How to build a strong investment strategy based on AI forecasting

Philips leveraged GetFocus' AI forecasting to improve its investment strategy in medical technologies. By analyzing over 146 million patents, GetFocus provided Philips with a detailed overview of the developmental history and future prospects of a key medical technology. This helped Philips make informed decisions on investment timing and understanding the competitive landscape, utilizing GetFocus' efficient and cost-effective technology forecasts. This approach proved more efficient than traditional, time-consuming analysis methods.

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"We have known this technology is promising for years, but deciding when to ramp up investment is a really big challenge."

Daan van Manen

General manager DXR

The challenge

How to make sure that you do not invest in a disruptive medical technology too early, or too late, but exactly at the right time

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The outcome

The insights provided by GetFocus led to a well-informed decision on when, and how much, to invest. Philips also got a clear overview of their competitive position.

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Philips uses GetFocus' “Goldmine of insights” to improve investment decision making

Philips has been a world leading innovator in the medical space since 1924 and is always trying to bring cutting edge technologies to the market.

Introduction

Since Philips is always on the lookout for the next big thing, it works with top researchers, institutions, and partners, to discover & develop new ideas globally. Consequently, a steady stream of new technologies flows into Philips every year.

It is up to Philips’ management and R&D leaders to sort the wheat from the chaff in order to develop the right technologies at the right time. Generally, it is quite clear whether a new technology has potential or not. The hard part is to figure out how quickly the technology will be able to improve so that it may realize its potential.

Ramping up investment into a promising technology at the right time requires an accurate prediction of how the technology will develop. Gathering information about the current performance and costs of a technology is relatively straight forward but predicting how this will develop in the future is a different story altogether. For such predictions, Philips relied on expert opinion. Technologies tend to improve exponentially, but unfortunately, people have a terrible intuition for exponential change. This makes it extremely difficult for experts to make reliable predictions, which in turn makes it hard for Philips’ management to ramp up investment into promising technologies at the right time.

Because of the sensitive nature of the information, we cannot disclose which technology was the subject matter of this case, other than mentioning that it was a disruptive medical technology.

"We have known this technology is promising for years, but deciding when to ramp up investment is a really big challenge."

- Daan van Manen, General manager DXR

The challenge: Investing at the right moment

As the technology in question matured, a big decision came up. Does Philips invest millions in prototypes today, is it too early to do so, or should it have happened yesterday given how fast the technology is improving?

To answer this question, Philips needed an accurate overview of the technology’s developmental history and a forecast of how the performance and costs of the technology would develop in the future.

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The solution: using GetFocus’ technology forecasts

During the first half of 2022, Philips partnered with GetFocus to create an accurate historical overview and forecast for the disruptive medical technology in question. The first step in the process, was to identify every single invention that related to the technology. To do this, GetFocus executed multiple searches on its platform.

After scouting through >190 million patents to identify relevant inventions, we had a dataset that contained every single relevant invention. With this data, we analyzed the technology’s developmental history and created a forecast. It is important to mention that we are not talking about patent trends, but about the speed with which the technology has been and will be improving in the real world. GetFocus’ methodology has been verified together with MIT and two peer reviewed papers have been written on the topi.

To get a good overview of a technology’s developmental history, GetFocus measures two things: Cycle time, and Knowledge flow. Cycle time looks at how many years it takes for a technology to create a new generation of itself. Knowledge flow measures how important each new generation has been for the development of the field. In simple terms, we measure how quickly a technology area takes steps forward, and how big those steps are. The higher the knowledge flow and the shorter the cycle time, the faster a technology improves. Together, the cycle time and knowledge flow measurements allow Focus to estimate the overall improvement speed for any technology.

The above mentioned measurements are automatically made in GetFocus’ interface and a set of charts showing all metrics are always provided, it is not a black box.

Next, we made a forecast for Philips by extrapolating from the current technological performance with the estimated improvement speed, so that Philips could get insight into how it should time its investment.

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The results

Philips got an overview of the entire developmental history of the technology in question, and a forecast of when the technology would be able to perform at a level that would make it competitive. Philips also got an overview of all competitors that are active in the same technology domain, including their portfolio sizes, trends, geographical focus, and portfolio quality.

With GetFocus’ insights, Philips was able to take a well-informed investment decision.

"GetFocus provided clear, actionable insights that we could use to inform our decision making."

- Daan van Manen, General manager DXR

Technology forecasts made with GetFocus are cost efficient and fast to make. Similar analyses performed by analysts or external consultants typically take months, often produce inconclusive results, and are orders of magnitude more expensive than GetFocus. GetFocus’ methodology is quick, accurate, and proven to work on >32 technology domains in outstanding peer-reviewed research.

Philips was able to get an overview of the developmental history of the technology and got an accurate technology forecast
Philips got access to insights that are not available anywhere else and only paid a fraction of what it would have cost internal analysts or external consultants to generate generic reports
The insights created by GetFocus were used by Philips to take well-informed investment decisions.

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