May 2012 OVO Newsletter

Innovation Newsletter from OVO

OVO Views
Conversations about Innovation
May 2012- Vol 6, Issue 4

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Greetings!

OVO logoSummer is upon us, dear readers . Summer is the time for vacations, for business as usual, but rarely for new concepts or ideas. While things at work slow down over the summer, take some time to think about the theme of our newsletter this month, increasing business velocity, and how innovation can accelerate your velocity.

Increasing business velocity

If your markets and competitors are moving faster than ever, you risk obsolescence by sitting still. We’ll examine how to gain business velocity and why innovation is important.

Innovate the way you develop

Having good ideas isn’t valuable if your product or service development process is slow or cumbersome.Do you have a log jam of ideas waiting to be developed?

Slowing down to speed up innovation

Why building innovation competencies, workflows and developing innovation skills means you can innovate faster and with better outcomes.

Rapid, Disruptive Innovation

Traditionally, we divide innovation into fast and incremental or slow and disruptive. The best of both worlds is rapid and disruptive. Let us show you how to accomplish that.

Innovation Speaking/Workshops

Our consultants are often asked to speak at off-sites, workshops and executive meetings. Read about the topics we focus on. Consider OVO speakers for your next off-site.

As always, feel free to contact us to exchange ideas, ask for innovation help or suggest topics you’d like to see discussed in the next issue.

 

Increasing Business Velocity

Pedal to the metal

Many organizations are interested in innovation, and often for the wrong reasons. Some are interested in innovation because they believe innovation, well executed, can help create a new product or service. Others believe innovation may help their organizations compete more effectively. Still others hope to disrupt a market with new products and services based on innovation outcomes. These are all reasonable expectations, but they fail to capture innovation’s core benefit: business velocity.

VelocityYou may wonder why I chose to talk about “velocity” rather than speed. Most of us use the words interchangeably, but scientists create a distinction. Speed is the distance covered over a specified period of time. Velocity is defined as speed in a specific direction. Therefore, business velocity is about creating more speed and in specific directions.

Why is velocity important? In your markets and your competitive landscape, the pace of change is accelerating. There are a number of factors we can point to that drive that change, but rest assured that as the pace of change accelerates, two things happen in combination. First, product adoption rates accelerate. We can see evidence of this by looking at the adoption rate of common household electronics pictured above. The pace of adoption of common household electronics has accelerated over time. The lines further left on the chart are increasingly vertical. Adoption rates have accelerated as infrastructures become more ubiquitous, people are more educated and willing to try to new products and the value of the products changes aspects of people’s lives. Second, this means that product lifecycles shrink and customer demands increase. As adoption increases and product lifecycles shrink, new products must be introduced at a higher rate of speed than in the past. Your existing product development pace and the pace with which you innovate must increase.

Does this impact my business?The first question you are likely to ask is: does this impact my business? It would be difficult to name an industry that isn’t impacted by the accelerating pace of change. Product features that seemed radical only a few years ago are now considered table stakes. For example, only a few years ago relatively few cell phones had cameras, and those that did took poor quality photos. In less than a decade cell phones threaten to replace most stand alone cameras as the capabilities and qualities of the embedded camera improved. This accelerating demand, and rapidly improving technical capability, will disrupt firms that rely on stand alone cameras. And this is just one simple example. Every firm faces an increasing rate of change in its environment, and we expect that rate of change to continue to increase. Sitting still is not an option. Even trying to maintain equity or pace with your customers and competitors is going to require far more work.

Speed, in a specific directionYour firm needs not only speed, but velocity. That is, speed in a specific direction. By direction we mean that executives must do a far better job providing roadmaps and guideposts about corporate strategy so product, service and innovation teams can do a better job innovating to provide products and services that help the firm progress in specific markets, opportunity spaces and customer segment opportunities. In the past, creating a product or service that missed a window or failed to meet customer needs was unfortunate. In the future, those mistakes could prove fatal, as a miss doesn’t simply mean a gap in your product offering. It could mean playing catch up or having to abandon a market because customers and competitors moved faster than your team was able to in order to catch up.

Three key factorsOK, if velocity is important, and innovation can help us increase our pace of change to stay abreast of the market or perhaps even move more quickly than the market, what do we need to do to gain more speed?

  • Innovate your product development and commercialization process
  • Develop a consistent innovation methodology and constantly improve it
  • Clarify your strategic direction, goals and time horizons

Improving your ability to bring great ideas to market quickly is perhaps the most important, and most frequently overlooked challenge. No matter how good your ideas are, they must proceed through a product development process and commercialization/launch process. Many of these processes are cumbersome, overworked, underfunded and potentially not appropriate for new ideas. Improve these “downstream” processes first, to accelerate good ideas to market. Only after you’ve improved development and commercialization processes should you then improve and implement consistent innovation processes.

