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BoozCo_The-2012-Global-Innovation-1000-Study

The 2012 Booz & Company Global Innovation 1000 Study reveals that successful innovators bring clarity to the early stage of innovation – that critical time when ideas are generated and selected for further development. The study also suggests that the most successful innovators in all industries have developed a consistent, manageable set of principles, tools, and processes that any company in any industry can take advantage of to get the most out of their R&D budget.

In a previous post, I outlined 8 key components to building an innovative culture that provides a practical set of tools and processes that can help your organization continually achieve breakthrough results. Listed below are the first five components that bring that all-important clarity to the early stages of the innovation process with reference points from the study.

1) A sharp focus on your top business priority. Companies that align the innovation process to their business objectives have a distinct advantage in the development of new products and services. From the study:

A far more critical factor (than types of techniques and tools employed) is how well they follow their chosen innovation strategy:

      • Is it tightly aligned with their overall business strategy?
      • Have they put in place the innovation capabilities needed to support their strategy?
      • Do they have the right corporate culture needed to make that strategy work?
      • And are they using the tools and processes that will yield the best new ideas and development projects, consistent with their innovation model?

2) A daring goal. I strongly believe that breakthrough innovations require stretch goals to focus the team. Here is a quote from Tana Utley, chief technology officer of Caterpillar Inc.:

“There is nothing like a powerful external market force to really drive an intense innovative environment. And there is nothing that drives creative energy like that feeling in the pit of your stomach when you have a goal that you have to achieve and it’s still pretty far away.”

3) Identification of the Key Drivers of performance. The further ideas progress in the innovation pipeline, the more important it is to understand the business implications. As a result, incorporating an understanding of the key drivers of business performance early on in your innovation efforts is critical. Once again, from the study:

All these laudable efforts have led many companies to say, at least anecdotally, that coming up with new ideas is not as big a problem as selecting and converting them to development projects, and the survey results and interviews validate this hypothesis.

The process of choosing which ideas to convert to full- scale product development is perhaps even more critical to a company’s innovation success than is the ideation stage.

4) Fast, efficient, highly focused innovation. Many companies and consultants focus on this ideation stage, debating the merits of Benchmarking, customer focus groups, technological capabilities, etc. Booz and Company identified the three innovation strategies most commonly employed:

    • Need Seekers, such as Apple and Procter & Gamble, make a point of engaging customers directly to generate new ideas. They develop new products and services based on superior end-user understanding.
    • Market Readers, such as Hyundai and Caterpillar, use a variety of means to generate ideas by closely monitoring their markets, customers, and competitors, focusing largely on creating value through incremental innovations.
    • Technology Drivers, such as Google and Bosch, depend heavily on their internal technological capabilities to develop new products and services.

For all of the focus placed on ideation, it is interesting that no one strategy was seen as being more effective than any other in the study. The most important factors are that you have an approach and that you follow it.

5) Predictive lift. The more a team understands the key drivers of business performance, the easier it is to predict the impact of the innovation. This is what Matthew Ganz, vice president and general manager of research and technology at the Boeing Company, had to say:

“If you have a creative idea and it doesn’t create value, it’s not technology. It’s art. If you’re all about value creation with no creativity, the accountants are going to take over. You need to prime the pump with creative ideas, and then you need to have rigorous processes in place to turn those ideas into dollars.”

A Personal Example Having clarity in the early stage of the innovation process led to the design of a new product line that ultimately became 60% of total sales at a national homebuilder [The Homebuilder Case Study]. Having a big, stretch revenue goal moved the team away from incremental improvements and forced them to look at a market that had been previously abandoned. The focused innovation required benchmarking and discussions with customers to establish the right specifications. And the insistence on predicting the impact of the innovation effort on revenue growth helped garner the necessary resources to complete the designs.

Why does it work? The reason that clarity during the front end of the innovation process is so important is that “Activity needs purpose”, especially when you are hard at work in the innovation labs. Like Matthew Ganz said above, you ultimately have to “turn those ideas into dollars”.

Any company in any industry can build a perpetual innovation machine. What is comforting from the study is that managing innovation can be more consistent and predictable than previously thought. From my perspective, this type of focused innovation is always preferable to the one brilliant person or waiting for that “ah ha” moment to arrive.

I would love to hear your comments on how you manage the early stages of innovation in your company.

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