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External Innovation “Dating Etiquette”: Who Pays?

Posted by mdf4u on December 27, 2009

It is common for a would-be technology provider to find that a corporate technology seeker wishes for them to invest in conducting supplemental work to validate their technology.  While a certain amount of this is to be expected and is appropriate, how much is reasonable?  At what point should the technology seeker also be expected to contribute?
A technology seeker typically has access to and knowledge of available, alternative solutions in the space that a technology provider may be seeking to fill.  The potential value of the provider’s innovation to the seeker must be weighed against these.  Investment decisions must be similarly considered.  

As one might expect, a technology seeker’s strong preference is to push costs and resource investments onto the technology provider. Realistically speaking, large companies can’t afford to invest in the validation of every potentially attractive opportunity. That said, a technology provider should seek to have good knowledge of how well positioned his technology is relative to the current art.  With this knowledge, he can decide at what point he feel he can request that the seeker share in this investment.  If the seeker is unwilling to make this investment, then their interest likely isn’t that pressing.  It further signals their apparent willingness risk losing the opportunity.

Importantly, a technology provider should seek where possible, to define a validation roadmap with the technology seeker before incurring costs.  In effect, they should seek to identify what information is necessary, what results will qualify their technology, and what specific actions will be taken by the seeker if these conditions are met.  With this roadmap defined, a provider can decide what investment they are willing to sign on for.  Technology seekers will not usually raise this issue as they do not want to be committed to anything prematurely, and because in some instances they don’t have authority to commit to anything beyond qualifying the technology as an input to another business decision in a staging process. 
Many technology providers are reluctant to broach this topic at the risk of offending the technology seeker.  However, without some  clarity, the provider has no sense of what obstacles must be cleared in order to achieve success, nor will they have a clear definition of what constitutes success. 
I recall several years ago, one of my clients having spent about 6 months seeking to validate a technology with a consumer products company, only to find that there was no internal business customer ready to adopt it once it had cleared this review.  After this experience, I have learned to seek clarity much sooner in the vetting process. Sometimes the answer simply isn’t available to be given.  And that can be useful information in and of itself. 
In conclusion, technology providers should approach interactions with technology seekers with clear eyes and a measure of sophistication.  Associated investment decisions should be viewed similarly. 



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