Most companies involved in the innovation game can proudly show their winners – the new products / services that have successfully launched and exceeded the expectations of revenue / profit / market share. At the same time, the same companies may often express frustration or dissatisfaction with the full return on innovation investments.
"We see three common questions that cause dissatisfaction," says Frank Lynn & Associates Inc., vice president and director, "Metrics, Project Launch and Innovation Process."
Smart Business asked you to share some experience with the company's experience.
Why do leading innovators still express the process frustration?
Incorrect metrics result in poorly restored expectations. Even the most successful innovators have to expect less "hits" than "miss". Misleading projects prevent development pipeline in so many low-probability projects that winners can not be funded properly. And weak process management takes too long for the losing bets.
You mentioned the metrics What are the most appropriate indicators for the development process?
Most companies will measure innovation based on outputs. For example, a common benchmark claims that 20 percent of corporate revenue comes from products / services launched over the past three to five years. This does not measure the efficiency of the innovation process. (Even the poorest process can meet this revenue goal by providing sufficient resources.)
The most powerful indicators provide useful insights into the innovation process.
Return on earnings / invested in dollars. This measure indicates how well the resources are distributed. Actions from this indicator may include changing the project staff model or changing the timing of hard costs (patent applications, on-site tests, etc.) to reduce overall project costs without affecting the positive outcomes.
Average number of projects / innovation employee. There are often so many development projects that staff can not devote sufficient resources to effectively move them forward. "Withdrawal withdrawal" may cause limited or even delimited effects of the number of development projects that are allowed in the process at any time.
Average duration of a project. Companies struggling with innovation have nothing to say. The pipeline is clogged with too many projects and the best deals are not able to reach the critical mass of resources needed. Even the goal is to reduce the average duration of the project by 10 percent, to provide faster go / no-go choices and better overall resource utilization.
The most appropriate way to initiate projects
Historically, companies tend to innovate in an in-house approach (ie "invent inventors"). As a result, the overwhelming majority of the projects had little to do with the needs of the market. As market-driven rumor gained, many companies moved to the other extreme. All development projects had to justify the market. This approach has lost the "quantum leap" progress; too many projects have been rejected for a slight improvement in the features / benefits.
The most appropriate approach is a combination of the above extremes. A 75/25 benchmark is used: 75% of the initiated projects should be market-oriented, from the outside point of view to gain a specific advantage for a particular market segment. The remaining 25 percent is less limited. Inventors are free to invent and find the quantum leap.
What kind of improvements would the innovation process suggest?
The world-class innovation process requires disciplined management using the seasonal process. Development projects are managed through several stages. The highlight of each section is the review and the go / no-go decision. Only projects that pass through this gate will be funded for the next phase.
Although the concept of stage process is easy to imagine, separating successful innovators is the input set from the rest of the sections. Both technical and market feasibility studies are intertwined. For each review, the criteria are progressively tougher, ensuring that the product / service can be scalable to support commercial traffic, and there is a market potential for profitable launch and commercialization of innovation.
What does it mean to help companies improve their return on innovation?
If we look at the big picture, we find that the most successful innovators understand the process. These companies understand the importance of process-oriented indicators. They are encouraged to initiate projects primarily from the "outside". And it is disciplined to handle as little as possible the likelihood of handling pipelines.