There are two distinct parts to any Innovation Funnel

I wrote in an earlier blog called “the new extended innovation funnel” (http://bit.ly/hQTEJz) my reasoning for thinking differently from our traditional view of how the innovation funnel should look like. I feel it should look more like this.

Extended Innovation Funnel – are we really listening?

The ‘classic’ innovation funnel talked about is wrong for todays job!

Certainly every company does have some form of funnel, so it can whittle down the host of ideas into that final concept that eventually becomes commercialised and released into the market.

It is most commonly seen as wide at the front to capture all these ‘great’ ideas and narrows to the selected ones to go through a selection process although the more famous one being the Stage-Gate one made famous by Robert G Cooper (shown further on in the blog)

the Classic Innovation Funnel

I don’t want to get into the specifics of stage-gates, how many, why these have certain assigned hurdle rates, why they are equally loved and hated etc., etc. That is fuel for a later blog perhaps.

The funnel is always depicted as easier than the real thing, the activities that goes on daily in each company working through the idea to final concept. Taking ideas to commercialisation is an awful lot of hard work.

The worry and constant complaint is, that irrespective of our generating “thousands of ideas,” we still only seem to get between 5 to 10% success rate. This low success rate is what you seem to hear more about than anything else laying the blame on innovation, why? Maybe because our view of the funnel is wrong? Maybe because we are not listening and appreciating both sides of the funnel?

Tom Fishburne depiction of the funnel

Again this is seen set in the ‘classic’ traditional way, but with a real touch of Tom’s great humour. He also capture it well in that any idea entering the funnel is facing a ‘death of a thousand cuts’. The jaws of a hungry alligator realy to devour all (ideas) that enter the funnel.

He implies that the funnel has got a certain reputation as something ready to constantly digest its next prey. But does it need to be like that?

The Innovation Funnel Actually Has Two Distinct Sides.

The Left Side is the one often not deeply appreciated as the really critical one  and the side we often spend less focal time upon. “Before anything else, preparation is the key to success”. Really mastering this side of the funnel, allows for the potential for better ideas/ concepts to move through the complete funnel.

Extended Innovation Funnel – the exploring side

This is the raw end, the side that really is the hardest part, the often really, really, fuzzy part. This is the place mostly lying outside your organization’s domain of knowledge where the ‘real world’ functions and where you really need to constantly search and scan the horizon for possible ‘breaking opportunity or posibility, not just ideas that you think might fit from within your own world but ones that alter that world.

What do you need to capture within the left side of the funnel?

1). Firstly, this is where innovation and your strategy need to get good alignment. Having a clear perspective of what you need to focus upon is going to get you far quicker to spotting possible opportunities. It helps you to have a ‘reasonable’ understanding of intent, of capabilities, of potential to take this ‘raw material’ and convert it into a tangible set of ideas or concepts.

2) The External Knowledge gathering and Internal Alignment need to keep working these ‘nuggets’ of raw opportunities, realting them, exploring them, turning them over in your mind, in your thinking about possibilities and seeking different points of alignment.

3) The connecting points come from the deeper set of insights you have about your markets, your customers and their unmet needs and your capacities to translate these through exploring any potential from the ‘raw material’ and the degree’s of learning that comes with this, to convert it into something value and eventually commercial.

4)  Knowing where to go as sources of knowledge is becoming more critical. These can be through existing partners, through university connections, collaborations with competitors, institutes or by completing your own desk research offers you a wealth of places to explore. Simply observation in different markets, in-use studies or travelling in different countries and absorbing different insights and experiences provides the ‘scout’ the capture points. The key is being alert to ‘seeing possibility’ but at the same time ‘being aware’.

5) Once you have some raw concepts or ideas they will need some testing against. Not just can this be translated into a finished product that gives us value but does it map back to your research, your internal understanding of market/ customer and their needs. To sell any raw thinking back into a company you need to make it relevant, it needs to connect, and it needs context.

