Net Introducing Technology Intelligence The Basis for Systemic Innovation of the Technology- Based (Chemical) Company From: Wolfgang Runge: Innovation, Research and Technology Intelligence in the Chemical Industry Fraunhofer IRB Verlag, 2006

Net Copyright 2006 Wolfgang Runge2 Acronyms and Abbreviations CI – Competitive Intelligence CTSC – Customer Technical Service Center EH&S – Environmental Health & Safety FDA – (U.S.) Food & Drug Administration I&CT – Information & Communication Technology IAM – Intellectual Asset Management InfoCenter – (Corporate) Information Center/Services JV- Joint Venture M&A – Mergers & Acquisitions NBD – New Business Development NPD – New Product Development TI – Technology Intelligence VC – Venture Capital

Net Copyright 2006 Wolfgang Runge3 Competencies, Competition and Intelligence It does not suffice to have a competitive (technology) intelligence organization! Organizations who succeed to implement and run an effective and (centralized or decentralized) systematic intelligence process with defined deliverables will have the competitive advantage over their rivals. “I have a simple but strong belief. The most meaningful way to differentiate your company from your competition, the best way to put distance between yourself and the crowd, is to do an outstanding job with information. How you gather, manage and use information will determine whether you win or lose. There are more competitors. There is more information available about them and about the market, which is now global” Bill Gates: the speed of light.

Net Copyright 2006 Wolfgang Runge4 Intelligence in Technology-Oriented Companies “Intelligence is knowledge and foreknowledge of the world around us - the prelude to Presidential decision and action” (CIA Definition). Business world: “competitive intelligence” (CI) Technology Intelligence (TI) – (which, how, when; by whom) technology meets markets (demands); actionable knowledge and foreknowledge arising from systematic processes involving gathering, analyzing, hypothesizing and disseminating information on external scientific or technological developments, opportunities and threats that may affect a company’s competitive position (defined by its strengths and weaknesses). Information & Communication Technology (I&CT): supporting systemic innovation, particularly via intelligence processes and products.

Net Copyright 2006 Wolfgang Runge5 The Information Challenge Gain insights from increasingly vast sources of internal and external data and information. Research into high-performance businesses has shown that they excel at translating industry insights into action, using those insights to adopt innovative approaches to innovation and growth. The challenge today is not just obtaining data or information, but knowing how to manage and use them. Asking proper questions (in context) is a start, but it is the answers that matter. “To be best, you must know best.”

Net Copyright 2006 Wolfgang Runge6 Providing Answers to Some Strategic Questions? What is driving competition in the industry segment we are thinking to enter via a new business? What are the risks? What shall we do concerning the promising emerging technology, buy (acquisition, license-in) or build (own competencies) or cooperate (joint venture; joint research and development with universities/research institutes)? How will the (chemical) industry evolve vis-à-vis a changing raw material and intermediates basis and increasing energy cost and how will the technical developments be driven by political interventions, programs and regulations? What actions are competitors likely to take, what are the options to respond?

Net Copyright 2006 Wolfgang Runge7 Can we block technical developments for the rival’s product line by a “tactical” patent? Shall we complete our line of offerings by a product “imitation” of an existing successful competitive product? How do we respond to the new regulations at the horizon in Europe concerning our product line? Will these regulatory trends show also up in the U.S. (China, etc.)? What is the best mode to protect our recent innovation (patents, trade secrets)? How do we react after detecting infringement of a patent which is of “minor” importance for us? Providing Answers to Some Tactical Questions?

Net Copyright 2006 Wolfgang Runge8 Normative Attributes of Competitive Intelligence DA&4P: Descriptive: what is done (in the firm’s “environment”) Anticipative: what will be done (in the firm’s “environment”) Prospective: what may be done (by the firm); Proscriptive: what cannot be done (by the firm); Prescriptive: what should be done (by the firm); Prohibitive: what must not be done (by the firm).

Net Copyright 2006 Wolfgang Runge9 Organizing Corporate Intelligence CI is people-driven. It is also a mindset. Support decision making by hypothesis-driven recommendations and presenting alternatives. There are many objectives for CI, but usually one major thrust (such as TI); there are various business cases. CI is a multi-sources, multi-step, multi-departmental or/and multi- functional exercise with complex interrelations between touch-points. There is no one CI model. Research-driven technology intelligence is a model appropriate for technology-based firms, particularly for systemic innovation and the chemical industry. There is CI practice, but no “best practice”. CI organization is a customized program. If existing, intelligence activities are often widely spread in firms. If so, a decentralized (or “hybrid”) organizational model is advantageous.

