This quarterly column, written by Victoria Scarborough, Ph.D., Vice President Collaborative Innovation of The ChemQuest Group, Inc., provides a look into the latest trends and technologies within the coatings and adjacent industries that impact the value chain.

The paint and coatings industry is very mature. Mature companies remain profitable by employing a business strategy that includes organic and inorganic growth, developing new products internally and acquiring companies and/or technologies.

Larger mature companies are in special danger of becoming complacent and risk averse, as external opportunities may be viewed as a threat to the status quo and potentially cannibalizing to their well-established product lines. Such complacency gives competitors an advantage if they are willing to take calculated risks, invest in technologies that deliver superior products that solve your customers’ pain points and satisfy unmet market needs. Thus, it can be advantageous to seek technology partners who, by augmenting internal resources and overcoming inherent biases, drive faster growth for your business rather than for the competition.

Why You Need Technical Scouting

A good way to differentiate and enhance research and development (R&D) programs is to add external technical scouting as a new activity to identify emerging technologies, novel materials and novel application methods that may significantly differentiate you from your competitors. The importance of technical scouting cannot be overstated, as it is a necessary activity in a highly aggressive environment. 

Scouting for opportunities outside your company starts by clearly defining your needs, having the ability to access information all over the world and focusing your ability to collaborate with others. The scouting process is distinctly different from typical R&D research in that it focusses mostly on external collaborations that may not yield results. Typically, just 10% of external opportunities result in success—but those successes can bring a lot of value if they meet expectations. 

Breakthrough technology is often found outside corporate walls and in places like universities where more time is devoted to new science. This has created a knowledge gap, as new learning from major universities with dedicated polymer material science and engineering departments do not interact on a routine basis with paint and coatings manufacturers.

Technical scouting fills that void by not only working with universities but other research organizations outside the normal channels of business. By augmenting current R&D activities with technical scouting, companies can stay abreast of any nascent technologies that could disrupt their business. 

Scouting as a Process

If a company adds technical scouting to its team, the decision to do so must be supported by upper management and with the understanding that results will not be instantaneous. Technical scouting requires patience, skill and good timing.  The typical scout is someone who has been around the industry, knows your business inside and out and can speak to anyone, at any level, about anything. Their technical skills are often surpassed by their soft skills in working with people. 

Several key activities must happen before scouting begins in order to enhance the probability of finding the right opportunities for your company, including:

• Conduct an internal customer needs assessment to understand what new product or service would provide value to them if you could deliver a solution 
• Triage the list of needs for those that have the financial potential to provide the highest profitability
• Gain agreement from upper management that the needs list is in alignment with company goals
• Distill the needs list to make it understandable to a wider audience outside the organization
• Communicate on a regularly scheduled basis with the technical scouting team to review needs and changes to the list 

Once a needs list is established, the scouting team can begin searching for technologies that closely match the list. Keep in mind that additional opportunities are often discovered in the search; you must have a process to evaluate these as potentially valuable to the company. 

The Scouting Landscape

Because new technologies can be found anywhere in the world, it is necessary to have a strategy for searching the landscape. The map shown in Figure 1 lays out most of the potential areas for technical scouting. 

FIGURE 1 | The technology market pool.

Source: The ChemQuest Group, Inc

As mentioned previously, traditional R&D in the paint and coatings market is not necessarily a source of breakthrough solutions. However, maintaining vigilance for competitive threats is necessary to avoid unexpected disruption. Raw material suppliers rarely bring in new capabilities unless they are also scouting for novel additions to their product portfolio and acquire something that has the potential to be of value. Some of the areas listed in Figure 1 may be new to you.

Adjacent Industries

Industries like cosmetics, adhesives, printed electronics, medical and pharmaceutical businesses all have their own technologies that might be of use to the paint and coatings industry (see Figure 2). For example, many adhesive companies are investigating the use of the specific chemistry associated with mussels for use underwater. Can this same technology be used to enhance adhesion in paint? Cosmetics formulations are very advanced, containing many encapsulated ingredients that may also be used in paint. Thus, scouting at trade shows associated with adjacent industries may reveal an opportunity for horizontal innovation (i.e., translating technology from one industry to another). 

FIGURE 2 | Industries adjacent to paint and coatings. 

Source: The ChemQuest Group, Inc. 

