Tuesday, December 21, 2010

Tuning the Innovation Engine

Tuning the Innovation Engine
A major issue in achieving and then maintaining successful product development is the challenge of sustaining the optimum blend of spark and fuel that is essential for the innovation engine. Both elements are critical for innovation, but all too often these two key components can become unbalanced effecting performance and sustainability.

Fuel, in the form of commercial resources is essential for any business (including product development). And access to the vital investment resource needed for new innovations and product development is only secured through trust, risk appetite and promised reward. In the corporate environment budget allocations and supporting sponsors are essential in order to setup and maintain the lines of credit that keep the fuel flowing. Because this fuel line is so critical, much of the product development effort then becomes dedicated to protecting that supply line; progress reporting, management compliance, stakeholder engagement and even the delivery milestones and schedules themselves may all defined to protect the fuel supply that is needed for innovation. Investment angels, corporate institutions, the market place and economic forces all control the fuel supply and so they get to define the rules for its access, including its rationing, use and refueling options.

However the spark critical for successful innovation is very different from the fuel. This other key component has very human characteristics that are expressed through creative invention, initiative, thought and insight. Within a commercial business environment people recognise talent selection & development, challenge & opportunity plus work culture & rewards are among the more important elements essential to maintaining their innovative spark. Almost because these are “soft” elements of the business their implementation can become less formal and dependant on local management style. With the level of people’s engagement in sparking innovation more driven by management style rather than management controls there is considerable scope for variation in the size and impact of the innovation spark.

So how to maintain the balance for a high performance innovation engine? First by being aware that there are actually two, sometimes opposed, forces driving your innovation engine. They are both necessary but sometimes they need to be protected from each other. Second by controlling where and how those two components come together. Neither should dominate and both should be managed according to their separate characteristics. Third, by recognising that tuning for the optimum performance needs balance and timing rather than simply opening the inlets and turning up the current.

It is hoped that this provides at least some small contribution to help the cause of better innovation.

I'm interested in feedback and views to help achieve better product development. Please contact me to share your views and thoughts.

Sunday, November 21, 2010

Genius and heroism is that the right strategy for innovation?

Having a great product-to-market process with a clear strategy is fine but without a pipeline of innovative ideas it’s like an empty fuel tank. Successful companies must be continually looking to feed their innovation engine. Without a full tank the portfolio of fresh competitive products weakens, the program of continuous service improvements breaks down and the customer renewal roadmap of enhanced value or cost savings becomes tired and unconvincing.

That innovation engine needs fuel. It needs mechanisms to stimulate people’s great new product or service ideas. It needs components to capture and handle the innovative concepts. And it needs people to collaborate, empathise and contribute.

But being an innovator within a company can be risky and challenging. The demands of innovation are different than operations. Those differences start with the focus on the customer expectations and perceptions of value. They extend to recognising the key distinctions with the competition or the status quo. Often innovators may need to adopt behaviours that classic business methods would encourage staff to avoid.

So does that mean we should leave the supply of innovative just to those on the fringe?

Of the two different paths to innovation – by chance, genius and heroism or by the discipline of process institutionalised and not dependent on individuals – process wins in today’s unbelievably competitive markets. You can’t afford to squander resources…” [Source Stanton, & Associates]

Innovation workshops offer a useful, structured way to explore, survey and extract the fuel that’s essential for the growth engine. But building a sustainable and substantial fuel supply has many challenges:
  • How can we build real customer empathy and understanding to achieve accurate insight?
  • How can we integrate new ideas with our business-as-usual operations, our strategy, and with our existing key competencies?
  • How can we optimise the collaboration across our teams and even with our customers?
  • How can we avoid group think and stop the hollow affirmations of aging paradigms?
Innovation Workshop services can be setup and run as effective event based sessions to find innovative opportunities and to fuel growth.