You really do need to make the necessary connections

1)      Going back to matching goals, the knowledge gained and needed and the internal capabilities to translate this really needs working through before it enters the actual internal process

2)      Also a preliminary assessment of if this can be managed and where it is going to be developed; purely internally (closed innovation) or do you need to have a collaboration with external partners (open innovation) or equally, the raw thinking was already found through a collaboration and you need to build the justification to take this further, in agreements, resourcing etc.

3)      Many organizations are looking beyond raw thinking and deliberately searching for concepts already part-baked or proven concepts that can be ramped up or scaled quickly or just needing the additional expertise your organization can bring into the mix.

Then the final part of the left side of the innovation funnel

1)      Doing the assessment of risks and returns. Assessing the potential value to the organization to turn its full resources on and take the idea/ concept through the idea to commercialisation funnel. Addressing the gaps, the risks, the impact becomes the beginning of refining the business case

2)      It is at this point you transform possibility into business opportunity. The seeds of an idea have already been through a fairly vigorous evaluation, it is at this point you make the ‘case’ for this to enter the classic’ innovation funnel

Moving across to the Right Side of the Innovation funnel

Extended Innovation Funnel – the exploiting side

This is the better known and discussed part of the funnel.

I will not go into that so much on this side, this is well discussed and debated by many. I just offer a few thoughts.

The crucial difference lies in listening and interpretation of the inflow from the left side.

By working through the left side of the funnel ou have refined much more. What is entering the funnel is arguable not needing the traditional wide-neck funnel; it actually becomes the narrow part. It is then a real need to widen out these as the concept takes hold and has resource taking these up and exploring the idea and working through the concept to turn it into final offerings or multiple ones for release into the world.

The generation of thousand of ideas becomes a misnomer as applied here.

Ideas were evaluated well before they entered the commercialisation process (the right side of the funnel). The critical thing here is they need to meet your portfolio aspirations and goals, any concepts need to ‘fit’. Fit not just a portfolio but the strategic goals, the product intent, the market and customer needs. This is the point you start really testing and refining inside the organization. Stop just ideas simply entering your commercilaization part of the funnel, it wastes precious resource and dilutes energy, better spent on focusing on the real few valuable potentials moving across into the right side of the funnel.

Taking concepts through the internal process,

We come back to the stages you take a concept through; it could look like this, based again on the stage-gate approach.

The Stage Gate Model

Emerging to the World

Where I do feel all the efforts made that get a raw opportunity into a concept and through often a highly structured and laborious internal system often misses the critical execution stage. Some even offer the view execution can be the harder part; it is where all the hard work meets market and customer reality.

The ability to execute an innovation initiative sometimes interrupts the ongoing business. Execution is an area that Chris Trimble and Vijay Govindarajan have written about in their book ‘The Other Side of Innovation- Solving the Execution Challenge.” It is worth reading to understand this final part of any innovation introduction, it brings execution into its appropriate place, the realities of the market place and where (innovation) rubber really does hit the road.

A brief summary

So for me, the present thinking of the innovation funnel needs to be extended back, back before the classic ‘ideas’ of people gathered in brainstorming sessions or simply using idea management software to explore mostly random thoughts that often do not translate.

You need to start with a strategic perspective and define your intent, your intent to look for ‘targeted’ ideas and raw opportunities not the ones randomly offered in idea generation sessions. Start at the beginning and not as we seem to do, in the middle. Simply ‘ideas’ entering the funnel is a myth, it is far too simplistic a view. Lets listen to both sides of the innovation funnel, it can produce a better (re)sounding results.

The more and earlier you know what kind of value your business is aiming to create, the better the eventual concepts entering the commercial end of the funnel will be. Then managing these in the most appropriate way given the context in which your business operates makes both ends of the funnel mutually important.

Walking that narrow innovation pathway.

Walking that narrow innovation pathway needs some rethinking.

