Telecommunications companies increasingly outsource their innovation detection and generation activities to leverage broader external technology developments while minimizing internal research and development (R&D) costs. Compared with internal innovation developments, companies that utilize outsourced innovation management can adopt identified technologies or products and incorporate them into their regular business more quickly. The most significant measurements of successful innovation are generated revenues from new sources and time to market.

As already exemplified and discussed in previous articles, Detecon has created and established various systematic means of detecting and discovering technology and business innovations (e.g., Detecon's Innovation Radar, Product and Services Radar). Discovered innovations are referenced to different time frames in which they are expected to take effect in the market.

Sometimes overwhelmed by the complexity and tremendous pace of technology developments, many companies will need to do their homework with regard to evaluating innovations as business opportunities for the market they are addressing. Such an evaluation will determine the impact an innovation is expected to have on the business, the organization, its customers, and potential partners.

In general, Detecon distinguishes between the following main impact categories for innovation:

• Disruptive
• Sustaining

Strategically, innovations which are most critical are those which potentially disrupt established business models. "Disruptive technologies" are a myth: new radical technologies do not replace old ones. They are actually, by definition, new, with their own unique advantages. However, what is disruptive is their potential impact on established business models. This is especially true in telecommunications, as this industry is founded on technology-based business models. An example of a disruptive innovation is voice over Internet protocol (VoIP). The technology and concept is not that new. However, given the level of maturity of IP technologies and its consequent application to the vast consumer market, either for free or for a comparably low cost, VoIP is becoming a very disruptive innovation for voice communication, potentially eradicating fixed-line voice telephony.

Sustaining innovations, on the other hand, either improve existing technologies (e.g., broadband evolution from dial-up, integrated services digital network [ISDN], digital subscriber line [DSL]) or enable new features, essentially making an existing product or service work better. Companies must understand and address both sustaining and disruptive innovations to embrace them as tools for growing and sustaining the business.

This is especially critical in the fast-paced and highly competitive telecommunications market.

Detecon provides significant support to service companies in their efforts to understand identified innovations more quickly and more comprehensively, especially with regard to their potential business impact. Detailed business impact evaluations are an integral part of Detecon's Strategy and Innovation service portfolio.

Once a technology has been identified and pre-assessed as interesting and significant for a company, a team either draws up usage scenarios or scans existing usage models to apply these, sometimes supported by external experts and market makers. It is critical to define specific usage scenarios for innovations. Such scenarios will be precursors for services and applications for the "real world" in which novel technologies innovations will be applied. Detecon usually provides a variety of usage scenarios ranging from quick-win approaches with immediate potential for implementation to more visionary scenarios further down the road or even radical out-of-the-box approaches (see Figure 1).

Figure 1: Innovation Management to Implementation – Integrated Technology-to-Business Approach

Usage scenarios also help identify and define an enabling ecosystem and the value chain of service delivery by detailing processes and elements involved in the delivery. As time to revenue is one of the most critical success factors for innovation, usage scenarios play a very crucial role in communicating the value of such innovation throughout the company. They basically help decrease the level of complexity and narrow down the vast number of possible choices for real-world applications. Experience shows that usage cases also enable streamlined interactions with potential business partners, as they clearly lay out the role and interaction among various elements in the service ecosystem and provide indications about the technical functionality of the service architecture and interfaces.

As a next step, Detecon's Strategy and Innovation team defines the value chain for service delivery based on the identified innovation. This value chain consists of a series of activities that create and build value for the applying company and is based on the business ecosystem and enabling technology architecture. Often, a number of value chains can be created, leading to alternative ways of introducing the service to the market and different business models.

In addition to the value chain, Detecon also defines and/or evaluates viable business models for its clients, covering partnership opportunities with third parties, sales channels, provisioning, and customer service. Basically, all operational functions will be assessed with reference to the impact the innovation will have on them. As a result, its clients will have a set of clear recommendations and guidelines for implementation.

The portfolio of services offered by the Strategy and Innovation team at Detecon especially addresses corporate development organizations, CTO organizations, R&D organizations, and product development organizations, among others. Detecon therefore details and develops the business impact of innovations within the respective time frame in which they become relevant to the market. This includes strategic impact on a business or organization as well as more tactical assessments leading into product and service launches within a time frame of 12 months or so.

