IMPROVING THE FRONT END

OF INNOVATION WITH ARTIFICIAL

INTELLIGENCE AND MACHINE LEARNING
Lead Analyst
Kevin See, Ph.D.
VP, Digital Products

Contributor
Ryan Dolen
Senior Data Scientist

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Innovate Smarter
& Grow Faster
ABSTRACT
AI and machine learning are hyped for use in applications as
varied as marketing and predictive maintenance of machines. The
innovation community has long desired tools to enable greater
efficiency and impact and is now considering whether AI can deliver.
This white paper analyzes tools for parsing innovation data and
pulling out insights in an efficient and unbiased way in the ideation
and vetting stages of innovation. It discusses needs, approaches,
uses cases, and best practices to help organizations leverage the
tools for maximum impact.

TABLE OF CONTENTS

Executive Summary......................................................................................2

Machine learning is easy; extracting value is hard..........................................3

Machine learning can improve the early stages of innovation..........................3

Natural language processing and topic modeling are the ML tools of choice.....4

Use cases for ML in innovation......................................................................4

Landscaping case study: 2D materials patents...............................................5

Building an ML strategy requires technical and cultural changes......................7

1
EXECUTIVE SUMMARY
Artificial intelligence (AI) and machine learning (ML) have become ubiquitous concepts across many industries. The algorithms
and libraries to do it yourself are increasingly commoditized, so deploying and training a model can be done in the hands of a
skilled data scientist in a short amount of time. Corporate innovators, entrepreneurs, venture capitalists, and government funding
agencies are among those seeking to leverage AI/ML to identify the next impactful and profitable technology. However, this
application lacks training data and quick feedback loops to verify whether today’s decisions will bear fruit.

Innovators must consider the why, what, and how of AI for their process
To bring clarity, this white paper explains why innovators need better solutions, what use cases to attack, and how to deploy AI.

• Finding the right technologies and companies to invest in is rife with challenges. These challenges include turning amorphous
ideas into action, moving through the pipeline faster, overcoming bias, and understanding the competitive landscape.

• Use cases for AI and ML in innovation are wide-ranging and include landscaping, concept similarity, competitive analysis,
and trend identification.

• Because innovation data is often largely text, natural language processing (NLP) technologies, and specifically topic modeling,
are the ideal tool to extract insight from a sea of data.

To illustrate the power of this approach, we use topic modeling to landscape the space of 2D materials and show how significant
insights fall out of a single model.

Best practices can help you get started while avoiding missteps
Organizations wishing to implement AI and ML for innovation must consider some key issues when starting any digital
transformation initiative. These issues include whether to buy or build, how to integrate humans into the loop, and how to
implement cultural change. Because data science is not a skill that’s readily available to build for every corporation, partnership is
wise, as is a plan to enable cultural change so that the technology augments the human – rather than replacing it.

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MACHINE LEARNING IS EASY;
EXTRACTING VALUE IS HARD
Artificial intelligence and machine learning have become ubiquitous concepts across many industries. The algorithms and libraries
to do it yourself are increasingly commoditized, so deploying and training a model can be done in the hands of a skilled data
scientist in a short amount of time. Increasingly, there are vendors that layer on beautiful user interfaces, scalable platforms, and
specific use cases to solve problems as varied as scoring marketing leads and predicting when a motor will fail. In all of these
cases, human understanding of the challenge to be solved is paramount.

Count corporate innovators, entrepreneurs, venture capitalists, and government funding agencies among those seeking to leverage
AI/ML to identify the next impactful and profitable technology. Indeed, many a client has come to us saying, “We’d like to use AI to
improve our innovation process… but where and how?” Unlike the examples mentioned above, this application lacks training data
and quick feedback loops to verify whether today’s decisions will bear fruit. Specifically, this group is challenged to:

• Take amorphous ideas and turn them into actionable insights.

A CTO can identify an important trend like climate change that will drive R&D. But that doesn’t tell her what technology to
develop or where there is an opportunity to differentiate from competitors. Or a specific area like metamaterials can arise, but
even that leaves huge variability in where to spend R&D dollars to best profit off the trend.

