The Lux Innovation Grid

Evaluating potential partners, competitors, acquisitions, and investments in emerging technology areas is challenging because these nascent fields are populated by a confusing mix of unproven start-ups, established companies, and international players – all fielding diverse business plans and unfamiliar technologies. The Lux Innovation Grid provides an objective, unbiased reference tool for evaluating companies active in emerging technologies, based on the proprietary insights of Lux Research’s highly-regarded analyst team.

Lux Innovation Grid Value

The Lux Innovation Grid provides a means to:

• See which companies are leaders and laggards in a given technology area
• Quickly narrow a search based on companies’ positions
• Get a sense for the competitive landscape in any technology area at a glance
• Benchmark companies against rivals and peers

Who Should Use The Lux Innovation Grid?

The Lux Innovation Grid is a useful tool for:

• Technology scouts at major corporations seeking to identify potential partners
• Business development executives tasked with finding and assessing M&A opportunities
• Financiers looking for investment candidates
• Start-up CEOs that need to understand their competitive landscape
• Policymakers trying to determine what firms and fields will drive economic growth and job creation

How the Lux Innovation Grid Works

The Lux Innovation Grid positions companies using three key quantitative scores plus a qualitative “Lux Take.” The quantitative scores are weighted averages of multiple assessment criteria that we maintain for each company as part of our ongoing technology scouting database. Criteria weightings may differ from one Lux Innovation Grid to the next because different attributes are more critical for success in different markets, but each Lux Innovation Grid provides a consistent visual benchmark.

In the Lux Innovation Grid, we position companies witihin a technology area as dots on a plane where:

• The strength and value of a company’s technology determines its “Technical Value” score. Companies with useful products and services that lower cost, boost performance, or increase revenue are valuable to customers, partners, and investors. The criteria for this score are the value of a company’s core technologies or solutions, its addressable market size, and its competitive landscape. The Technical Value score is placed on the vertical axis, ranging from 1 (low) to 5 (high).
• A company’s ability to perform and achieve success determines its “Business Execution” score. Business execution is a measure of the company’s ability to run a viable organization – growing sales, managing costs, and making customers and investors happy. The criteria represented in this score are management strength, profitability, partnership value, momentum, and barriers to growth. The Business Execution score is placed on the horizontal axis, ranging from 1 (low) to 5 (high).
• The completeness of a company’s development determines its “Maturity.” Mature companies have secured a niche and built a defensible presence in the markets where they compete. The criteria for this score are company size, stage of development, annual revenues, and age. The Maturity score is represented by the size of the dot on the Lux Innovation Grid, from 1 (immature) to 5 (developed).
• The “Lux Take” presents the posture that potential partners and investors should take toward a company. The “Lux Take” is a qualitative assessment based on the considerations taken in the above areas, placing companies into five categories: “Strong Positive,” “Positive,” “Wait and See,” “Caution,” and “Strong Caution.” It’s important to note that “Wait and See” is not a “neutral” judgment; instead, companies with this assessment face significant unknowns regarding their technologies or markets that can’t be meaningfully judged today. It’s also important to note that the “Caution” ratings are not necessarily negative – instead, they serve to flag company-specific issues which are not representative of the field as a whole that potential partners or investors must keep in mind. (As one example, consider a company with a great product and management team and big addressable markets, but facing a dispute over intellectual property). Colors ranging from red (Strong Caution) to blue (Strong Positive) indicate the “Lux Take.”

For more information about the Lux Innovation Grid, or to request a grid evaluating a particular technology area or set of companies, please contact your account manager or email info@luxresearchinc.com.