Monday, June 27, 2011

Four kinds of innovation time

We innovation consultants often talk about the value of ideas.  Good ideas, well managed, in time can become new products and services that drive new growth, revenue and profits.  But while ideas are valuable, the input that really matters is time.  Even if you have the best ideas in the world, if you don't have the time necessary to work them effectively, they don't matter.

Today's insight is brought to you by your wristwatch, your calendar and your annual planning cycle, all of which are different ways to measure different blocks of time.  I believe there are at least four different kinds of innovation time, which can make it difficult to innovate regularly, if at all.

Right time
The first time barrier that many firms struggle with is "when is the right time" to innovate?  I guess when product life cycles were longer and customer demand less intense, a periodic innovation pattern was acceptable.  A firm could afford to innovate, then rest on the revenues and profits of the new product or service that was introduced.  In that scenario, all the firm had to do was to correctly predict when the product would lose favor in the market or when customer demand would change.  In many cases, the firm simply produced a "new model" and expected customer demand to shift to the new model. Those days, my friends, are over.

The right time to start innovating was yesterday.  And, if you missed it, you can start today.  The pace of change is accelerating.  Firms don't dictate customer demand anymore, and can barely respond to it effectively.  Now, you need to either anticipate it, or if you are really insightful or lucky, like Apple, create it.  There is no "right" time for innovation, it needs to occur all the time.

Finding Time
If you can convince yourself, your team and your management that innovation should be happening regularly, the next time barrier will be to "find" time to innovate.  After years of rightsizing, outsourcing and cost cutting, there's no slack in the system.  To innovate, real tradeoffs have to occur.  An individual or team must put aside important short term work to address important long term opportunities.  In most organizations, everyone is working 40-50 hours a week.  The real question isn't "can we find the time" but "is what John is working on now as important as a new product or service a year from now?"

And yes, there's the myth of Google's or 3M's 20% time.  That investment is actually begun by people who spot an idea and start working on their own time.  They then get some time to validate the idea "on the clock" so to speak, but many of the ideas created under 20% time were on the employees' time.  If firms want to innovate, they must create some slack in the system for excellent employees to have time to consider future products, not current problems.

Time to Market
One of the most interesting thought experiments I use when leading an innovation workshop is to ask:  how long is your product development cycle?  If we had an approved project that we could submit to the product development team today, how long would it take for that product or service to launch in the market? 

Typically the answer ranges from 9 months to 24 months, depending on the complexity of the product and the regulations in the market.  But then, to really get the team thinking, I'll ask:  OK, how long do you think it will take from the recognition of a customer problem or the identification of a customer need till we have a good idea validated and ready to present to product development.  Typically, this elicits blank stares.  So we'll just pull a number out of a hat and estimate 3 to 9 months.  Which, if correct means that from the identification of a need or problem to product launch is 12 to 33 months.  Yet most executives have no clue that it will take more than a handful of months for an innovation team to spot an interesting need, validate the need, conceive new products and launch a new product. 

Further, if your idea to market timeframe is 33 months, you'd better dream up ideas that will be important and relevant at least 40 months from now, or you'll be late to the market.  Innovation takes time, and the longer your idea to market cycle is, the more interesting and disruptive your ideas need to be.

Time to value

Once your new product or service launches, it can be difficult to ascertain whether or not it has been successful for quite some length of time.  Many consumer good manufacturers will pull a product from shelves only after 6 to 9 months, to ensure customers are aware of the product and to let advertising and market alert the customer and to ensure a sufficient trial.  How much time will your executives allow for your new product in the market before they start deciding to "pull the plug"?

While we all love the proverbial "hockey stick" growth curves, they are rare in the real world but prevalent in PowerPoint.  New products require time for adoption, since they usually require customers to become aware of the product and recognize the value proposition.  Usually there is a need to test the concept, or see others test the concept, before the majority acquires the product.  This is what Geoffrey Moore called "Crossing the Chasm".  This means your first adopters aren't the majority, and it will take a little time even for a good idea to enter the consciousness of the marketplace.

We're all out of time
The problem with these different perspectives on time is that most executives have been brought up in the school of the stopwatch.  They expect everything to happen in the very short term, and have little awareness and patience for the time necessary to bring a wholly new idea to market, and even less patience for the time necessary for a new product to gain traction in the market.  Wall Street has trained executives to meet quarterly numbers often at the expense of longer term growth, and many opportunities are passed over because there simply isn't time, or the time isn't right.  You can only postpone innovation so long, before it bestows insights on other firms that aren't time-bound. 
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posted by Jeffrey Phillips at 5:37 AM

13 Comments:

Blogger Reff said...

Great article. It's nice to see my thoughts on innovation are consistent with yours. Further, I say "Finding time" must be "Making time" for the reasons you state. IMHO, you make time by ensuring your org has the basics of an innovation system. That is there is a clear and transparent mechanism for capturing, evaluating and communicating decisions about ideas. Thx for the great article.
@iamreff
Http://refford.com

3:57 AM  
Anonymous Jocelyn Davis said...

Excellent post. Time to value is an often-overlooked aspect of speed -- we talk about it in detail in our book Strategic Speed. You're right that many leaders fall into the trap of measuring by the stopwatch ("did we get the product out on time?") while paying little attention to how long it takes for the product to get up above that "value line" and start contributing to the organization's results.

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Blogger Kurt said...

you are very right about that, ideas well-managed will become products. Last night I watched a video called Entrepreneurs it showed how Steve Jobs began his second company called Next and it was pretty interesting. Now, I'm reading some pharmacy reviews to start my own company

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