• Vet more ideas faster with confidence.

The traditional innovation funnel takes in many ideas and relies on smart people to filter, refine, and deep dive on
potential winners. This is a slow process that limits how many ideas a team can investigate and can be variable in quality and
comprehensiveness depending on who is doing the analysis.

• Overcome bias.
If the process wholly relies on people to taxonomize and investigate a given space, the result may be biased due to the limited
knowledge and experience of the person conducting the investigation. As a result, the analysis could miss a technology or idea
that could be fruitful simply because they didn’t think of it at the beginning of the search.

• Understand the competitive landscape.

Many in the innovation community use sources like news and patents to identify the activities and portfolio of competitors.
Patents in particular drive freedom-to-operate analyses and help corporations build competitive moats around key
technologies. Identifying threats and opportunities based on competitor activities is an evergreen activity that is difficult
to do systematically and efficiently.

MACHINE LEARNING CAN IMPROVE

THE EARLY STAGES OF INNOVATION
We have looked at the impact of digital tools across the entire innovation process in various reports. The scope of this white paper
is to specifically look at the impact of AI/ML at the front end of the innovation process, which we here call the Ideation, Discovery,
and Initial Assessment stages.

Figure 1. Digital impact across the innovation funnel

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Our data science team built the Lux Intelligence Engine to address these challenges for both our clients and our own analysts.
After developing and experimenting with various tools, we found two main benefits of ML for the front end of innovation:

• Speed.
Applying ML to data sets like patents can generate fast landscapes that identify key areas of innovation as well as important
players within those areas. Whereas a traditional approach would require a thorough taxonomy and numerous search strings
to start with, an ML approach requires only a general definition of the space. ML can also help prioritize what documents are
worth spending time on. Furthermore, it buckets key concepts and data points automatically, which would require significant
time to do manually. For example, we were able to identify the innovation focus areas in the cannabis space, visualize trends,
and identify white space using machine learning, reducing the analysis effort from weeks to days.

• Unbiased and comprehensive results.

ML allows a user to define a space or company of interest, at any level, and then use the machine learning algorithm to
identify what clusters of topics arise from a given data set. Provided that the initial search captures the area of interest,
there is no further bias. As a result, all important clusters are identified, ensuring that no topics are missed, if the model
is tuned correctly.

NATURAL LANGUAGE PROCESSING AND TOPIC MODELING

ARE THE ML TOOLS OF CHOICE
The core data sets that fuel innovation consist of text. Patents, product specifications, academic publications, market research,
news, and more are the fundamental data that help identify key technologies and companies, build business cases, and spark
research and development. Synthesizing and acting based on these data sets is a challenge due to the copious amounts of
information buried within a huge variety of sources. The challenge is amplified by the rapid growth of the data sets, with thousands
of patents and publications appearing each day. The data ecosystem is replete with vendors who gather and house this data and
allow for searching and procuring full text from original sources. Sourcing the data isn’t the real problem; making the most of the
data to identify weak signals and make the appropriate bets is. Enter natural language processing (NLP) and machine learning.

• NLP enables processing and analysis of huge volumes of text.

NLP is a catch-all term under the AI umbrella that encompasses technologies for training computers to understand
and sometimes mimic human language, including concepts like speech recognition and natural language
generation. High profile deployments of NLP include Google Translate, spell check in Microsoft Word, and Amazon
Alexa. Not all of these examples are relevant for the innovation use case, but they are representative of the power
of AI for structuring the messiness and complexity of text.
• Topic modeling extracts important concepts from text.
The strength of topic modeling is the ability to take an idea and break it into subcategories without assumption. Within a given
area of interest, it finds commonly occurring concepts that are defined by groupings of words. The user can see the buckets
that the model has defined, what the associated keywords are, and what documents are most strongly associated with each
topic. Once you have the documents associated with topics, you also can extract data like the growth trend for that topic over
time, how different topics interact with each other over time, and, if tagged to the document (as with patents), who the
leading players are in each topic. This is critical information that points to where the hot spots and gaps may be, as well as
potential partners or competitors.

