Tuesday, August 02, 2011

Taking your eye off the innovation ball

I'd like to tell you a parable about an innovation effort.  This parable has the additional benefit of being true, though the names and descriptions have changed to protect the innocent.  As many of you will know, a parable is a story that instructs or informs.  I hope this parable will instruct and inform many of you.

The parable has to do with choices and blinders.  It has to do with what is an unfortunate but common approach to management in many organizations.  That management philosophy believes in whittling down ideas to solve one very specific problem, and failing to pursue viable alternatives or ideas.  I've written about this before - what we call the idea gauntlet - the slow stripping away of interesting options, valuable attributes and potential markets to arrive at one final concept that doesn't seem to meet any of the original objectives.  Here's the parable.

Several years ago a young innovation consultant was approached by a company that wanted far more growth and differentiation in a specific market segment.  The segment had experienced little growth and little product innovation, and there was significant room for innovation and for change.  The focus of the innovation effort was to create a new component in this market that would radically change the final product offering.  After some scenario planning and customer insight gathering, the consultant and team went to work, generating some truly interesting ideas.

One involved creating a radically new product, so new that there was no known way to create it mechanically.  But if the product could be made, it could reduce costs by significant amount and create benefits that the staid market had never seen.  So, the new idea was approved and research went to work.

That's where the whittling down began.  Rather than consider every market that had a need for the new product, the team focused on just one industry.  Rather than focus on several potential partners in that industry, the team focused on just one partner, and not one of the leading players.  Rather than consider a range of end products in which the new component could be introduced, the team selected the entry level product which competes on price, not value or benefits.  With just a few decisions, the team narrowed the field from many potential applications in a range of industries to one application in one industry with one (middling) partner, and their lowest priced offering.

Further, during the time the research and development of the new product were underway, the economy changed dramatically.  The needs and wants of the customer base changed as the economy got worse.  People's buying habits and expectations were lowered, meaning that the new product had to deliver even more value than originally expected or cost less than originally expected.  However, the shifts in the market conditions did not get communicated to the research team, which continued to develop the product for the market and customers as originally envisioned.

When the product emerged from research, focused only on one potential partner customer in just one of several potential industries, and after a radical dip in the economy, the firm was surprised to discover that while everyone praised the new product, it didn't meet the needs and expectations of the market NOW.  Of course with a little scenario planning and careful communication of the shift in customer needs and expectations, these insights could have been filtered into the research and development group, which may have been able to shift components or manufacturing concepts to lower costs or produce more value.

The morale of this parable?  First, time and customer expectations wait for no firm.  If your idea takes time to develop, ensure you understand what's happening in your target market.  If the market is changing, you need to feed that information back to the development team to ensure the concept is relevant.  Just because you identify a need and opportunity at one point in your investigation doesn't mean that your idea will remain viable if the market shifts, especially if it shifts dramatically.

Second, don't trim your idea too narrowly and focus too specifically on only one industry, customer segment or outcome.  In the parable above, several potential industries and applications were recognized but ignored by the team, which quickly focused on just one application, in just one industry, with just one partner.  While the concept generated had a lot of potential in several industries, no research or business development was conducted, placing all of the eggs in one industry basket.  When those needs became less important as the economy shifted, other potential opportunities that were passed up earlier on now appear far more interesting, but will require new investigation.

Final morale:  innovation is a continuous process, not a once and done effort.  Even after a good idea is generated, innovators must continue watching trends, forecasting scenarios and understanding what the future will look like when the idea is ready for consumers.  Snapshots of the future are interesting, but the future is always in motion.  While we can't predict the future, we can assess the potential for many different outcomes.  Selecting one outcome based on a snapshot while ignoring the continuous stream of activities, trends and scenarios can leave even a really promising product missing the boat.
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posted by Jeffrey Phillips at 5:38 AM


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12:28 AM  

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