An Innovation Workshop can be either internally focused or client facing. Typically, business teams use internal Innovation Workshops to help identify and capture new opportunities that will enhance their customer relationships or help refine and strengthen a planned product (or service) offering. Alternatively client facing Innovation Workshops are typically used as part of the ongoing program of continuous improvement infusing that extra innovation long-term customers expect from their operational and delivery suppliers.

I hope this provides at least some small contribution to help the cause of better innovation.

I’m interested in feedback and views to help achieve better product development. Please contact me to share your views and thoughts.

Wednesday, September 15, 2010

The Importance of Improving Innovation

Successful innovation and new Product and Service development is a vital way to achieve business growth, market differentiation, customer loyalty and profitability.

If your innovation engine is performing well the benefits can be substantial.
Consider one of today’s classic new product successes:

“In the third quarter of 2009, Apple’s iPhone division delivered $1.6 billion in profits, while Nokia earned just $1.1 billion. What make’s these figures eye-popping is that Nokia’s global handset market share hovered around 35% while Apple’s was less than 3%.” [Source TechCrunch 11/11/2009]

So what does that mean? It means you don’t have to be the biggest to be the most profitable—but you do have to be the most highly differentiated. It means the leverage to be gained from innovation and new product leadership can be orders of magnitude.

But the Business Challenges to achieve strong business growth can be substantial:
  • Should future growth plans focus on market expansion, channel extension, business acquisition or new product and service developments?
  • How should the innovation and product development goals be achieved?
  • Does our development process provide all the necessary consistency, transparency and rigor.
  • Have we done the market research and industry homework? Do we have the right planning and control systems in place to track our success? And is the accountability clear for all the key roles?
  • What about our internal teamwork, collaboration behaviour and communications practices? Do we have the reward programs and cultural norms necessary for positive risk taking and exciting innovation?
  • Do we have suitable, motivated and experienced people and do they have supportive commitment from executive management?
Improving the performance of new product development capability and generate new, technology based, product and service innovations is critical. It is vital that both large and small businesses face the challenges of better innovation and stronger product development as they strive to grow, compete and maintain profitability through their new products and services. Businesses need to continually optimise their innovation engine.

I hope this provides at least some small contribution to help the cause of better innovation.

I’m interested in feedback and views to help achieve better product development. Please contact me to share your views and thoughts.

Saturday, August 21, 2010

Know Yourself, now that's obvious?

Successful businesses build on their strengths; they manage their risks and understand their limitations. To be sustainable and grow they must continuously discovery and apply productive knowledge. And to grow rapidly in a competitive market, businesses must use their capabilities and competencies to identify and commercialise novel business ideas.

A notable characteristic of those businesses that are successful at product and service development is their ability to learn from past challenges and build on past successes.

Nearly 2/3 of survey respondents in a study of new product practices stated the fit of a new product with internal strengths as the 2nd most important success factor… matching customer needs was cited as the most important” [ Source Kuczmarski, TD]

The key lesson for success is simple; “Know yourself”.
And a diagnostic audit provides that blueprint of internal strengths to accurately guide future product development and innovation. The business benefits are significant; using the limited available resources to generate higher returns and improved risk mitigation and tighter contingencies to achieve business growth, market differentiation and profitability.

But undertaking a diagnostic audit is not always straight forward or comfortable. Testing our limitations and impediments, or questioning familiar assumptions can be a difficult challenge:
  • Who should conduct the diagnostic audit when internal management has the best local knowledge but an outside consultant brings the broadest perspective and independence?
  • Is there a real willingness to find and examine that hard objective data from past development performance or are the facts all too complex or incomplete?
  • Will senior executives provide the sponsorship that’s necessary and then will they be open to the audit results and ready to act?
  • Can we actually afford to refine or recalibrate our business strengths so they better serve the needs of our product development and innovation practice?
The Diagnostic Audit services helps to identify, pinpoint and then exploit and capitalise on what you actually do best.