USE CASES FOR ML IN INNOVATION

There are myriad applications for ML that leverage the speed and comprehensiveness benefits listed above. Some examples are:

• Landscaping.
Given an area of interest, ML can automatically build a taxonomy that defines key areas of innovation underneath a larger
concept. The starting concept can be arbitrary in size (e.g., as broad as “sustainability” or as specific as “superabsorbent
polymers”). The ML algorithm can extract key topics from the resulting data set, and cluster and rank organizations and their
associated documents by the strength of the link between the text of the document and the topic. An expert is still needed to
interpret and label each topic, but with these results a user can identify leading players for each topic and easily extract
trends on which topics are growing or shrinking.

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• Concept similarity.
In conducting a freedom-to-operate analysis, or simply in trying to find relevant academic papers close to a known concept,
finding and prioritizing relevant documents is extremely valuable. Using NLP technology, a model can establish a fingerprint for
any given document and use that to identify other documents with similar fingerprints, highlighting which ones are most
relevant to the subject of interest. Automating even a portion of the arduous document review process can significantly
improve efficiency and time to actionable insight.

• Competitive portfolio analysis.

Developing sound strategy hinges on understanding the activity of major and emerging players in a given ecosystem, and
understanding the portfolios of competing players informs product and R&D roadmaps. The landscaping or concept similarity
approaches above certainly help with this, but often, innovators crave in-depth analysis of the portfolio for competitors.
Applying topic modeling to a corporation, rather than a technology, can generate a map of the activity for a given company
based on available data (such as patents, publications, and news), again with the benefits of speed and lack of bias.

• Weak signal identification.

Many in the innovation space are interested in weak signal or tipping point identification – what is coming that we need to
prioritize and prepare for? Patents, papers, and news all have this insight buried in a sea of data. Applying topic modeling
identifies the areas that are important, but also allows you to compare one topic to another on an apples-to-apples basis to
feed a ranking or prioritization exercise.

As displaying the power of ML for all the possible use cases is beyond the scope of a single document, we will provide an example
of landscaping here, as it is a universal exercise across all of the organizations we work with.

LANDSCAPING CASE STUDY: 2D MATERIALS PATENTS

Here, we show the value of applying this methodology for landscaping an emerging technology area of interest that Lux closely
monitors: 2D materials. Driven largely by the emergence of graphene over the past decade, the space continues to evolve into
new applications as well as new materials that exhibit unique properties.

Methodology
We began by defining a master patent search that was as general as possible while staying focused on 2D materials. Then, we
trained a topic model using all those patents (approximately 7,500 globally). The model identified 14 topics; not all were relevant,
so only a portion of those are presented here. By looking at the associated keywords and patents for each topic, we labeled the
topics based on our familiarity with the technologies and applications. From there, we extracted trends and leaders for the different
topics.

Figure 2. Methodology for topic modeling and document tagging

Example Results
In Figure 3, we show a market map, but one that differs from other maps you may have seen:

• The groupings are defined by the topic model plus human-assigned labels.
Once fed the master search, the topic model identified key topics that are commonly occurring. Those topics are defined by
keywords, which a subject matter expert uses to label the topics.

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• The logos are ordered by strength in the topic.
While many maps have a random assortment of logos, we selected the top four patentors associated with each topic and
show them in descending order from left to right. The model identified many more key players, but only the top four are
shown here as an example of the quick visual insight that can fall out of the topic model.

• Leading innovators are not just startups, and some players come up more than once.
Since the goal is to provide insight on the 2D materials space, the map below is comprehensive in covering startups, large
companies, and academic institutions. Furthermore, as you might expect, certain players lead in more than one space and
thus show up more than once on the map (see, e.g., Samsung Electronics).

Figure 3. Market map for 2D materials leaders via topic modeling

Figure 4. Trends across topics via topic modeling

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Additionally, we can compare topics against each other to evaluate the patenting trajectory. Figure 4 shows patent
trends for six topics and conveys where activity is focused and how it has changed in recent years.