These processes should become part of your “business as usual” operations. As innovation becomes business as usual, you’ll take on the attributes of a Relentless Innovator.

Finally, once these two factors are competent, your organization must provide the “direction” portion of velocity. What markets, customer segments, needs and time horizons should the innovators use to shape their thinking? This means your executives must do a better job defining strategy.

Objects in the rear view mirrorIf you’ve ever had the chance to drive on a German autobahn, you may have experienced a car flying by on your left, moving at much greater speed than your car. If you maintain your velocity, you fall further and further behind the faster car. In the same way, as customers, markets and competitors accelerate, if your organization sustains its existing speed and velocity, you’ll watch competitors “fly by” and win market share and profits from new concepts. Status quo is not an option for survival. As product lifecycles decrease, adoption rates increase, customer demands increase and new competitors enter your markets, you must obtain higher velocities in your business. This velocity comes from faster product development and commercialization, and improved idea generation. Otherwise, you’ll see obsolescence creeping up in the rear view mirror ever more quickly.

Innovating your development process
JamCrackerOne of my favorite product names from the dot-com era was JamCracker. JamCracker is now in the business of brokering cloud services, but the historical reference to JamCracker is vital to accelerating innovation. The original JamCracker was a lumberjack or riverman who worked the logs floating downstream to a sawmill. If the logs jammed up and got stuck, creating a literal “log jam”, his job was to “crack” the jam and help the logs flow freely again.

You need an innovation JamCracker in your organization but the bottleneck is probably not where you think it is. Most organizations face an “idea jam” not in idea generation, but when deciding which to pursue and how to develop them. Any organization can create more ideas, but far too often the log jam starts with idea evaluation and selection, and continues through product development, since those functions are fully loaded with priorities and projects several years into the future.

Internal Focus FirstIn this edition of the newsletter we are focusing on velocity. Many companies fail to focus on the internal functions that can accelerate innovation velocity, choosing instead to focus on idea generation. As many more ideas are generated, they simply pile up, waiting for effective evaluation and for the product development teams to find additional bandwidth. The failure to accelerate evaluation and development leads to the growth of cynicism in the organization, since participants see that nothing is done with the ideas they generate. Failure to accelerate evaluation and development also leads to mounting frustration, as understaffed evaluation and development teams are blamed for failing to develop new ideas while under extensive existing workloads and priorities.

If you want to improve innovation outcomes, define selection and evaluation frameworks and improve or change development and commercialization processes before focusing on new idea generation.

Evaluation and SelectionOne of the first barriers to speed and effectiveness in an innovation activity is the fact that there are no clear measures, frameworks or methods for ranking, evaluating and selecting ideas. Many ideas are created, but without consistent frameworks and filters it is difficult if not impossible to determine which ideas are the most valuable and most relevant. The absence of strong frameworks slows the innovation process and introduces a significant amount of risk and uncertainty. Of course, these issues can be solved by defining evaluation frameworks and by establishing clear evaluation criteria, based on strategic goals, customer needs and existing competencies.
If your organization needs help improving idea management, contact us. We have extensive experience working with companies to define idea management processes and bridging ideas into product or service development teams.

Product Development and CommercializationBefore we are accused of pointing fingers at the development teams, let’s stipulate that most development teams have fewer people and more work than they can possibly achieve. Product development is always the allocation of scarce resources to a wide range of high priority activities. When new ideas, which were generated outside of the annual planning process, are presented to the product development teams, they encounter a “jam”. That jam is caused by a team with far more potential work than staff, a development roadmap committed to existing products and funded in the annual funding process. In many cases, new ideas are relegated to a much lower priority than they should be, since other existing products have precedence and funding. Further, even if a new idea can receive priority and development resources, the commercialization teams may not be prepared to launch a new idea.

Many new ideas compete with existing products and services, or require new thinking, new channels or new marketing strategies from yet another overworked and underfunded team. It’s little wonder that up to 80% of all new ideas that are launched in the consumer space fail in the first year. They are subject to development shortcuts, launched in channels that are often not appropriate, and don’t receive the marketing or positioning they need to succeed. Far too often they are late to market, because they were jammed up behind other priorities.

Innovating the development and commercialization processRather than focus on generating more ideas, many organizations that seek to accelerate their capabilities should focus on improving their ability to evaluate, develop and commercialize ideas. This means placing innovation focus internally, changing or re-arranging how projects are prioritized and funded, and how new products and services are launched. Increasingly it can also mean that every idea should be presented with at least two development paths – internal, and partnering/external.

Defining an internal development path is relatively straightforward. The systems, methods and decision making processes can be changed to become more accommodating, and the funding processes can be changed to recognize the value of new concepts. Far too often, however, these processes will remain rooted in support of existing products and services over new products and services, due to familiarity, alignment to goals and mission, and experience. There may be no other option but to define for each viable idea a development roadmap using internal resources, and a roadmap relying on third party or external resources.

