Insource Innovation to Generate Better Ideas & Fuel Product Pipelines
November 3, 2011 by Mark E. Atkins
Is innovation a numbers game? We’ve all heard the statistics around the number of ideas it takes to eventually lead to a single successful product. But if we look at why it takes 3000 to 6000 or more ideas to find a single winning concept, the answer becomes fairly obvious: not every idea is a good idea. Mark Atkins explores how we can create better ideas, not more ideas. As companies struggle to generate game changing ideas internally, they begin looking for mechanisms to increase the rate of idea generation. For some organizations, this includes exploring the notion that by opening their innovation funnel to ideas from partners, customers, suppliers and others, they can improve their chances of finding great ideas. The appeal of Open Innovation and Crowdsourcing is the allure of the ‘silver bullet’ – the illusion that the next great idea is out there, companies need only implement a good idea evaluation (aka idea management) system to capture and identify it.
Traditional idea management software delivers the capability to capture and process ideas. Essentially, these software packages collect ideas from a designated community – internal or external to the company – and then move these ideas through an idea funnel that generally includes a community discussion around the ideas followed by voting on and the ranking and selection of ideas.
While there is some merit to this approach – particularly in consumer focused industries providing low-cost, high volume products, it does not work as well for heavily engineered products like automobiles, airplanes, medical or electronic devices. In addition, the crowdsourcing approach does not address the underlying problem —the inefficiency of sourcing good ideas and the lack of predictability in the process of idea sourcing. Quantity Before Quality In reality, while idea management systems can prove valuable for collecting ideas, all too often, too much focus is placed on idea capture and selection at the expense of quality idea generation. The reality is: the challenge for companies innovating new products and services is not in finding ideas, but in determining the optimal idea. While it may be an interesting idea to have a solar-powered MP3 player opening a new market where electricity is scarce, an audio products manufacturer may not have expertise in solar cell technology or consumers in that market may have little use for an MP3 player. With the low success rate of innovation experienced by most organizations and the high cost of failure, organizations are under tremendous pressure to make the right decisions and select the ‘right’ ideas. If the ideas in the funnel are of marginal quality, one can hardly expect good selection discipline to come out of a pile of lack-luster ideas. On the other hand, if every idea in the opportunity pipeline is high quality, well aligned with the company, and properly qualified, then almost any choice will lead to success.
This concept may seem simple, but this principle is often overlooked and, as a result, a lot of time, effort, and money are wasted on idea capture and management solutions when the real issue to be addressed is the process of getting good ideas in the queue at the front end of the process. Beyond Idea Management Ideas can come from anywhere – particularly in today’s Internet connected social communities. But it’s a long road and a tremendous amount of effort in making an idea – the right idea – a market success. How then, can organizations more consistently find and generate better ideas? First, companies need to recognize that innovation, open or otherwise, can’t succeed if it is viewed as an idea generation and capture process that is divorced from business execution. To move beyond simply generating ideas to realizing innovation, companies need to ensure: Ideas are precisely aligned with corporate goals and objectives. Ideas are mapped directly to market and customer opportunities and needs. Ideas are pre-validated for applicability and feasibility. Ideas are novel leaving engineers the freedom to operate without fear of IP infringement litigation. The idea to product conversion ratio is dramatically improved which in turn leads to top-line impact of better time-to-market and right-to-market delivery as well as bottom-line impact through product development program efficiency gains. There is no question that open innovation brings value to many organizations, and open innovation and crowdsourcing are here to stay as part of the available tools and methods to formalize innovation practice. However, the hype around open innovation has built expectations to a point beyond the reality experienced by most companies.
