THE STRATEGIES OF THE INNOVATION PROCESS
Once you have made a decision that your company must innovate to remain or to become competitive, you should establish a rational, logical process to guide you during the entire course of action.
First: You need to pick a type of innovation process that is correct for your company. The result of this process could include a new product, a new service, a break-through in R & D or the reinvention of a current strategy concept, yours or a competitor's. You need to look at the tools your company has to use in this process. What strengths can this process take advantage of? What weaknesses should you stay away from?
Second: Once you have decided your general goals, you should look at your organization to see where and how this process should be initiated. Does your organizational structure support the innovation process you have selected? What are the organization's strengths and weaknesses? Will the culture within the company support the innovation development procedures? What is the tolerance for risk within the company? Will the management team allow highly speculative research, or is it more conservative in its approach? The important point here is that the level of risk tolerance must be compatible with the overall philosophy of the company, or the dissonance could doom the project.
Third: What is the time scale for such a development process? This will depend on a number of factors. First among these is the size and complexity of the project. If the development project is an extension or minor modification of an existing product or service, the time scale could well be a few months up to a year in length. Conversely, a major R & D project could take years to complete, with a huge commitment of personnel and other resources. Your team should determine the size and complexity of the development and pick a time-line which is appropriate and compatible with the scope of the project.
Fourth: Decide on what measures should be appropriate to spur creativity in your team. Examples include (but are not limited to):
Smart Bombing: This involves analyzing your company as if you were going to create it from scratch. What have you done well? What have you done that could have been done much better? What have you been doing, which you never should have started, or, assuming the competitive environment changed, should not now be doing? What are your Strategic Competencies - those few combinations of skills, processes and knowledge that give you one or more sustainable competitive advantages, because they add value for your customers, provide differentiation from your competition and are difficult to copy. Step outside of your company and pretend you are your most formidable competitor. How would you then attack your own company to take advantage of weaknesses and to overcome strengths?
Map your competition: Where are your competitors strong and where are there holes of which you could take advantage with some development and a determined effort to exploit the openings.
Extend your Strategic Competencies (P 3.2): Once you have determined what your Strategic Competencies are by completing the team exercise on Page 3.2, step back to see what new things you could do which would build on these competencies. One example is Federal Express going into managing warehousing and shipping for other companies. Another is Fed Ex going into overnight computer repair servicing. Both of these activities build on their strengths in overnight shipping, information services associated with shipping and integration with similarly oriented services.
Logical Analysis: A general business strategy matrix involves a two by two box. One axis has current and new products or services, and the other has current and new markets/customers. The resulting box combinations are: Current products/services to Current customers/markets, Current products/services to New customers/markets, New products/services to Current customers/markets and New products/services to New customers/markets.
Look at each of the four categories and analyze each to see what opportunities may present themselves as you study each one. What can you build on that will address needs and opportunities in one or more of the four categories? How can you take advantage of the strengths you use now to reach your current customers/markets? What can you do to extend your products/services to more customers who look essentially like your existing customers? How can you sell your existing products/services to new customers who are not currently your targets? What new product or service could you sell to your existing customers? Finally, what new product or service could you develop to sell to customers you don't yet know? This is not an easy process, and can involve considerable time, effort and cost to do well. Looking at industry trends, competitors, where you think the industry will be in three, five or ten years, and at your strategic competencies should give you hints as to where you should look for new opportunities.
Ask your customers: Where better to learn what you might do that your customers might buy than to ask them? Be careful that you don't get the problem of the day. Your questions need to be sufficiently penetrating that you get to the real problems your customers are facing, and thus to the real needs they have. Most of the time, the first things you hear are not the real problems they have. You need to gently probe for their real pain, and what the possible solutions might be, in order to make this effective.
Brainstorming: While this is an obvious tactic, to be done well, this exercise needs to be structured and controlled. Someone who is not directly concerned with the content of the session should be responsible for facilitating and controlling your brainstorming discussion. Without guidance and control, the session could easily drift away from the goals of the team, with the results not justifying the time, expense or effort. The trick is to allow sufficient latitude so the team does not feel too constrained, yet to have enough control so that the discussion is focused on the general areas of interest. One caution should be that, on occasion, a wild idea will surface which can be the real homerun you are looking for or totally impractical and worthless. Give your team sufficient freedom to put those off-the-wall ideas down, for two reasons. First, even the worst, wildest idea, while not at all practical by itself, may well be a catalyst for a great idea which could be the winner you are looking for. Second, by allowing any and all ideas to be submitted, everyone is encouraged to contribute, and your session will be more effective, more productive and, frankly, more fun. The process should screen out those concepts which don't fit your needs or capabilities, leaving those which have better possibilities for your company.
Next you need a good process to capture ideas so they may be evaluated and filtered. One excellent tool to do this is our Worksheet Page 4.4 Perceived Opportunities. This page provides the format to capture all ideas generated by the team, and a process to quickly evaluate at a base level each opportunity to see if it meets the first level needs of the company. The process is very straightforward to use. First, the team goes into a brainstorming session as discussed above. An open atmosphere is requisite for the best generation of ideas, and immediate judgment tends to intimidate those who might contribute in the absence of such judgment.
