In the recent past, information technology (IT) service providers have been under enormous pressure to simplify and standardize their services, increase efficiency through reorganization, and introduce selective sourcing—all as a response to shrinking IT budgets and more aggressive competition. The top management's expectations of those responsible for IT are still rising. This means that IT service providers are under time pressure to provide solid evidence of the value proposition made to their customers concerning their competitive ability to change and innovate.

Innovation is the successful exploration and exploitation of new ideas to create value for society and for economies. In his book, Open Innovation: The New Imperative for Creating and Profiting from Technology, Harvard Business School Professor Henry Chesbrough emphasizes the transition from closed forms of technological innovation tied solely to corporate research and development (R&D) labs to the dominate trend, readily observable in the past two decades in the United States, of decentralized research and looking outside the company for innovation. In the 21st century, innovation is the domain of government and university R&D labs and small start-up companies: corporate enterprises focus their own R&D on creating near/mid-term revenue cycles consisting of current and next-generation products and services.

The pace of innovation is relentless and often requires the cooperation of various partners, the licensing of intellectual property, and/or the creation of completely new business models for the innovations to succeed.

Businesses must be innovative to maintain their differentiation and competitiveness to create new opportunities, capabilities, and efficiencies. Businesses increasingly look outside for innovations that will take them beyond the two-year product and service life cycle. Innovation is critical to information and communications technologies (ICT) companies and has become a necessary tool to compensate for declining revenues. Thus effectively identifying and prioritizing innovations, as well as fostering an innovation culture, are imperative when it comes to organizational success and future profitability.

This article aims to provide a holistic framework as to how innovations can be effectively discovered, evaluated, described, and distributed into an organization.

The framework and process presented are Detecon's best practice, which will help leading ICT companies do the following:

• Drive an innovation culture by creating innovation awareness
• Effectively communicate innovations into strategic business units
• Be at the forefront of innovating companies with viable business and partnership models
• Generate new revenues through innovative products and services

Innovation intelligence is the spearhead of the innovation life cycle. This paper will present best practice as to how to effectively discover innovations, rate them according to strategic relevance parameters, and communicate innovations across organizational boundaries. Examples of the organizational benefit will be given at the end of each section.

A discovery framework is used to assemble a long list of innovations collected from various sources, also referred to as a baseline of innovation knowledge. The discovery framework focuses on the following:

Technology/Product/Service Segments or Focus Fields

• Services—End-user, network
• Networks—Core, access
• Devices—Fixed, mobile, nomadic, hybrid
• Cross—functional areas

Market Segments

• Consumer
• Small business
• Enterprise
• Community

Time Horizon: 0-5 Years

• Market presence
• Market ready
• Product/service concept
• Research (applied or basic)

The discovery/identification process consists of a series of multidimensional tasks that are aligned with a process that identifies, qualifies, filters, and evaluates innovation. The nature of innovation discovery requires a vigilant, systematic, and proactive monitoring of sources. One must devote considerable time to the discovery process in order to identify promising research, companies, products, services, and business models.

Figure 1 Discovery and Identification Process Activities

It is important to recognize that the discovery approach is uniquely tailored to the needs of the client and can be adjusted iteratively. For example, some clients prefer a product-centric approach, leading to sources and conversations with sources that involve innovations closer to market readiness. In contrast, R&D organizations need to understand what new technologies are emerging that may still be in a basic research phase.

In order to align innovation discovery with the strategic directions of organizations, strategic innovation fields have to be identified. This should be done in close cooperation with the client. After jointly agreeing on the focus fields of innovation with the client, during the discovery process information is aggregated and pre-qualified from its various sources to generate a collection of relevant topics, which is referred to as the innovation baseline. The innovation baseline reflects a cross referencing exercise to determine which innovations the client is aware of versus topics that are entirely new. This is done leveraging Detecon's proprietary product, service, and technology databases.

The relevance framework is used to select a set of innovations of most relevance to the client from the innovation baseline. Innovations are qualified, classified, and prioritized based on key metrics of the greatest importance to the client's business. A list of relevant parameters based on conversations with existing and prospective clients follows (Figure 2).

Figure 2 Relevance Framework Parameters

To take one example from Figure 2, the degree of disruption is a highly relevant innovation rating measure for most clients. Disruption comes in three forms: sustaining, cannibalizing, and new market. Sustaining disruption indicates the level of innovation on a sustaining path, ranging from incremental to leapfrog innovations along the current product, service, or technology innovation trajectory. Disruptive innovation in existing markets creates a cannibalizing effect, thereby shifting the playing field. New market disruptions represent an opportunity to enter into a new industry vertical and disrupt its incumbents in a new market context.

Each of the three forms of disruption described above can be evaluated and stored, a priori, in an innovation database tracking products, services, and technologies. Innovations that have high disruptive potential in new markets are given a high rating, as are innovations that have high cannibalizing effects on existing markets, as they have a direct impact on the future profitability and business models of a given organization.

Once the database is populated with information on the parameters of relevance to existing clients, the relevance framework acts like a filter, using the parameters that are most important for a given client. For example, one client may be more interested in a "radar analysis" that tracks the intensity of competition than image or brand alignment, while another may be acutely interested in the disruptive potential to enter into new markets and generate new revenues for the bottom line.

A searchable database that is customized on a per-client basis can thus be envisaged, weighting those parameters that are of most relevance for a particular client or search function. Further, as the database expands, new data-mining capabilities and productivity enhancements are now possible.

A profiling framework is used to effectively describe and communicate the selected innovations within a client's organization.

