used daily to steer the business and make strategic decisions. She also segmented a global customer market for a billion-dollar identify theft prevention company in a way that allowed it to target its customers and allocate its resources based on the customer’s value to the organiza-tion. Ms. Ulmer graduated from the Owen Graduate School of Management at Vanderbilt University with an M.B.A. in marketing. She holds an undergraduate degree in political science and philosophy.

18

MARgAREt FIoRE

Analyst Margaret Fiore is experienced in patent investigations, spe-cializing in optics, lasers, imaging, aerospace, military projects and contracting, and telecommunications. She brings Nerac clients a strong interest in many scientific disciplines, enabling her to be highly effective in researching unusual topics involving multiple fields of study. Ms. Fiore has 18 years of industry experience, in electronic aviation controls with United Technologies Corp., and in fiber-optic transmission of analog and digital video with the Broadband division of ADC Telecommunications. She was an electronics technical writer and engineering liaison for tele-

communications and aerospace companies in Connecticut. Ms. Fiore, who holds a bachelor’s degree in English and journalism from the University of Massachusetts, is also a certified electronics technician and a member of the Institute of Electrical and Electronics Engineers. She is expert in commercial and military technical documentation for aerospace, and Bellcore technical documentation for the telecommunications industry.

About Nerac Nerac Inc. (www.nerac.com) is a global research and advisory firm for companies developing innovative products and technologies. Nerac analysts are uniquely qualified to conduct objec-tive, third-party clinical literature reviews to assist companies in meeting the European Union’s new medical device requirements. Nerac analysts also deliver custom assessments of product and technology development opportunities, competitor intelligence, intellectual property strate-gies, and compliance requirements through a proven blended approach to custom analysis: review of technical knowledge, investigation of intellectual property, and appraisal of business impacts. Nerac deploys analysts in diverse disciplines to help clients discover new applica-tions, serving as a catalyst for new thinking and creative approaches to business problems or identifying strategic growth opportunities.

No reproduction or further dissemination of the report in whole or part may be made without the express written consent of Nerac, Inc. This report is provided on as-is basis and does not constitute a recommendation to make or not make an investment. This report provides infor-mation that the recipient must independently analyze and verify in its evaluation process. The recipient of this report can accept or reject its findings at its sole discretion. The terms of any investment decision, including the merits and risks involved, must be solely and independently analyzed by the client.

Nerac specifically disclaims any and all warranties, including without limitation, warranties of merchantability and fitness for a particular purpose. This Report is given on and as of the date hereof only, and it does not contemplate, and no opinion is given or intended with respect to, future events or subsequent changes or developments in science, law or fact, and Nerac has no obligation to update this report with respect thereto. Nerac shall not be liable for any loss, injury, claim, liability, or damage of any kind resulting in any way from any use of this report.Nera

c Inc

. | 1 T

echn

ology

Driv

e, To

lland

, Con

necti

cut 0

6084

| 8

60.8

72.70

00 or

visit

us on

the w

eb at

www

.ner

ac.co

m©

2009

Ner

ac In

c. Al

l righ

ts re

serv

ed.