Detecon's strategy team, for example, helped define the strategic position of a global information technology (IT) system integration with reference to the emerging business opportunities based on RFID technologies in various industry applications. Detecon evaluated the status of technology developments and the level of market maturity. By doing so, it was able to demystify a technology topic that was overhyped at the time in the public discussion. Its ongoing innovation detection activities allowed us to define a qualified future development road map, which Detecon used as a reference timeline for its strategic guidance for the client. Detecon was successful in defining potential business models for its client to maximize its potential in the RFID business considering technology and market timing, capital expenditures/operational expenditures (CAPEX/OPEX), strengths/weaknesses, competition, and vertical industry expertise. Its strategic support enabled its client to identify several focus areas for immediate piloting opportunities, identification of technology partners/suppliers, and more strategic steps toward an integrated radio frequency identification (RFID) solution provider. A side outcome from Detecon's project was a guideline for external corporate public relations and marketing toward the RFID community.

In another example, Detecon assessed business opportunities for a telecommunications service provider, based on developments in the area of D display technologies. Its team was able to ascertain that the worldwide development of D technologies had matured further in several areas than was widely understood and believed. Detecon was able to project a market impact of D technologies much soon than was assumed by its client. Detecon uses a methodology in which facts and data from primary and secondary research from its Innovation Radar activities are compared with information and assessments from external industry experts as well as from the client company's internal experts.

Upon comparison of the data in this case, Detecon was able to demonstrate a gap in understanding D technologies as drivers for business innovations between internal sources and the external market realities. In the next step, Detecon developed and demonstrated a number of D application scenarios and business models for its client. These built the base for a proposed solution and business road map for its client company. Based on its qualified technology-to-business expertise, Detecon was able to allow its client company to maximize the potential of D display technologies in several fields more quickly as a first mover. A number of D product initiatives are under way, leading to first products in the market before the end of 2006. In short, Detecon's work helped the client gain a competitive advantage in this area.

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Figure 2: Relationship between Technologies and Applications. Most Applications Are Immediately Available but Will Gradually Improve as Quality- and Performance-Enhancing Technologies Emerge.

New competitors such as the MVNOs or municipalities in the wireless case, or new entrants such as Skype in the wireline case, jeopardize the formerly dominant positions of market incumbents and are living proof that it is now imperative for telecom companies to differentiate themselves in order to avoid being perceived as a mere pipe. They have to be quicker and more efficient in order to stop losing ground. This means a shift in the legacy innovation paradigm, away from that characterized by an overall conservative approach, plus rigid and highly formalized processes, and toward agile and more entrepreneurial approaches where failure is an integrated part of the learning process that will ultimately foster innovation and differentiation.

Figure 2: Analysis and Recommendations for Agreed Models – Comparison of Models for Recommended Deep Dive Analysis. In Comparing the Plan and Build Models, Clients Must Keep in Mind the Budget/Buying Capabilities of Small and Medium-Sized Enterprises (SMEs) and Potential Complexity of Offers.

Besides defining business models for the introduction of new technology innovations, Detecon also identifies and evaluates innovative business models and creative go-to-market strategies. This is especially valuable for international information and communication technologies (ICT) companies to benefit from lessons learned in the U.S. market. The United States is one of the most vibrant and innovative business environments in the world. The business mentality in the United States allows new approaches to be introduced relatively quickly and then be adjusted based on market feedback and bottom-line impact. Detecon very recently systematically investigated and evaluated innovative business models and market approaches to provide LAN implementation and operations services to small and medium-sized enterprises (SMEs) for a major European ICT service provider. Local-area network (LAN) services for enterprises have already evolved into a commodity business for many providers, but for SMEs, these services are a still growing and, to some extent, underserved market. Based on its direct established market access, Detecon's team has used primary and also secondary research to identify truly innovative business models, detail the parameters of the business model, and identify success factors by interviewing service providers and customers.

A legacy business approach for providing LAN services includes site survey and planning, equipment planning, equipment acquisition, installation, operations, and customer support. Such an approach might be viable for larger enterprises, but it is too complex, time-consuming, and cost-intensive for smaller companies. Detecon was able to identify innovative business models to help "package" the LAN offer by providing equipment and service options pre-packaged, with easy acquisition and flexible pricing to target the SME market. Such models include "IT in a box," "branch in a box," "LAN per square foot," or "LAN per port." While providers are basically using the same type of middleware and hardware, various innovative cost and pricing models or service approaches have been developed. Detecon was able to identify, detail, and evaluate these business models based on the level of market success, ultimately leading to very concrete recommendations that its clients adopt and implement key lessons learned. Detecon was instrumental in transforming its client's approach to the SME market. The company started adopting lessons learned while the project was still ongoing.

Business detailing and planning bridges the gap between innovation intelligence and the actual implementation of innovation by the client. By applying Detecon's systematic, integrated, and expertise-driven approach, clients can gain tangible value not only by utilizing discovered technology innovation, but also by significantly reducing the time to revenue and reducing the innovation risk. Most of Detecon's engagements lead to tangible implementations, product developments, and the adoption of new strategies with reference to the innovations it identified.