This analysis is a brief display of some of the rich insight that falls out of a single model. Additionally, there’s the
benefits of speed (from weeks to days) and the unbiased nature of results. We have found that further mining of the
data can lead to a thorough segmentation of innovation activity in a given space and a solid view of the competitive
landscape. It’s possible to analyze more topics, break topics down into subtopics, show trends across all topics, and
more. Again, landscaping is just one use case for topic modeling, which holds great potential to change how we as a
community execute on innovation.

BUILDING AN ML STRATEGY REQUIRES TECHNICAL

AND CULTURAL CHANGES
As part of the overall digital transformation of your business, you must consider the potential of machine learning and AI.
Here, we’ve talked about specific use cases for ML in the innovation process, but getting started can be daunting for numerous
reasons. To best position your organization for success, you must:

• Determine build vs. buy.

Building an internal AI and ML capability can be difficult due to the high demand for talented data scientists. Furthermore,
building a well-rounded team is challenging, as a team may need to have the right mix of software engineering capability
along with data science skills. Besides hiring, organizations should explore upskilling existing team members with some coding
and analytics skills given the increasing availability of off-the-shelf tools, but that will be a partial solution due to a potential
gap in ML experience.

Some organizations already have established teams using data science in their traditional R&D and product development;
one strategy might be to reassign them to work on improving innovation processes across the organization. The other option
is to work with a partner with expertise on sourcing, scrubbing, organizing, and analyzing data. For many, this will be the
most efficient route; however, beware of pure data shops that don’t understand the use case or goals of the deployment. The
likely solution will include both building and buying, to combine internal domain expertise with ML capabilities and scalable
platforms.

• Leverage experts to interpret and extract insight from the data.

Developing In using this approach in a variety of examples, it’s clear that without strong insight from subject matter
experts, extracting value from the data is tough. For example, the model can surface topics that are irrelevant, requiring
a knowledgeable person to identify and exclude those. People with technical depth, business savvy, and experience
commercializing technologies will truly unlock the power of the data, so don’t count on replacing them with machines. Key
places where humans are invaluable to the process include defining the starting point of the analysis, labeling topics, and
making decisions on actions once the data is in their hands.

• Emphasize cultural acceptance of new tools.

Innovation is a clear case where AI isn’t coming for your job – but rather, it can make you better at it. Corporate innovation
professionals, VCs, and others in the community take great pride in their acumen, expertise, and methods. While some may
view ML as a threat to this value, it’s clear that the collaboration between human and machine can generate better results,
and mastery of these tools only makes you more valuable. Ultimately, this community should embrace new tools that can
make them more efficient and effective at their jobs.

• Consider your data sources

The example use case here highlights patents, but topic modeling is effective with a variety of different text data. News,
academic papers, internal reports, and more could all provide varied insights that drive different use cases – for instance,
social media posts could be a strong leading indicator for certain consumer products. Isolating data sources could serve one
purpose, while combining multiple data sources in one analysis might also be beneficial. The possibilities are numerous, and
organizations with huge volumes of existing documents could find value from ML in bringing order to vast and disparate
knowledge sources.

We have introduced a tangible way for machine learning to impact current innovation processes by creating efficiencies and
identifying opportunities that may have been buried in vast and fast-changing data sets. Ultimately, we are only at the beginning
of learning how ML can improve the way we innovate, and we expect proliferation of use cases like those above, as well as the
emergence of new ones that will create an improved ROI on our innovation efforts and investments.

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 Lux Research is a leading provider of tech-enabled research
and advisory services, helping clients drive growth through
technology innovation. A pioneer in the research industry, Lux
uniquely combines technical expertise and business insights with
a proprietary intelligence platform, using advanced analytics and
data science to surface true leading indicators. With quality data
derived from primary research, fact-based analysis, and opinions
that challenge traditional thinking, Lux empowers clients to make
more informed decisions today to ensure future success.

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