The typical diagnostic audit is a blend of qualitative and quantitative steps. It starts by quantifying past performance of innovation and product to market achievements, isolating underlying causes and the reasons for success or failure, mapping activity against risk profile, measuring costs and comparing planned against actual performance. Then the audit qualifies the selection, ranking & screening criteria for new innovations and considers the fit against capability and advantages. Finally the audit reviews processes, procedures and practices for any gaps and looking at commitment and cultural alignment. This completes the picture of those success factors and key areas that will drive better innovation outcomes for the business.

I hope this provides at least some small contribution to help the cause of better innovation.

I’m interested in feedback and views to help achieve better product development. Please contact me to share your views and thoughts.

Monday, June 21, 2010

The Centre of Innovation can be outside the boundaries of your business.

Businesses are increasingly recognising the limitations of their own capacity for innovation, development and new ideas. With the rise and rise of open and reliable knowledge networks an alternative model is now available for sourcing innovation.

Open Innovation as a concept grew from the 1960’s practices of inter-firm cooperation in R&D and expanded over time into user innovation, cumulative innovation, Know-How Trading, mass innovation and distributed innovation. A leading champion of today’s Open Innovation practices is Henry Chesbrough from UC Berkeley:
Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology” [Source Chesbrough, HW]

In the traditional model, only businesses were involved in the commercialisation of technology. It was held that successful and timely innovation required control. However more recently, several factors have emerged driving a change towards the new open innovation paradigm:
  • The increasing availability and mobility of skilled workers
  • The growth of the venture capital market
  • External options for ideas sitting on the shelf
  • The increasing capability of external suppliers
These four factors have resulted in a new market for knowledge. Knowledge is no longer proprietary to the company. It resides in employees, suppliers, customers, competitors, and institutions. If companies do not use the knowledge they have inside, someone else will.

Today’s Open Innovation networks offer an ever expanding and extremely rich source of almost every capability and capacity necessary for innovation and new product development. While software exemplifies the traditional winner from this collaborative environment, the breadth of pure product development and innovation that is being delivered today is immense. Web based collaboration and open sourcing rivals the product development capability of any established business.

Its important for businesses, both large and small, to participate in and find competitive value in Open Innovation.

The knowledge explosion means it is increasingly difficulty keeping up with significant trends. But trend spotting remains vital to identify and encapsulate those sources of knowledge that sustain our competitive advantage:
No matter who you are, most of the smartest people work for someone else” [Joy’s Law for the high-tech industry].

So in adopting a distributed Open Innovation model it’s necessary to acknowledge the centre of innovation can be outside the boundaries of the business. And this requires a fundamental reorientation of views about tasks, structure, incentives, management, & intellectual property.

The easiest opportunities for Open Innovation are often to be found where products and services are dominated by information and knowledge. But as more physical components of all types give way to rapid prototyping, agile methods and soft models, the candidates for open innovation are rapidly expanding across more and more areas of product development.

However old business models may need to be refreshed. It’s vital to first identify and then tightly focus on key core competencies that are to be protected for competitive advantage and sustainable customer value. Everything else becomes a candidate for participating in the synergies of Open Innovation.

And a culture of participation is vital to success. Open, transparent and merit based participation needs to become the benchmark. Clear governance, iterative processes & open product structures are also important prerequisites.

I hope this provides at least some small contribution to help the cause of better innovation.

I’m interested in feedback and views to help achieve better product development. Please contact me to share your views and thoughts.

Tuesday, May 18, 2010

Health warning: “Inhaling your own exhaust fumes may cause brain damage”.

Health warning: “Inhaling your own exhaust fumes may cause brain damage”.

Probably because self confidence is such a vital ingredient for successful new product development it sometimes also becomes particularly vital to guard against the dangers that can accompany excessive self-confidence in our innovation

Those dangers exist because the success of any innovation and product development is ultimately judged by users and customers and not by the core development team or by the founding inventor. And those dangers surface when, head down and focusing on the end game, our connection with the customer begins to slide into an aging and optimistic set of assumptions.

