Is Scouting for "Fully Cooked" Products a Recipe for Success?

Monday, 14 January 2013 06:30
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Companies new to external innovation can risk being seduced by the promise of significant time and resource savings from adopting fully developed products from outside sources. Are these savings realistic, or might it be more advantageous to acquire well-qualified performance ingredients and then develop products around them? Or, are there points in-between that are potentially more attractive than either extreme? The answer, as is often the case is: it depends.

Curious to learn more? Read on, dear friends....

Is Scouting for "Fully Cooked" Products a Recipe for Success?

External innovation initiatives can range considerably in their scope. For instance, one company may desire to learn about or license novel performance ingredients to incorporate into as yet to be defined new product formulations. Another may wish to secure a fully formulated product that could be "tweaked" to meet its aesthetic preferences. Another company may commission an external party to fully formulate/develop a product for them, according to their requirements.

External innovation can consist of any of these scenarios, as well as many others. These approaches can potentially afford companies savings and efficiencies versus developing the technologies and products themselves.

Sometimes it can be relatively simple to decide whether or not to "go outside". For instance, if the company requires expertise and capability in an area that it lacks (e.g. Neutrogena and P&G have gone outside for personal care appliance development). Other times, it can be more challenging to make this decision.

One might assume that it would be relatively straightforward to qualify a new aesthetic variation of an externally sourced formulation. It can be, but sometimes the challenge can turn out to be more complex than expected. For example, while working at Bath and Body Works some years ago, I experienced the instance where the company considered licensing an externally developed body wash with terrific technical moisturizing properties. While it was a simple matter to alter the product's fragrance to be brand right, it unfortunately lacked the rich foaming characteristics that its customers expect and require. As they were unwilling to overlook this performance disparity, despite the other technical benefits, they didn't pursue the formulation.

My point is that when companies state that they are scouting for "fully cooked" external products they may or may not fully understand the implications of this decision. Do they truly mean that the product requires absolutely no redesign or reformulation? It is possible that they could mean that they are seeking technologies that have been sufficiently de-risked to be "qualified" for incorporation into the client's preferred product matrix. This exercise may or may not be a straightforward matter and could potentially consume a lot of the anticipated time and resource savings. As one might expect, these are not trivial matters. Therefore, companies need to fully think through the their "mission", including their success standards and action criteria before they go hunting for external solutions in order to be able to realize the greatest benefits from them.

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