Alternative Development PathwayAt this point many readers may react in horror. It is simply unthinkable to suggest that your firm discover new pathways to develop ideas, especially pathways or roadmaps that may rely on external sources. But as many of our clients can tell you, the internal development teams and processes are backlogged with work that is scheduled years in advance for existing products and services that currently drive revenue. Trading off development resources scheduled years in advance for a new concept not yet proven in the marketplace is difficult. Further, many new concepts may require new capabilities, new tools and skills that aren’t internally resident. Our supposition is that any significantly new product or service must define an internal development roadmap and rationale, and, further, identify third parties that can assist with the development and commercialization of the idea in the cases where internal resources are overtaxed, overscheduled or simply not prepared to build and commercialized a radical new idea. If no secondary development path is identified, then ideas will be left to languish at the doorstep of the development teams, creating a logjam of new ideas.

ConclusionIf you want to accelerate your innovation capability and capacity, start not by improving idea generation, but by focusing on idea evaluation, selection and new product development. Speeding up idea generation while a constrained and overtaxed product development capability exists will simply frustrate both teams. When an organization can execute product or service development at an increased rate of speed, then it is ready for more and better ideas and concepts. And you shouldn’t merely consider internal resources. It may be that your best alternatives include partnering for product development or commercialization skills or bandwidth. Don’t allow good ideas to languish because your product development or commercialization teams are overburdened. The market doesn’t care about your bandwidth and pace. It cares about resolving its needs and wants in a timely fashion. Start your innovation acceleration by “cracking the jam” where the bottleneck for innovation exists – in evaluating, developing and commercializing new products and services.

Slowing down to Speed up
Management GurusWhile I am always a bit cautious about advocating advice from so-called management thinkers and gurus, there are several ideas that Stephen Covey promotes that I think are very valuable. Two have great relevance for innovation. The first is the distinction between importance and urgency. In most organizations, innovation is very important, but rarely urgent. Existing priorities, short timelines make the investment in innovation easy to push off or delay. The second concept that he explores which has great meaning to innovation is what he calls “sharpening the saw”. In other words, have the right tools in the best possible condition before starting the effort. Taking a few minutes to sharpen a saw before cutting wood makes the work more productive and enables an individual to do the same work in less time. We innovators need to take a cue from Covey, and sharpen our saws before generating ideas.

ChallengesThe problem with “sharpening the saw” when it comes to innovation, especially generating ideas, is the amount of work involved to get innovation right. It’s often not a matter of tweaks, but a matter of process and tool identification and implementation.

In a typical organization, business processes and tools are defined and familiar. For innovation and idea generation, this is rarely the case. So sharpening the saw isn’t just about improving existing capabilities, but often about defining and implementing new tools and processes.

Improving Idea GenerationIdea generation is a fairly well-understood capability, but often deployed poorly or without context. Ideas that are generated are difficult to evaluate and implement. That’s not a problem with the teams or the techniques, but a problem with the CONTEXT. Good idea generation is the result of a well-defined challenge or problem, excellent understanding of the customers’ needs and expectations, and some understanding of future trends and conditions. If all of these conditions are met, you can generate fewer but more important and relevant ideas with the same idea generation tools and techniques. Without that context, you’ll generate ideas that seem very familiar and frankly incremental in nature that don’t seem to introduce new capabilities. Further, the ideas will be more difficult to rank or evaluate.

If your firm needs to build a robust “front end” capability to spot opportunities, understand customer needs and generate meaningful, relevant ideas, contact us. We can help.

Improving the Idea Generation ProcessSo, to “sharpen the saw” of idea generation, you’ll need to slow down and do a better job developing the context of the problem and insights into needs and solutions. First, define a problem or opportunity statement that includes scope, mission and constraints. For example, you may say you want to generate ideas that will deliver a new product that delivers 30% more benefits as existing products at the same cost, and do so within one year, using existing technologies. This statement provides the idea generators with scope for exploration and with defined constraints (within one year, using existing technologies). This framework helps the team focus their attention, gives them targets to shoot for (30% improvement) and provides scope and timeframes.

Once they have this definition, it is helpful to gather trends to understand how the market will unfold and any significant shifts that are likely to occur. This helps anticipate new markets or customer segments that may emerge, or new shifts that may threaten your existing products. Finally, it helps to conduct some customer research to understand important needs that must be filled for customers to acquire your new product or service. Having this information makes idea generation much easier, improves your ability to evaluate ideas and ensures greater uptake of ideas when they are launched. Defining an innovation process aligned to these tasks will accelerate your ability to generate meaningful, valuable ideas. It will mean you need to generate fewer ideas but those ideas are more relevant, and more likely to achieve customer needs and expectations.