Unfortunately the slide is often imperceptible. Confidence underpins the crucial motivation that we all needed to drive forward with that new product or service concept. The confidence to keep on fighting becomes internalised as the team (or the individual inventor) identify with, and increasingly grow to “own”, this new development. Personal interpretations, values and paradigms are inevitably used to shape the new concept. Meanwhile, as the link between the concept and its development team becomes more personal, the voice of the customer can become marginalised and disengaged.

So how to avoid breathing the exhaust fumes of your own development machine? A framework I’ve found particularly useful to avoid this trap is offered by George Kembel. The suggestion I’ve found useful is to fundamentally base your development on empathy for the target customer. It simply means that as we drive our development machine through each process stage, empathy must define “what” we are developing. Our own competencies dictate “how” we realise the new product or service and our business models dictate “why” we pursue this opportunity rather than any other innovation. It means our fighting self-confidence needs to be directed and not simply become a total state of mind.

The metaphor of riding a motorbike works for me. If we spend all our time focused on making the gear changes and watching the instruments we’ll inevitably crash because the road demands that we look upwards and outwards. The successful innovation process is not closed, rather it needs to remain open to external customer forces that can show us where to head. If the bike’s gear box means we cant just go straight up the hill, we need to find other ways of reaching the same destination but the destination needs to remain something that is externally defined.

The value of empathy will remain obvious while we keep away from our own exhaust fumes.

I hope this provides at least some small contribution to help the cause of better innovation.

I’m interested in feedback and views to help achieve better product development. Please contact me to share your views and thoughts.

Wednesday, March 24, 2010

Bootstrap Innovation - Only in a Virtual World

In a recent blog post that I was reading (by Kathy Harris from Gartner), it was suggested employees who are enthusiastic and committed to innovation, should start a “Grassroots Pilot”. It sounds like an interesting idea but I can’t help wondering if the challenges aligning personal motivations and corporate motivations would just be too much to make this a sustainable model. I’d be very interested in any examples that anyone can share about successful and sustainable intrepreneurship.

My observations and experience point to innovation being like the Middle East; what you see depends on your frame of reference. First there is Entrepreneurial innovation, driven by individuals or small teams where the underlying personal motivation is most often change (or "to make a difference”). Second there is (large or small) Corporate innovation which is most often driven by finding or protecting competitive advantage. Here, change is very often an anathema and regarded as a risk to production. Third is Economic innovation where governments and agencies are nobly seeking growth. Often breaking down competitive barriers to new entrants is applauded by economists and change is just an inevitable outcome.

The different frames of reference almost inevitably lead to problems, conflict and misalignment because of the differing motivations. Problems are inevitable where the enthusastic Entrepreneur attempts to lead innovation for the Corporation. Conflict is inevitable where the independant Corporation is left to effect Economic reform. Misalignment is inevitable where the (politically driven) Economy attempts to pick winning innovations.

So the Grassroots pilot sounds fraught. At a minimum (and from any frame of reference) innovation takes courage, and confidence (as Kathy highlights in her blog). Workers who take an independent grassroots initiative, without strategic backing from their employer for such intrepreneurship may be brave and self confident, but they also appear doomed. Sponsorship can be used to mitigate this risk of misalignment. However that necessary integration is still relying on the sometimes accidental advantages of heroic efforts and personal patronage.

While there are a few notable exceptions, today's management is founded on classic principles of a clear hierarchy, alignment to strategies and efficient division of roles and responsibilities. As discussed by Gary Hamel this classic management model may be showing signs that it not adapting to the newest demands for growth and innovation in the network world. Perhaps grass-roots pilot would be better replaced by participation in open innovation and the collaborative innovation models promoted by Roberto Verganti.

I hope this provides at least some small contribution to help the cause of better innovation.

I’m interested in feedback and views to help achieve better product development. Please contact me to share your views and thoughts.

Thursday, March 18, 2010

Has Popular Management Practice Become Dated and Obsolete?

