A lot of companies trying to break out of the “me-too” product doldrums start their innovation process by getting a bunch of people together to brainstorm and create as many ideas as they can. The hope is that one of these ideas will emerge as the “next great thing” that will propel the company back to market leadership and accelerated growth.
Unfortunately, breakthroughs seldom happen through ideation alone
A lot of ideas are mulled about, but more often than not, most of the ideas will be a rehash of the current thinking (more me-too products). There hasn’t been enough thought, stimulus and new tools to get the team to think differently, so they stick to what they know and do business as usual. A formula for the continuation of the product doldrums.
Perhaps the very creative and forward thinking types in the group will identify potential “game changers.” But the ideas will either linger in an endless loop of discussion because there is no process to move the ideas forward (not in the play book) – or if they do move forward they aren’t grounded in market reality and end up becoming the dreaded “solution looking for a problem” conundrum.
The problem is that the innovation process lacks mechanisms to test and validate the concept early on to make sure customers have a real pain they want solved. So the team marches forward thinking they know what’s right for the customer. “Customers’ don’t know what they want anyway.”
Or maybe management has been burned one too many times by solutions looking for problems and vow never to let that happen again. So promising ideas are dismissed early on because the ideas are too far outside of the current business performance engine (i.e. current business model). There isn’t enough innovation designed in the innovation process to rethink and expand outside the current performance engine, resulting in missed opportunities and continuing product doldrums.
Managing the Front End of Innovation requires balance between creativity and structure
Okay, so what’s a team to do? It sounds like a catch-22 doesn’t it? Well it turns out, there is a solution to managing the front end of innovation. Is called direction, management commitment and a balance and flexible innovation framework that is designed to manage the uncertainty and risk associated with innovation and new product development. While at the same time managing the existing pipeline of core product development projects to fund new innovations. See Figure 1: Balancing Creativity with Structure.
Figure 1: Balancing Creativity with Structure
First order of business for management is to make innovation a priority
An all too common problem I see with innovation initiatives is a lack of clear direction and commitment from the senior management. Though there is a lot of lip service given about “innovating our way to a brighter future,” actions by the senior team don’t reflect the words.
Instead, they give the marching orders to their managers and NPD teams to go innovate. And when the troops come back with real potential opportunities – they are told: “we don’t have the resources, there are other priorities in the pipeline that are more important. But we like this idea so much, why don’t you figure out how to resource it yourself?” (No kidding I have heard this line of BS more than once!)
A well thought out new project portfolio system that manages resources and focuses on the best opportunities will solve a big portion of this issues (more on project portfolio systems in future articles). Of course project portfolio systems don’t work unless there is an overlaying direction provided to make the right decisions in support of the company’s overall strategic plan.
Direction starts by making a commitment that innovation is a priority for the company
Perhaps senior management isn’t clear yet on a direction. Setting a new course is complex, and doesn’t happen overnight. It’s critical for a company to take the time to really understand the marketing landscape and define playing fields worth fighting for and ones where its existing and future core capabilities can be deployed to win the fight.
Strategic direction and decision making is all part of the innovation continuum. The front end frameworks and process used to discover opportunities work equally well in defining strategic intent and direction. As a company explores new opportunities, it will discover and define its overall strategic direction in parallel. We will explore how to discover and set a strategic direction in future articles.
A commitment of resources to execute innovation is paramount
Senior management needs to make innovation a stated goal if it’s really serious about using innovation to grow. A stated goal of “x” percentage of future revenues will be attributed to new innovations and products, sets the intent and tone of management’s commitment to innovation initiatives.
I suggest a minimum goal of 30% of revenues be attributed to new products introduced in rolling three year period. Of course “new” includes the right balance of new to market as well as product extensions to both manage risk and provide internal funding for innovation expansion (See: “How Much Risk Is In Your New Product Development Portfolio?”)
Just as a point of reference, PDMA’s most recent CPAS report (Markham, S.K., and Lee, H. 2013. Product Development and Management Association’s 2012 Comparative performance Assessment Study. Journal of Product Innovation Management, Vol. 30, No.3.) indicates the best innovative companies achieve 47.9% sales contribution from new products – the rest: 25%. The best innovators are achieving 48% in new revenues – shouldn’t you?
Next week’s article I will explore how a company can go about discovering where to compete, how to win and setting the overall direction of its strategy and innovation initiatives.
Until next week, compete to win in whatever playing field you choose.