Once relevant innovations have been selected for further assessment, one needs to understand who will be the target within an organization. In order to effectively drive innovation into an organization, addressing the right person effectively with the right information is absolutely critical to enabling an actual impact on the organization.

Hence, as a first step, one should identify relevant existing groups, initiatives, or individuals that will be interested in a given innovation topic. Once these have been identified, one can directly communicate with these groups to assess not only their needs, but also their current level of knowledge and understanding.

Taking into account the gained information, one can then go ahead to write a more detailed assessment of the innovation. An assessment could be a short e-mail, a PowerPoint slide, or even an extensive Word document, depending on the client's needs. As part of this profiling process, one also interacts closely with the innovation source, e.g., a start-up company or university researcher, to conduct fact checking and additional due diligence. Venture capitalists, analysts, and other sources can also assist, for example, in identifying other companies that are pursuing a similar idea. Today, virtually no idea is unique. One can usually find other researchers or entrepreneurs somewhere in the world who are devoting their energies to the same idea.

Effective communication of what the innovation is all about is critical. One needs to take into account the current knowledge base at the target group as well as apply a general framework of key questions to be answered. Generally, Figure 3 illustrates the order in which certain questions should be answered.

Figure 3 Framework to Effectively Answer Client Questions

Including the right information is critical. For a given organization, one needs to understand what type of information could help a particular group. For example, some groups are tasked with building business cases. For these, adding first data points to construct a business case is very valuable. Other groups are tasked with escalating strategic issues to senior management. For these, adding an indication of the type of disruption an innovation has on existing businesses and/or other industries is very valuable. For an R&D organization, understanding the impact of a technology on future business is of key concern. Senior management is more interested in an overview and aggregation of all innovations, while people close to products are interested in the details of only a select few innovations. Providing a drill-down capability from the overview into the details can ensure that all groups have the "right information."

Finally, one needs to distribute the written information effectively. A quarterly or monthly high-level overview usually gets distributed to the executive level to create general awareness and assist with driving highly relevant topics top-down into the organization. At the same time, not all innovations can be adequately captured with such a high-level summary. Hence, it is critical to truly drive innovation into the organization, interact with people in the trenches, and directly point out relevant innovations to the appropriate people in a timely way. A push distribution, e.g., via e-mail, can be combined with a pull, e.g., with a subscription to certain topics via the company intranet or by accessing an intranet innovation database.

Workshops can assist in making certain innovations more tangible, leveraging either internal participants or the participation of outside visionaries, researchers and industry leaders, e.g., from Silicon Valley. An expanding network of expert contacts can be highly valuable for clients in addressing further questions and establishing a culture of innovation.

Going one step beyond what has been typically done at leading carriers, one can also introduce a "need" radar or tracker. Instead of tracking the innovation supply (i.e., products, services, technologies), one can also track the innovation demand. Demand for innovation within an organization can be identified and measured by continuously surveying an organization for a niche demographic and determining its short-term and medium- to long-term needs. Needs identified through this process can be divided into short-term "problem fixers" and medium- to long-term "strategic additions." Problem fixers are innovations that immediately solve a problem faced by an organization or group in executing its business. Strategic additions are innovations that are closely aligned with the strategic direction of an organization or group and are a natural extension to the existing business once the immediate operational challenges have been overcome with problem fixers.

Such a need-based approach can significantly increase the innovativeness of an organization. First, it creates a strong pull for innovation, increasing buy-in for adoption of proposed innovations. Second, it communicates the expertise accumulated within the core of an organization to outside groups around the world that identify and evaluate new innovations on the ground, improving their ability to judge innovations correctly.

A need-based radar or tracker can be further associated with a social innovation trend tracker, for the needs of individuals and organizations will also change as the needs and wants of society do. Detecon is not aware of a radar system that tracks either social innovation or needs changes at the present time.

This section illustrates the shifting innovation landscape with a recent example and explores the possible strategic impact on a carrier and the recommended strategic response.

Detecon's Silicon Valley office tracks many innovation sectors. Lately there has been a lot of activity around Wi-Fi, laptops, and related or value-added services. As everyone knows, carriers are facing significant challenges today. Voice ARPU is declining, and growth in data ARPU is not fully compensating for the loss. But that is not the end of the story. In our view, things are likely to get far worse before they get any better.

New entrants are planning to deliver virtually free wireless service, typically subsidized through advertising and based on Wi-Fi or similar future technologies, in an effort to disintermediate carriers. The coverage of such service providers is, at least initially, limited to non-rural areas. Hence, customers now face a tradeoff between price and coverage. Clearly some proportion of consumers will switch and cancel their mobile plans, given that consumers today spend more than 80 percent of the day at the office and at home (locations likely to be covered by Wi-Fi).

Entrants such as FON, Google, and Skype are building on organically growing architectures such as Wi-Fi—possibly WiMAX in the near future. These technologies require neither heavy upfront investment nor lifetime maintenance by carriers. Instead these technologies spread out the investment and maintenance costs across users. At first sight, this development seems unstoppable, threatening the existence of carriers. How can a carrier respond to this disruption?

Carriers face an opportunity to fight back. For example, they have an opportunity to disrupt the PC industry. Today carriers are uniquely positioned to subsidize devices such as inexpensive laptop computers. And while search and portal providers could possibly subsidize devices with advertising revenue, historically the ad-sponsored device model has not prevailed. By bundling a virtually free laptop with ubiquitous high-speed Internet access, a carrier no longer competes on price due to its unique position. Furthermore, the carrier can pre-position software and content on increasingly sought-after real estate: the user entertainment, communication, and productivity device.