Reading a recent blog I was struck by the confidence and clarity that Gary Hamel seemed to be identifying a critical flaw in the DNA of popular business management. He cites a recent survey that found “only 20% of employees are truly engaged in their work — heart and soul”. While the respondents laid much of the blame for their lassitude on uncommunicative and egocentric managers, the question he posed is “if there’s not some deeper organizational reality that bleeds the vitality and enthusiasm out of people at work.”

The blog provides some thought provoking observations about the (lack of) humanity of our business world.

Why is there a hole in the soul of business? Before answering the question its useful to first consider the metaphysical characteristics that a business requires. For a listed company it appears to be very simple. The stock market ensures the dominant corporate purpose remains focused on growth and protection of shareholder value. Customers, suppliers, workers, technology and capital are all engaged and employed to achieve that over arching goal. Management skills are used to apply the resources and navigate the environment so as to realise greater shareholder value. The personally inspiring leadership and “big hairy audacious goals” are only kept in place while they generate greater EPS. In some companies founding owners may have an opportunity to redefine corporate purpose and deflect the market’s myopic obsession with quarterly earnings expectations. But for the most part it appears companies have a very small soul that has already been sold to the bulls and the bears. That means (using Hamel's own delightful analogy about corporate innovation) inspiring a soul in a business may be just like teaching a dog to walk on its hind legs; it’s a great party trick but in reality its NOT really part of the corporate DNA.

So is there a different business-beast (perhaps a “net-enterprise” model) that actually does have biped DNA? If there is, I think it’s probably web based, with a collaborative business model permitting small partnerships to form and reform, using open-innovation, online manufacturing or cloud computing, open source business tools and web sales channels. This “net-enterprise” model assumes that the opportunity to build and sustain a successful vocation provides individuals with the self-actualisation necessary for meaning, purpose and a soul in their work. And it appears the “net-enterprise” model is already thriving. It can be found in many forms that range from individual entrepreneurs, to the supply chain of multinational aggregators (like Dell).

So when would we hit that evolutionary tipping point and see the fall of four legged fossils and the rise of two legged humanity? Many nations are already encouraging the change with national high speed broadband network infrastructure building out their “knowledge economy”. But what could I do to accelerate the move to more humanity in business? Evangelise the practice of open innovation, promote the success of those leading gazelles and help drive management evolution.

I’m interested in feedback and views to help achieve better product development. Please contact me to share your views and thoughts.

Thursday, March 11, 2010

Are Businesses Becoming Less Innovative?

Comparing the "Innovation Intensity" in a sample of 120 typical tier 1 companies with their "Innovation Intensity" five years ago (in 2004/05) suggests innovation has declined about 15% for an average tier 1 business.

Using the same analysis method described in an earlier blog, the results seem very clear:

The findings for the sample of 120 tier 1 companies:

  • 20% have stronger then the average Innovation Intensity and their Innovation Intensity has grown, typically 30-35% since 2004/05 - The Innovation Champions
  • 21% have stronger then the average Innovation Intensity but their Innovation Intensity has fallen, typically 20-25% since 2004/05 - The Innovation Deniers

  • 16% have weaker then the average Innovation Intensity but their Innovation Intensity has grown, typically 30-35% since 2004/05 - The Innovation Aspirants
  • 44% have weaker then the average Innovation Intensity and their Innovation Intensity has fallen, typically 40-45% since 2004/05 - The Innovation Chumps
The conclusion:
  • most companies appear to be generating significantly less innovation compared with 5 years ago.
And who have been Innovation Champions and the Innovation Chumps over the past 5 years? Well from my sample of tier 1 businesses the list is (full details will be available from my website):

The Innovation Champions:

The Innovation Deniers:

The Innovation Aspirants:

The critical question from this analysis is why. Why has Innovation Intensity declined? Is it all down to the GFC? Challenging times are expected (in some people at least) to inspire entrepreneurship and innovation , however that fighting response may not be what we see from established businesses.

I’m interested in feedback and views to help achieve better product development.

Thursday, March 4, 2010

No one innovates because it has no business value.