Research Institutes

Many independent or sponsored research institutes around the world develop unique technologies that may be available for license or acquisition. Investigating these institutes usually requires in-person visits and tours to understand their full capabilities. While not an exhaustive list, a few are listed here:

• The Battelle Institute (United States)
• RTI International (United States)
• Southwest Research Institute (United States)
• The Fraunhofer Institute of Technology (Germany)
• The Centre for Research in Engineering Surface Technology (Ireland)
• The Finnish Institute of Technology (Finland)
• ETH Zurich (Switzerland)
• The Basque Center on Materials, Applications and Nanostructures (Spain)
• Institute of Fundamental Technological Research (Poland) 

Federal Government Laboratories

Government laboratories conduct material science research all over the U.S. Most of their patents are available for license, especially if the technology is not related to national security or being used by the military. Working with these agencies can be onerous and may require special development agreements, particularly when work is needed to develop the technology further. The agencies listed below often have material science technologies of interest to the paint and coatings industry:

• Oak Ridge National Laboratory 
• Sandia National Laboratory
• Lawrence Livermore National Laboratory
• National Renewable Energy Laboratory
• National Aeronautic and Space Administration (NASA)
• Pacific Northwest National Laboratory
• Army Research Laboratory
• Navel Research Laboratory

Startups and Universities

Material science startup companies can be a source of breakthrough innovation that can address the strategic needs of your business. In the U.S., their technologies are mostly developed from government-funded work conducted at universities. Their participation in government programs like the National Science Foundation Innovation Program (NSF I-Corps™) greatly enhances their ability to understand market needs and how their value proposition might add benefit to your business. The NSF I-Corps™ program encourages startups to engage with industry at conferences, trade shows and pitch competitions to preset their technology and find collaboration partners. 

Startups are nascent companies that have little experience in industry. Technical scouts must therefore provide some coaching as well as handholding to understand the value of the technology to their organization. They then translate that information to their internal stakeholders. Good startup presentations must include the following:

• Definition of the problem and the solution — Look for a clear understanding of customer problems followed by a description of the technology that solves the problem.
• Market segment and competitive environment — The impacted market is quantified with data sourced from industry experts. Key competitors and alternative solutions are described, as well as how their technology gives them a market advantage, including intellectual property (IP). Their targeted beachhead market is defined, as well as the markets that extend from the beachhead. 
• Business model, cash flow and growth strategy — How does this startup want to make money? A clear revenue model is given that includes essential partners, licensing opportunities, supply chain information, manufacturing capabilities with built-in operational efficiencies and a robust go-to-market strategy.
• Startup background — The startup staff and their advisors are highlighted, along with any prior startup and leadership experience that is relevant to this market. Sources and amounts of current and future funding are disclosed, as well as associations with any venture capital firms. The presenter should be able to answer your questions without presuming they know how to solve your problem.  

One key issue to fully understand is who owns the IP. An employee of a university is usually required to assign to the university all inventions made with university-administered funds. IP such as patents is administered by the university technical transfer office. In exchange for equity, the university technical transfer office will license the patent to a startup company, usually founded by students who originally worked to develop the technology. The distinction of who owns the IP is an important detail when working with a startup company.

Technology Evaluation

After finding the right startup collaboration partner, it is time to understand if their technology will meet your requirements. Data provided by a technology startup should be verified by your company or an independent lab to determine its overall value to your organization. Testing under conditions that meet your specifications will determine if this will, in fact, meet your needs. 

FIGURE 3 | Technology scouting workflow. 

Source: The ChemQuest Group, Inc. 

Vetting new technology can be complicated, as new materials do not always behave in a consistent manner. Allow ample time (combined with R&D experience and modern application/testing equipment) to fully understand how to handle a new-to-the-world material; be prepared to tinker with testing conditions and variables. 

At some point, you may be tempted to give up if you cannot verify the technology claims, but don’t. Instead, work with the startup company, providing them with pertinent feedback to make the necessary adjustments. Be prepared with an exit strategy that sets parameters for knowing when and how to walk away from a technology if, after following your innovation process to make it work, it fails. Clear goals, timely vetting and good communication among all collaborators prevent scope creep.  

Create a Strategic Advantage

Implementing technical scouting is a strategic advantage for a mature industry like paints and coatings. It is essential to drive innovation while maintaining vigilance against incoming disruptive technologies. Finding the best collaboration partner, properly vetting their technology and working to secure a technological solution for your business is a process that requires special expertise.

A practiced technology scout serves as an effective bridge between small technology providers and larger corporations. The relationship can be delicate and requires nurturing on both sides. 

Ultimately, driving your innovation process by collaborating with others can deliver new technology and profitable new products. It starts by describing your needs, exploring many potential opportunities, vetting new material technology and finally, establishing a collaborative relationship with a trusted partner. 

To learn more, reach out to the author at vscarborough@chemquest.com or visit https://chemquest.com.