The narrow innovation pathway

Innovation is the pathway to travel and seek out our future”

Today there is as much a gap between the aspiration to innovate and the ability to deliver on this. We still continue to ignore the constant suggestion that innovation should be systematic so the organization can provide some degree of reliability to innovate in a continuous fashion. We often allow the concept of ‘holistic’ to simply float over us and ignore the intimate connection between strategic thinking, innovation and their alignment. It is still sad we seem not to go beyond a certain point in our innovation thinking, it continues along a narrow path of limited understanding. Will it ever change?

I appreciate the statement, I think made by John Kao: “Strategy is useless without innovation, innovation is directionless without strategy”. Innovation can be strategies catalyst but is it still? I really do believe we need a new sense of the scale and scope of innovation; we do need to get a firmer grip on its complexities. I would certainly suggest we do need to align it far more to the organizations strategic imperative and recognize innovation’s role in this for this to be successful and to be repeatable. We must strive and push for more of a complete understanding of the innovation process to manage this thoroughly. Firstly innovation is never linear; it is iterative with lots of trial and error to learn from it.

Innovation leadership needs to step up to the plate and deliver.

Innovation leaders need to develop and execute an end-to-end innovation process that encourages discovery more, better screening and assessing earlier on to move discovery into exploration and concept generation that ‘fits’ with the strategy. The process today needs to manage ideas into conversion for profit and growth at increasing speed as well, it is demanded. Innovation is not an ad hoc process as many still see it, that eureka moment, innovation is a massively important strategic business process. We need to treat it as tackling an enterprise transformation designed to bring consistency into the thinking around innovation. It needs to cross functional boundaries, it has to transform current sub optimized silo’s that gets ‘richer’ through exchange, interface and learning from others and not dumped down as often is the case today. To make it work you need a common language and a common approach well understood by the innovation leader designated to deliver.

My last blog dealt with the new extended innovation funnel, with the argument that ideas that enter the internal organizations innovation process are actually in the middle of the process. Let me expand on this ‘extending’ a little more by discussing some of the parts of the innovation value chain that need to be thought through.

Extending innovations value- appreciating the whole system.

For me innovation needs to be treated more like a complete interlinked value chain. We must step back and see the whole value chain system for innovation. It constantly loops back and feeds back-in to add increasing value and experience.  It has many connected parts that need to work together to deliver effectively and efficiently the new ideas and concepts being discovered through to final commercialization.

The innovation value chain needs the following, seemingly obvious often missed:

  1. An established system that is clearly repeatable to ‘push’ innovation through constantly
  2. It needs to be able to scale, scope and quickly adjust according to the concepts being pushed or even pulled through, often by spotting unmet customer needs.
  3. It needs flexibility, resilience and adaptability that constantly adjusts and shaped accordingly and cannot be ‘fixed’, rigid and overly managed or controlled as many seem to try.
  4. It needs to have break points for considering the innovation options- carry on, kill off, spin out, send back to rethink, to allow to grow at a different pace, to accelerate more.
  5. It needs to ‘capture’ the collective learning and experiences constantly gained from the past and build those into improving the process for future activities
  6. The people who have ‘oversight’ need to have some form of option resolution built in for deciding resources, directions, allocations and investments. They need that responsibility.
  7. All innovation ideas and concepts entering the extended tunnel need to align to the strategic direction, compliment or extend onto the platforms you are providing (core, adjacent or new) and feed the portfolio’s that drive the businesses growth aspirations.
  8. They must have a clear ‘fit’ within the strategy needs and be resourced well.