Sometimes, just because it’s taken for granted, the obvious becomes a really important thing to test. Maybe it was that one cynical conversation too many with the CxO about “real” priorities, operational performance, capacity expansion and business efficiency that set me doubting whether product development really is necessary or useful. A well managed RFI/RFP process controlled by Procurement may be a much better way to engage hungry and competitive suppliers and source new stuff. After all “Elite Circles” and “Consortia” are two of the Collaborative Innovation models proposed by Roberto Verganti. And they sound like an RFx process to me.

So how to check out who is really innovating and whether they are actually generating any tangible value. A rough measure of innovation intensity can be gained from surveying the web news. Pick a company and then, using Google’s News Archive Search, measure how many web articles mention their name and in turn how many of those same articles include the word “innovation”. It’s crude and simple but seems to pass the sanity check and the ratio does yield an independent measure that at least approximates a company’s “innovation profile”. I know there are many uncontrolled variables and it certainly doesn’t have the rigor of professional research but its “satisficing”.

Based on some background experience plus a few areas of personal business interest I picked 100 listed companies. I limited the survey to 2009/10 news articles to keep it current and obviously because I was also searching for the word “innovation” had to stick with English language web sites. Occasionally I found a smaller business that didn’t appear to have published any qualifying news articles and so unfortunately had to exclude them from my sample.

And what did this survey show? The full results will be available from my web site but initially this is a summary of the "top 30" companies in my sample.

  • Based on this measure of “Innovation Intensity” (II) there’s a wide range of innovation activity occurring across different companies.
  • The average company has 2.5% of their news articles including a reference to “innovation”
  • A small group (approx 5% in the total sample) are talking about innovation up to 3 and 4 times more often.
  • However there’s also an even larger group (approx 25% in my sample) that don’t appear to be associated with “innovation” much at all.
  • The firm conclusion; it’s true not every business is embracing or even interested in innovation but some really are very interested.
So who they are and why?

My simple minded assumption was that company’s innovate (or don’t) because it does (or doesn’t) add value. While product development is certainly fun in itself, I’m still searching for that tier 1 listed company whose primary business goal is just “having fun”.

A useful mantra is that “the success of innovation is ultimately judged by the market”; through things like competitive differentiation, brand reputation and premium pricing. Financial accounting is an industry that’s knee deep in metrics quantifying the market valuation of a business. So after some thought the metric chosen to quantify the relative value of innovation was the simple P/E ratio. The market is certainly the arbiter of a company’s P/E and Nobel prizes have been won showing these markets are informed and efficient. So, all things being equal, it’s expected that more innovation would help generate higher P/E. While (as ever) all things are never equal, exceptions can become obvious and, after all, I’m only searching for some hope, so even a trend would be useful. To avoid some of the “exceptional market valuations” the stock market creates, my sample of companies was restricted to a mid-range market valuation of 5<>30.

So what happens if this Innovation Intensity (II) is now correlated against a company’s current P/E? Because the II Index was captured using only 2009/10 news articles there’s an implied assumption that innovation “released” to the market over the past 12months it will influences the current market’s view of a company’s P/E ratio.

And what did the correlation show? Well as expected it showed a range of results but the analysis indicated (with some relief) greater Innovation Intensity (II) is associated with higher company valuations (P/E).

In the Telecoms and Communication services sectors this trend was the most positive:

In the Technology and IT services sector (which often brings much of the technical innovation to the rest of the market) the trend was also positive:

However in some sectors including Consumer Products and Financials the correlation between a company’s Innovation Intensity (II) and its market valuation (P/E) was actually negative. The implication is that more innovation for these company’s may actually erode market value.

Perhaps innovation becomes a distraction or a disruption from the more necessary stability, security and control:

So, what does it all mean? Well with some personal relief it does appear to provide reassurance that new product development is worthwhile, at least in some of the more technology or design based industries. But it’s also a reminder that innovation is not valued by the market in every industry. That’s not to say innovation isn’t important to Banks (for example) but the analysis does suggest any innovation they undertake may be more internal and unseen to the market. The analysis also raises a variety of other questions about trends and profiles to further qualify the insight into innovation.