Net Copyright 2006 Wolfgang Runge10 What is Unique About Technology Intelligence? Covers also market information (not marketing information)! Liaison role between managers and scientists (researchers), corporate strategy and technology strategy. Liaison role between the Research and Technical Service and Manufacturing functions, between Research and Marketing/Sales. Liaison role between industries for co-evolution. Effective on the strategic, tactical and operational level. Needed for the “fuzzy front-end” of innovation (“ideas”) and all “gate” decisions during “staged” product or business development (“stage-gate”) processes, in particular, for project stop or redirection or project revival. Often several steps removed from commercial products.

Net Copyright 2006 Wolfgang Runge11 Implementing Technology Intelligence Emphasize the Organization and the related Information & Communication Technology Systems approach: The Law of Requisite Variety –The degree of complexity in a controller (here TI) must match the level of complexity in the environment (here the firm) in order for the controller to manage the environment. Corporate culture, leadership and organizational structure represent key (risk) factors for implementation.

Net Copyright 2006 Wolfgang Runge12 Technology Intelligence Driven by R&D and Related to Corporate Functions, Units and Key Processes InfoCenter Ideation IAM Research Computing Information Resources (external, some internal) Technology Intelligence NPD NBD Technology and Research Strategy Patents, Trade Secrets, Branding Technology and Markets (Future) Technology, Markets, Customers Ideas, Opportunities EH&SRegulations, (FDA) Product Registrations; EH&S Issues and Fines M&A JV Venturing Tools Knowledge Management Governmental Relations Future Legislation and Regulations External Technologies University Relationships (Internal info repositories) I&CT (IS) Department Marketing/Sales Production R&D Market and Marketing IntelligenceProduction Intelligence Corporate Strategy Technical Services - CTSC

Net Copyright 2006 Wolfgang Runge13 Avoid Surprises! On a Global Scale! Competitive and technology intelligence Begins with an understanding of yourself (culture, intellectual assets and “core competencies”) and the factors that impact your industry (segment) and your company. Focuses on current and future situations, current and future competitors, current and future technologies, opportunities and threats of complementary and substitutive technologies and offerings. Targets a “greater picture” (puts together pieces of a “puzzle”) Is basically comparative (your strengths/weaknesses, your position vis-à-vis your rivals’ positions). Anticipates your future actions and reactions and actions/trends of competitors, customers, suppliers, government and society.

Net Copyright 2006 Wolfgang Runge14 Identify and Assess “Hunting Grounds” Hunting for Hunting Grounds (identified A, B, C, …) Assessments of Hunting Grounds

Net Copyright 2006 Wolfgang Runge15 Basics for a Technology Intelligence Program Our experience suggests some fundamental principles for managing an effective technology intelligence program. –Audit current corporate intelligence activities and stakeholders and user factions and gather perceptions on value of the activities. –Identify intelligence needs focusing on “good or bad” management (or team) decisions in context to identify the most influential stakeholders that benefit from intelligence results. Find a champion. Identify further stakeholders in addition to those from the audit (for instance, through a questionnaire). –Define responsibilities (“If intelligence is everybody’s job, it is nobody’s responsibility”). Assign specific responsibility to an individual or group that knows what is necessary and has a mandate to recruit help from around the organization as needed. Appoint and train the right people. –Have or gain upper (top) management support (Research or Commercial functions); the technology intelligence effort has financial resources. –Design technology intelligence in the (at least conceptualized) framework of corporate CI and innovation organization; keep it open, extensible and scalable. Follow “evolutionary prototyping”

Net Copyright 2006 Wolfgang Runge16 Key Success Factors for a TI (CI) Program Upper (Top) Management Support Organizational and Cultural Readiness CI Champion(s) Clear Mission, Explicit Needs Agreed Upon Deliverables Decisions, Actions

Net Copyright 2006 Wolfgang Runge17 Technology Intelligence Program Dimensions Opportunities & Threats Strategy Development Tactical Decisions Operational Support Protection & Block Rivals INPUT OUTCOMES Hunting, Acquisition Leveraging Self- Assessment

Net Copyright 2006 Wolfgang Runge18 TI-Program Structures The intelligence program refers to different organizational models (and business models) –Centralized –Decentralized –“Hybrid” Criteria for model preferences include –The existing corporate culture and organizational model of the firm. –Reporting lines. –The extent and spread of existing intelligence activities –The proportion of strategic versus operational objectives. A program is an umbrella structure established to manage a series of related projects. The program does not produce any project deliverables. The project teams or corresponding units produce them all. A program structure is a method of classifying activities according to objectives pursued by the organization.

Net Copyright 2006 Wolfgang Runge19 A Phased TI Organization Development CI Auditing “Initialize” Management Conceptualize CI organization Align TI process with strategic and innovation processes Design “best fit” company TI processes Define responsibilities, champions, key players, task teams Gain cultural readiness: training sensitizing Define “metrics” Define policy and procedures Create infrastructure, align support Piloting Feedback for revisions Lauch “Measure” Define/design I&CT Support; “TI-System” Innovation processes