Designing the innovation pathway

To achieve increasing value in this, there is an innovation pathway you have to design and be ready to travel. It is highly dynamic and you, as the leader of the innovation activities, are required to constantly add the active innovation yeast by promoting the ‘fermentation’ needed for innovation to succeed, including:

  1. Establishing and encouraging a robust set of innovation processes and technologies to support that constantly adapts and adjusts to the needs of the innovation concept, not the other way around.
  2. The ability, energy and commitment to drive maturing ideas and concepts to realization.
  3. Create a powerful desire and motivation to innovate by encouraging the environment of what you do makes a contribution to our future.
  4. As ideas and concepts mature, you constantly build and restate the business case, again and again so it remains clear why this concept remains important.
  5. You actively seek out the different and often diverse points of connectivity with all the stakeholders so they can engage, contribute and lend their support and commitment.
  6. Constantly look for ways to empower individuals and groups to explore, challenge and improve constantly on what they know with what they need to find out and discover.
  7. You have to work actively (hard) at clarifying constantly the links of the idea and concepts across the innovation process for all involved to stay committed to the ‘long run’ between idea to commercialization in times of uncertainty and flux.
  8. Ensure you are actively working those networking, encouraging collaborating and building on the collective wisdom of many so that you are constantly exploring all the (emerging) options and expanding on the alternatives to extract maximum value.
  9. Seek ways to always measure, evaluate and see return through progress and impact so everyone involved or viewing the efforts can constantly ‘see’ the value and where their contribution is helping, not simply once a year in those organised ways and events that fit the calendar or bean counter needs.
  10. Strive for execution that builds from the best of the past by knowing what that is; remain open to what is all around you today in the wider world beyond your often more narrow confines and imagine what is really possible with that extra touch of imagination to ‘push’ by seeing beyond the known’s and traditionally accepted.

The concept-to-customer approach is an innovation pathway that constantly narrows down.

We do need a concept-to-customer approach across innovation. My 5C’s of capture, connect, convert, confirm and conclude shown in the extended innovation funnel can move this along.

Innovation is extremely strategic, it requires a more thoughtful understanding and we have to accommodate it within organizations by stating that it is often unpredictable, sometimes a chaotic process, it cannot be legislated or totally subscribed, thankfully certain significant parts can. It is by having this complete understanding of the entire innovation process so we can differentiate between the parts that can be made predictable and those that can’t. We can also constantly work at making innovation more predictable, in managing its many parts by making them more efficient and effective wherever possible. The more the deeper in innovation insight and understanding, the more we are adding to the internal knowledge. By often allowing for as much flexibility and adaptability for ideas and concepts as possible to ‘travel down’ and consistently improve the narrowing innovation path, the more it is likely to emerge as the right end-result.

As we progress from discovery to execution we need to offer more guidance and encouragement than prescriptive methods, currently prescribed and handed out in ad hoc doses. We DO need to understand innovation well. We then can manage our core well, expand into any adjacent spaces that strategically fit more comfortably and organize the associated activities to push the right innovation through a pipeline (depicted by the funnel in the previous blog). We will often have to go a lot nearer to the edge of uncertainly as we build this innovation path but knowing where these edges are is better than being constantly surprised. Innovation expertise inside an organization makes sound sense. Please see a previous post on some thoughts on this http://bit.ly/fQW6Jq

One last thing here, we must also rather surprisingly, reduce the many existing tools and processes we try to fit around innovation that ‘stress’ the existing core infrastructure but more on these in a further blog might be better.

The new extended innovation funnel

The ideas funnel has been with us a long time. We put our ideas into the funnel and then through a process of elimination out ‘pop’s’ finished products. Henry Chesbrough’s famous depiction of the Open Funnel has continued that concept, that ideas enter the more ‘open’ innovation process and go through a more ‘staged gate’ or equivalent process to emerge as the finished product or even spun-out- all well and good.

In the past few weeks the funnel has been constantly coming back in my life. It has been bugging me. Recently I was at a European Innovation Conference and we got into a roundtable discussion on managing ideas and up pop’s the fuzzy front end and the funnel and putting ideas through this. To be provocative I said “well ideas are actually in the middle of the innovation process” and we got into a significant debate on this and concluded that we all did not share a common language on this or understanding of what I was struggling to articulate.