And the winner? Well in my searching at least I couldn't find any company with a higher Innovation Intensity than Amdocs Limited. Almost 1 item in 10 from their 2009/10 web news references "innovation". Now does that sounds like fun?

I’m interested in feedback and views to help achieve better product development.

Wednesday, March 3, 2010

“It’s important to get the balance right!" Or is it?

Over the past couple of weeks I’ve been working on a small new product development challenge posted by one of the Open Innovation forums. It’s a really inspiring initiative; designing a 6,000 litre rain water storage system costing less than $100 that families across rural communities in a region of south west India can build and maintain.

Circumstances at the time meant I was tackling the work solo. So I found myself swinging between the practical world of structural analysis, high level design, detailing, cost engineering, etc, and then switching my mind into the creative world of cultural empathy, problem solving, invention etc.

As a result I was left questioning whether a cross-functional team with individual expertise in each of the key disciplines would be more likely to achieve an optimal result. But then it occurred; herding cats has its limitations and that significant insight or the special break-through are more likely to be achieved when only one or two people take up the challenge.

So if I’m looking for a safe and effective incremental development, the traditional project team probably offers more advantages (although it needs the discipline of the project management process to maintain cross-discipline coordination and team alignment). However if new or radical rethinking is needed then the individual designer or architect is essential to provide that break-through thinking and to direct the thought leadership.

And it looks like this observation is supported by the science. An innovation model researched by Roberto Verganti appears to validate this difference. Apparently based mostly on studies of Italian innovation success, it appears individuals with their supporting hierarchies are more successful at driving radical innovation, while flat teams with their project management coordination achieve better incremental improvements and adaptations.

For me, the really fascinating epiphany offered by this model is that radical innovation and break-through meaning can come in two flavours. The first is a Design Driven flavour where the radical innovation is based on inventing form, meaning and value. The second (possibly) more familiar flavour is Technology Push where the innovation is based on inventing function, purpose and utility. Occasionally it’s even possible for these two radical innovation drivers to align.

And the research appears to show this radical innovation is not achieved through user centred requirements analysis. Instead it is achieved by external interpreters (designers, architects and thought leaders) observing the environment from outside and seeking to find new meaning or capability that can then be proposed to the market.

So back to the self doubts inspired while working solo on my water storage challenge. It appears Open Innovation methods may offer an advantage when searching for break through solutions. Inviting participation from across the global community allows individuals to take part without imposing the constraints of a corporate cross-functional project team. While the result remains simply a proposal for evaluation, the open innovation approach appears to bring better opportunity for radical prototypes (just like a fashion parade or a motor show) where buyers and subject matter experts can experience the “what if”.

I’m interested in feedback and views to help achieve better product development.

Friday, February 5, 2010

"Its a techncial success but a commercial failure"

“It’s a technical success but a commercial failure.” A familiar cry about many newly developed products and services. But is that really important?

Recently I’ve followed an exciting blog “Build a startup in seven days and under $500” where Sebastien Eckersley-Maslin took us through his daily journey from idea to launch for his new product. I think it’s a great story of personal motivation and enthusiasm highlighting the real-world actions and the quick fire steps that can be taken to craft a new technology based product.

As I eagerly followed each daily update, I also found my “thinking-judging” (MB) alter ego was sitting back throwing up doubts and road-blocks. Where was the “necessary” commercial rigor? Where were the considerations of service quality and operational support? The costings seemed incomplete without any labour. The value proposition seemed thin. And so the list went on.

But maybe that judgement was not actually appropriate (or even particularly relavent). From the misty past I’ve picked-up a useful metaphor for new product development. Basically it suggests there are two types of development. First there is the sharp-shooter where the approach is: “ready, …. , take aim, …. , squeeze the trigger”. Second there is the machine-gunner where the approach is: “fire, aim, fire, aim…..”. Although not the most politically correct these seem to capture two key approaches to the world of new product development.

