How to Ace Technology Scouting

Let’s say you are working at the innovation, R&D or corporate venturing department of your company and your job is to find the most promising innovative companies in the world. How to find the company that impresses the hell out of you and… maybe far more important to you… impresses the hell out of your smart-arse-know-it-all-colleagues :-)? If you are experienced in scouting, you will probably know how time consuming technology scouting is. From all the sources that are available to you and all actions you could take, it is always difficult to choose that action or source that will give you most chance for short term success. And if you are new to technology scouting, additional challenges kick in: Where to start searching when you are not familiar with the space. How to assess a company on its potential? How can you be certain that you found the best company in the space?

A pre-warning: We do not have any quick fixes to these questions for you, but 40 years of investment experience have taught us a few things that you might find helpful. In a series of blog posts we will give our view on how to deal with the challenges of scouting. Today I will discuss  Should you define your scope?’”.

Should You Define Your Scope?

We have seen many of our clients struggling with initiating technology searches. They want to look for a technology that might disrupt their industry or give them an extraordinary growth opportunity. The “knee-jerk-first-step” often seems to be; scoping. The thought is: if you define your search well, you can search more effectively, which sounds very reasonable, right? Yes, I understand that in a corporate world you must have a clear plan to explain your actions, but trying to define your scope when you do not know the space, is actually… a flawed strategy. Teams that go for this strategy can typically spend many hours in meetings and analysis to come up with a breakdown of technology themes, that very often looks very similar to anything you could have googled together in 5 minutes.

Scoping well, might be a logical way to go in many other cases, but in technology scouting it can be fairly useless. I compare this strategy with a student that tries to narrow down his/her career choice with platitudes like, my next job should be one where I can work with people, where I can do diverse work, where I can learn a lot, and so on. As much as these things are important, you need a few years of work experience to come up with a better set of criteria that actually breaks the options down in a more sensible way.

The same is true for technology scouting, the only way to build your criteria is by talking to actual companies. Therefore, the best way to define your scope is not to over analyse it, but to just make a quick and dirty breakdown of the technology area (and no, there is nothing wrong with just trying to google it :-)). Pick an area that looks sort of promising at first glance and start reaching out to companies right a away.  ‘But?’, you might ask, ‘isn’t that super time consuming?’ Yes it is, but that is what technology scouting is. Are there other ways to limit your time? Yes, i can recommend the following practices:

  • Try to identify deal breakers quickly. You want to avoid spending much time on a company you cannot close a deal with.
  • Decline fast, whilst leaving the door open for the future. You never know how the company might develop in the future and if they are able to overcome issues that you encountered earlier, that could turn out to be a massive qualifier for the company.
  • Try to limit your company calls to 30 minutes.
  • Share learnings from your interviews with colleagues, to maximise the value of your invested time and to avoid double work.