The TEC Algorithm (Technology Entrepreneurship and Commercialization) is a series of highly structured commercialization tools developed at North Carolina State University with grants from the National Science Foundation and the Kenan Institute for Engineering, Science and Technology. It is designed specifically to help firms cross the so-called “Valley of Death” that occurs at the front end of innovation when promising technologies fail to generate any commercial rewards.
Managers – even those with very limited commercialization experience – can use these tools to make effective investment and product development decisions and to rationalize their organizations’ innovation processes.
In order to better meet the pressures of global competition, we have developed a more complete algorithm than the version described in the Spring 2011 issue of this newsletter. Our updated version includes better early search and ideation capabilities and methods to improve the internal adoption of new ideas into the organization's pipeline of approved and funded projects.
Using the Algorithm can help answer such questions as: How can existing products be elaborated to expand and address new markets? Which new technologies will enable new products and business models? How do we find new markets by leveraging existing capabilities?
Leveraging the success of the last 15 years, the TEC Algorithm is being expanded to include a comprehensive set of ideation tools and methods for implementing innovations within the company. New tools are also incorporated to address a range of sustainability issues.
And there’s now a module for identifying and developing service opportunities. Services are intangible, they are produced and consumed simultaneously and perish if not used.
The expanded Algorithm starts with a set of tools to find both articulated and unarticulated needs. Articulated needs are those needs that the intended customers or users are able to state clearly enough to the developer that a product description can be derived from information gathered from the user/customer. Such techniques as direct inquiry, Delphi, nominal group techniques, brainstorming, and discussion prompts are used to help people articulate their needs.
Unarticulated needs are those needs that the intended customer/users are unable to state, often because a new technology or service lies outside their experience base. Early-stage market research techniques like voice of the customer, trend analysis, unstructured text analysis, technology scanning, and a variety of open innovation techniques help users and customers identify latent needs.
For either articulated or unarticulated needs, a Needs Statement is prepared to define the new capability required to deliver the new product or service. This statement is fundamental to the search for ideas and solutions to meet the needs. The advanced text analytics developed jointly with IBM (see “Business Intelligence in the Clouds,” CIMS Innovation Management Report Winter 2010-11) are used to conduct an extensive search for multiple ways to meet needs.
Embedded in the Needs Statement is the possibility to develop either or both goods or services. An early-idea portfolio tool has been developed to assess ideas that are still in the embryonic stage. Drawing in information that research has shown to be both discriminating and knowable at an early stage permits assessing risk and return. For example, opportunity size and R&D capability are used to assess an idea’s business potential.
A modified Technology Readiness Level and a new Market Readiness Level assessment are also used for making early-stage portfolio decisions.
Once portfolio decisions have been made, the project enters an Opportunity Development phase. The scope of work done at this point is defined by what needs to be done to make informed decisions about the project – not full development work.
This phase starts with an eight-step Initial Opportunity Statement, illustrated in the worksheet above. The worksheet is a template to identify the specific work to be done in order to demonstrate the potential of the idea. The Statement becomes the controlling document for early-stage development, external search or RFP development.
Following the opportunity development phase, the existing Algorithm tools are used to assess and develop the raw idea into a viable commercial opportunity. A series of functional discipline development modules and strategic assessment tools gather and arrange information to prepare a business plan that allows making informed decisions about whether a project should move into formal development.
A major innovation challenge faced by most companies is how to implement the ideas they have developed. New ideas challenge the existing production/delivery capabilities, sales and marketing as well as supply chain partnerships, not to mention the financial model the firm uses to communicate with investors. Although most companies value innovation, implementation can be more difficult.
Throughout the project, an Adoption Checklist is used to ensure the adopting part of the company is kept apprised and input is sought to ensure there are no surprises when the project finishes development. The Checklist ensures there is a ready and willing organizational unit to move the project further.
To help the project traverse the Valley of Death without falling victim to the “not-invented-here” syndrome, a Timing of Involvement planning document is prepared. This document lists everyone who will be involved in project development and delivery. Each person or role is identified along with an expectation of his or her involvement across the entire discovery-development-delivery life of the project. In addition, a number of communication tools are utilized, such as: value proposition, one-page description, “killer graphic,” and elevator pitch.
In addition to the idea development process, we include a number of innovation program elements such as assessing the organizational structure surrounding the innovation function, the extent and functionality of internal and external interfaces, skill development among managers and staff, governance and leadership, and performance metrics. It is hard to under- state the importance of these elements for ensuring innovation success.
Will You Join Us?
Having developed each of these components in isolation, we are now soliciting companies to participate in the next developmental step by learning to apply the entire process. Participation entails actually working on a number of real projects at your location with teams of people from your company.
The advantage of participating is that you actually do real projects and develop a front-end capability and embed skills necessary to find new needs, match them with advantageous ideas and prepare them for adoption into the rest of the organization. By participating, your company can develop a critical mass of people using a common language for front-end work. To participate, email Fred Renk at FredRenk@aol.com to discuss costs and timing.
Stephen K. Markham
Associate Professor, North Carolina State University
Associate Professor, North Carolina State University
Retired Vice President of External Technologies, MWV