And, as a colleague and friend often reminds me, the best approach always “depends”. Where targets are fast moving, plentiful, and the risks from collateral damage are acceptable then that machine-gunner can be really successful. But where there is a single or maybe larger and more highly prized target then the sharp shooter can be the more successful.

There are always innumerable things to consider when developing a new product so identifying and then focusing on what is actually important becomes crucial. For example, where brand protection and mass market success are the priority, that machine-gun approach can become a liability. Where speed-to-market, innovators and early adopters are the focus, that sharp-shooter becomes a problem.

So how much rigor and effort should be invested in that new product development? It seems the answer is “what ever is appropriate for the goals you want to achieve”. Ultimately it will be the market that judges your service or product quality. If your goal is simply market entry, that 2.5% of innovators in the market may well be satisfied with a quick fire series of pilot services or product prototypes. But if your goal is to target that next 13.5% of early adaptors, more time may be needed investing in sustainable support and clearly targeted competitive differentiation. And if your goal is to cross the magical divide into the 20% to 50+% of mass market adoption; the new product needs to be both a technical and a commercial success.

I’m interested in feedback and views to help achieve better product development.

Thursday, January 14, 2010

So where to start with better product development?

The world of product development is wide and exciting. It’s full of opportunities and rewards, inevitably tempered by a measure of disappointments and frustrations. I’ve certainly always found it fun and fulfilling.

To get the most from this product development world it may useful to consider the fundamentals important for a “good life”. Just as we all need air, water, food and shelter; there are some basics that are critical for survival and success in the world of product development.

So what are these core requirements for survival and success in the world of product development? My experience suggests there are four:

  1. Process
  2. People
  3. Patronage
  4. Perseverance

Process is about discipline and structure. There’s a fundamental need to maintain order as the intangible product or service concept is guided through the often tortuous journey that transforms it into something of tangible benefit to customers. Methodologies like the standard phased framework published by the Product Development and Management Association (PDMA) define what and how the process should be followed. They help with stage gates, checklists and templates that act as descriptions, hurdles and screens for refining the product as it progresses to market. Without this defined process service creation remains just that, a creativity exercise, which can be fun, but is certainly not product development.

People is about teamwork. This is certainly not to suggest that product development needs committees and “group think”. But it does need good expertise and strong collaboration. Firstly, the span of skills important for successful product development is extremely broad. Compromising on the quality of skills applied to a new product increases risks, reduces potential, compromises success and wastes effort. Secondly, good people bring an opportunity for positive tension. Tension that can help test and improve the product as it develops. Thirdly is the customer. Famously it was Henry Ford who suggested that before the motor car, if asked what type of improvement people would want in their transport, the answer would have been simply ‘faster horses’. This anecdote belies the customer’s role as a member of the development team. But the enduring need for “faster” and our continued use of horsepower to define even today’s motor cars shows the vital team role played by the voice of the customer.

Patronage is about power and permission. In an open web centric world the critical importance of these less fashionable forces can be easily overlooked. New product development by nature is disruptive. It challenges the status quo and looks to introduce something new that competes with established paradigms. A familiar model to help understand the forces at play is offered by Porter. Strategies are required to successfully establish the new product into this sometimes hostile push and pull landscape. Ultimately key supporters (or patrons) with sufficient authority and responsibility in the existing landscape need to be engaged to help nurture and protect the change agent.

Perseverance is about self confidence. With less than 1 in 50 new product initiatives reaching production launch and with regular black-hat scrutiny, the world of product development is inevitably an uncertain roller coaster for its participants. The realities of competing for both limited investment funds and striving to win market success create that challenging environment. To stay effective and successful, participants in product development need an enduring culture of self belief and determination.

My experience suggests these are four of the critical requirements necessary for survival and success in the world of product development. I’m interested in feedback and views to help achieve better product development.