Tuesday, May 26, 2015

Innovate your processes before innovating your products

I was leading an innovation training session, talking about the reasons for conducting trend spotting and scenario planning prior to idea generation.  There are many reasons why I like trend spotting and scenario planning, but it's the sense of understanding what might happen in the future that really resonates with me.  I described why we advocate trend spotting and scenario planning as a component of innovation, especially as the expectations of an innovation activity are more disruptive.  Given the pace of change and the number of factors that are changing in the environment, taking some time to understand what may happen and, more importantly, what may happen in response, is very important.  No matter how good your ideas are today, most firms cannot hope to realize them as new products or services for months or years. 

If you are confused by the opening paragraph and its juxtaposition with the title of the blog post, don't be.  We teach trend spotting and scenario planning to our customers to help them understand the importance of recognizing emerging needs and emerging segments, because the great ideas they generate won't become products or services very quickly.  They'll become products and services when the product or service development process in their organization provides resources for the new ideas, and spend time developing, validating, testing the new products and finally launching them.  What will the world look like when we are ready to finally release a product based on an idea from the past?  What new needs or new segments will emerge?

As we teach trend spotting and scenario planning inevitably one senior member of the attendees will raise his or her hand.  With careful patience they will tell me that while other firms may take months or years to move from the recognition of an opportunity to a good idea, and then from a good idea to a finished product, and then from a finished product to a successful market launch, their firm is different.  And then I ask them to tell me their firm's average product development process timeframe.  Usually, blank stares result, for good reason.  First, there is no such thing as an average product development timeframe.  Product development differs depending on the amount of change, the available resources and the urgency of the product need.  Second, very few firms keep track of their product development cycles, so they are unaware that for many of them, product development cycles are GROWING at a time when product lifecycles are SHRINKING.  That can't be a good result.

What this bring me to is the original topic of this blog post - and the title of the post.  Far too many organizations want to "innovate" products and services, only to be stymied by their inflexible or unresponsive product development process and capabilities.  For the last 20-30 years most organizations have spent a tremendous amount of effort and training to hone their product development processes, eliminate waste, restructure priorities, implement Stage-Gate and then test other philosophies like Agile.  The vast majority of product development teams are underresourced, overtaxed, and constantly bombarded by changes to existing product developments as well as revisions to priorities for projects already in the hopper.  They typically have few tools to help re-prioritize projects and almost always have the wrong skills available for the next project in the hopper.  Further, simply developing a new product or service doesn't mean it's ready for launch.  Products and services must be validated through customer feedback, fully tested, integrated with other products or services to tie into a larger offering, and a marketing campaign must be prepared.  As should be apparent, all of these actions can take months or years, and that's before we incorporate any product review by the regulatory agencies if the product has an impact on the health or safety of consumers.

In the final analysis, it becomes clear that in order to innovate successfully, a company must innovate and update its existing internal processes before trying to innovate products and services.  Companies worry about the investment and time associated with developing a new product, concerned that customers won't accept or adopt a new product.  This should be a secondary concern, because the vast majority of product or service requests that enter the product development and launch stages - what many of us in innovation call the "back end" of innovation - simply fail to ever get resourced or funded.  There's simply not enough time, resource or management engagement to move new, risky ideas ahead of existing product development projects, and the backlog extends for years.

We worked with several clients on this issue, and almost always came to the same conclusions.  Companies need to respond to this issue in one of three ways:
  1. Rethink the internal product/service development process, to emphasize allocations to new products over existing projects.  Accelerate decision making and shorten cycle times to get new products to the market faster.
  2. Outsource the design and development of new products, leaving your existing product and service development team to focus on legacy products and services, to reduce conflict and confusion over resource priorities.
  3. Create a hybrid that speeds up and reworks internal capabilities while tapping external partners for key innovation tasks.
Regardless of the outcome you select, you'll need to spend time rethinking the approach and focus of your product and service development capabilities.

Now, it may be easy to suggest to yourself that innovation is an occasional activity and doesn't merit making changes to a stable, reliable product development process.  This thinking is wrong on both counts.  Innovation will become a far more consistent exercise as the pace of technology change increases and as competition increases.  Innovation will be required simply to remain in the game, not as an opportunity to leap ahead, which few take advantage of anyway.  Second, most product development processes do a poor job allocating resources and establishing priorities, and are bogged down with poorly defined projects and inadequate staffing levels.  It's exceptionally rare for products to exit the process on time and on budget.

If you hope to sustain innovation, start by focusing on your internal processes, both by developing a "front end" capability and reworking or rethinking the execution phases in the "back end".  The absence of either process, or the existence of an inadequate process in either case, stymies innovation.
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posted by Jeffrey Phillips at 6:19 AM


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