Once the team has generated all the ideas they can come up with, take a break for 20 minutes or so to allow everyone's minds to clear. On reconvening, ask if anyone else has had any new thoughts. If anyone does have new ideas, write them down with the others on the flip charts, then proceed to the evaluation phase. There are four criteria that must be considered.
First is the potential profit impact on the company. Here one uses two assumptions: One: That the company puts full efforts into making the idea work, and Two: That the result of the idea is successful. On a scale from 10 to 1, with 10 representing a grand slam home run and a 1 representing a tiny positive increment to the bottom line, rate each opportunity as to its potential impact on the bottom line, net of costs and investment.
Second: The team immediately will try to validate the assumption just made about the first factor. One needs to judge the probability that the company can actually attain the profit impact you just selected. Using a probability percentage - we suggest you use increments no smaller than 10% -- determine your best estimate as to how likely you will be successful to the degree you just selected in the first factor.
Third: Management time is one of the scarcest resources any company has. To best utilize the assets of the company, you need to estimate the impact of the opportunity on the available time of management. This is rated on a scale of High, Moderate or Low.
Fourth: One important consideration is that of what happens if the opportunity is not successfully implemented, or if it fails after being attempted. There are three types of impact which may be considered, depending on the situation. First, and most likely the most important, is the financial risk. Second is the impact on your market reputation if you try something and it fails. Third is the effect that failure could have on the morale of your personnel.
Once these four criteria have been considered and rated as above, the team will sort each of the opportunities into one of three categories. First is a "plus", which represents those opportunities which will remain as candidates for further consideration and possible exploration and implementation, given the right sets of circumstances. Second is a "minus" which indicates that at the current time, the opportunity does not merit further consideration. Opportunities in this category do remain on our list, however, for further consideration should circumstances merit at some future time.
The third category is a "question mark." For any opportunity put in this category, your team has determined that more information is needed in order to put it into a "plus" or "minus" category. To further explore this question mark, your team should fill out Page 4.5 Opportunity Screening Work Sheet. This worksheet is focused on answering a series of questions for the purpose of allowing the team to minimize the exposure to failure. When over 80% of all new product introductions fail in the marketplace, it makes good sense to run any questionable ideas through a screening process which is aimed at minimizing your exposure to failure. While it is not a guarantee of success, it usually will help eliminate failures before they become expensive. In addition, any "plus" may also be evaluated by having this Page 4.5 Opportunity Screening Work Sheet filled out for that opportunity. Finally, if someone on the team feels very strongly that one of the opportunities, which the team rated as a "minus", has potential, he or she may undertake the worksheet, playing the role of champion. If, in the process of filling out the sheet, the author determines at any time that the opportunity is not appropriate at this time, the exercise may be terminated at will. Otherwise, when one is filling out the sheet, the exercise should be completed, and a recommendation made to the team.
Once the team has selected the opportunities which are viable candidates for the team's consideration - the plusses and those question marks which resulted in being voted plusses - the team needs to place each item in priority order, so the company can address them in the best sequence based on the availability of personnel and financing.
When the team has sequenced the opportunities and decided which ones to start on first, the next task is to put in place a formal process to exploit each one. A written action plan is an ideal vehicle for development of innovative ideas. (See our Page 7.x Action Plan) The action plan consists of the individual steps, in sequence, which must be performed in order to accomplish the objective. To get started, write a simple outline or flow chart of the approximate process that will be followed to accomplish the task. This helps in two ways. First, it allows the authors to visualize the general procedure that will be followed. Second, it allows the authors to understand the other parts of the company that may be affected by this procedure, and to potentially involve people from those areas in the writing of the actual plan. Pull the appropriate people together and write out each action step. Put them in order and assign resources: people, time and money. Finish the final draft and allow it to sit for up to a week. Review and revise the plan if appropriate, then submit to the overall team for their input and revisions. In this process, it is incumbent on the action plan team (and later for the whole team) to make every effort to improve and extend the effectiveness of each idea for innovation. The goal should be to develop the most practical application of each concept, and to implement it in the most effective way, identifying any road blocks and dealing with them in the process. Creativity in dealing with road blocks is needed, as the roadblocks can derail the innovation process unless each is dealt with effectively.
How does one deal with a road block that springs up in the middle of an innovation development process? There is no single answer, as each situation is likely unique to the situation. In general, creativity is encouraged through brainstorming and/or logical analysis to determine possible solutions. One key here is to not get locked into a single approach.
Once the team has ideas on how to approach the problem, rank the solutions and select the best approach. Develop the solution or solutions to the problem and select the best solution. During the development process, don't forget to keep the marketplace in mind. Whenever feasible, try to validate your potential solutions with selected, trusted customers. Use them as your unpaid consultants to help evaluate the effectiveness and appropriateness of your proposed solutions. Bounce your concepts off them, listen to their responses, determine what improvements they suggest are appropriate for incorporation into the prototype. Once the final configuration has been determined, write out an action plan for trials and for final roll-out. Use the same approach as outlined above to establish the roll out plan, including prototyping, selected customer trials and final evaluation. Finally, evaluate the effectiveness of the process your team has followed to get to this point, and incorporate the lessons learned when you do this again the next time.
Dana Baldwin is a consultant with Center for Simplified Strategic Planning, Inc. He can be reached via e-mail at
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