Certainly, there are companies that have great open innovation success stories to showcase, but there are far more companies that are frustrated by the lack of results they are getting from their forays into open innovation. Companies feeling this frustration are learning about the challenges of open innovation and reassessing how to strike the right balance for their organization. How can we Innovate Smarter? As organizations seek a repeatable and more efficient process for generating and validating good ideas, companies are recognizing the need to innovate smarter. Innovating smarter means enabling R&D, engineering and product development teams to better leverage prior work, knowledge and expertise. Knowledge is the raw material of innovation. When an opportunity is recognized, when the underlying challenge is understood, we leverage our knowledge, experience and expertise to synthesize the new concepts that are the core essence of our innovations. The knowledge we use in this process comes from a variety of sources, both internal to our community as well as external. Many companies are facing a serious challenge to developing their innovation edge and for most organizations; the value of intellectual assets is largely untapped. Designers, engineers, scientists and other innovation workers are still challenged to find relevant concepts and solutions that will help them address day to day problems and locate internal innovation expertise that will speed them toward value creating innovations. Innovating smarter means connecting these innovation workers (across disciplines, departments and geographies) based on what they know. When you can get the right people engaged without taking them out of the context of what they need to get done, you have succeeded in accelerating the time to value for the enterprise.
Again, the concept is simple, but most companies recognize the challenge in executing on this principle Finally, innovating smarter means giving engineers and R&D personnel problem solving tools that infuse knowledge and bring consistency and repeatability to innovation activities (i.e. root cause analysis, failure mode and effect analysis, function analysis, contradiction resolution, etc.). By fusing proven ideation and problem-solving methodologies with precise access to corporate and external knowledge, innovation workers can more efficiently and effectively: Define and understand problems and opportunities. Analyze market and technology trends. Access the information they need, real-time, in the context of the problem they are trying to solve. Accelerate ideation and concept generation. Capture and re-use knowledge, expertise and intellectual property. Collaborate with subject matter experts. Again, the concept is simple, but most companies recognize the challenge in executing on this principle INsource Innovation Companies seeking to strike a balanced innovation approach need to shift from sifting through a pile of mediocre outsourced ideas to a more disciplined, organic approach to innovation. After all, who is better equipped to build upon your company’s successful product line than your own scientists and engineers? They’ve done it before. Becoming reliant on entities outside the corporation for concept generation and product research, design and development, not only squeezes margins (how much profit must be then paid out in licensing fees?), it erodes a company’s value and competitive differentiation. In effect, giving away the keys to the kingdom; that which makes a company unique.
The reality is: companies must use all the innovation tools that are available to them to compete in today’s rapidly changing environment. This includes open innovation methods. But, the companies that will win are those that consider how to best integrate external constituencies into existing innovation process and how to keep control over their destiny and value by identifying which parts of the innovation process are their unique value-add. Striking a balanced innovation approach generally includes recognition of some key aspects of the innovation process that must be internalized. By insourcing innovation, companies establish internal organizational structures and processes that enable the corporation’s innovation workers to better leverage each other and to better leverage knowledge – across the spectrum of innovation activities and in the context of the problems they are trying to solve. Companies seeking to empower innovation practitioners to connect with knowledge and each other should: Build an internal innovation network. Make sure your network is designed to reach out to innovation workers and connect them not just to knowledge but also to each other. Understand competency levels – who are your experts across different domains, products or industries? Are they four doors down, in another time zone, or across the globe? Anticipate knowledge needs and integrate concept delivery seamlessly into the innovation workers’ tasks. Collaboratively share work-in-process ideas, allowing each domain to add their particular expertise but also review the contribution of others – brainstorming works best when everyone can participate.
Tap the full spectrum of knowledge unique to your organization – the Innovation Intelligence Ecosystem (see below).Develop an automated
approach to keep an eye on and share the latest developments in technology, the industry, academia, and with competitors. This is especially true today with the sentiments being shared real-time in social media.
Understand – and address – the knowledge gaps in your organization. As markets and technologies are evolving, you may not have the expertise inhouse to keep pace. Having a method to assess your team’s expertise helps have a strategy to keep in front of this moving target. When you enable innovation workers to easily tap into the richness of the Innovation Intelligence Ecosystem and give them the ability to actively collaborate with and learn from peers, you unlock their innovation potential. Time-to-market with innovative, differentiated products is accelerated. Product design and development costs are reduced. Product quality and reliability is improved. Productivity is increased for innovation workers cross the organization. Regardless of where a company finds its ideas, an innovative and novel product awaits those organizations that have a solid foundation for leveraging knowledge and exploring, validating and realizing ideas ahead of competition.