So let me lay out my view. Firstly this was not as inspired as an insight I can  fully lay claim too as mine. I had read somewhere this very point, ideas lie more in the middle of the innovation process but just could not remember where I had read it- grey cells are my excuse.

On my return from the conference and the catching up that always follows I have now sat down to investigate where I had read this. It was staring at me in my document file, Langdon Morris  of Innovation Labs (www.innovationlabs.com)

Langdon Morris and his book “Permanent Innovation”

Langdon Morris wrote an excellent book “Permanent Innovation” back in 2006. I thought the book was great, full of really useful and practical thoughts for anyone involved in innovation or wanting to understand it well. Langdon has just updated this book in 2011 under a creative commons licence, with some rights reserved. You can download this book at  http://bit.ly/fgpNd2.

In his author’s notes for the revised version he makes the following observation that made me (also) rethink the innovation funnel and process:

“The major improvement involves a common misperception. Many people believe (and I used to be one of them) that innovation starts with “ideas.” People, the common view holds, come up with ideas, and then they turn them into innovations. The managed innovation process was therefore assumed to begin with ideation.

After following this approach for some years ourselves we’ve found that it’s not an accurate description of how innovation actually happens, nor is it an effective guide for how it should be managed. Instead, the most successful innovators are those who begin from a strategic perspective, thinking broadly about their goals and the key trends in society and technology, in order to define their strategic intent. They then develop detailed models of risk and reward as it pertains to the uncertainty of innovation development, and all this gets translated into “innovation portfolios” of their innovation investments.

The design of this portfolio embodies a set of themes and goals, and also identifies many unknowns, or questions. The pursuit of answers to these questions is the purpose of research, and the output of research is then the input to ideation.

In this way, the innovation process is inherently strategically aligned, risk-managed, and goal-directed. And as you undoubtedly noticed, ideation is definitely not the beginning, it’s the middle, and hence the need to revise the Permanent Innovation model to reflect this more accurate and more useful understanding.”

Jeffrey Phillips also then added his view for more thinking.

Then I get back and there is a great blog from Jeffrey Phillips on his Innovate on Purpose site of http://innovateonpurpose.blogspot.com/. This was dated March 31st and entitled “The evolution of the innovation funnel”, which can be read here: http://bit.ly/gIUB0J

Jeffrey comments “However, the funnel still seems too focused on ideas.  Our suggested revision to the funnel is outlined below.  This next iteration of the funnel incorporates opportunities, ideas, technologies and even products, considering “spin in” and “spin out”.  Ultimately the funnel is a bridge between unmet customer needs and the solutions we offer.  The funnel should consider far more than just ideas.  After all, in an open innovation model, we can accept and exchange ideas, technologies or even products that may address a customer need or emerging opportunity.  Limiting the funnel to ideas reduces its capability and power and creates a very limited metaphor for innovation teams”

He by the way, also offers a terrific slideshare as well on this through Ovo,  http://slidesha.re/idByw2. His view of the funnel was this:

Jeffrey Philiips/ OVO suggested funnel

So my three points seems to collide- a collision point I could not ignore.

So I firstly wanted to articualte my thoughts that I failed to do at the conference. Then as I got back into funnels and their ‘place’ in the innovation process I wanted to lay out my thinking.

Let me offer my thoughts on the insights, the suggestions and takeaways I have got from these colliding points.

I see this as the extended innovation funnel or alternative

I see the funnel differently. Initially my ‘flipping around’ was to get everyone quickly grasping a well established concept, the funnel, to see it in a new way. It partly worked in its central message of where ideas fit. Since I have now sat down I have moved from this and would like to offer this as my contribution to funnels, ideas and the extended innovation process. I think it reflects more of todays realities:

The new Extended Innovation Funnel v1

Let me briefly explain this, it certainly takes clearly on board the correct view of Langdon Morris and builds from this in a more detailed way. Also Jeffrey Phillips prompts us all to move from ideas to concepts.

Let me briefly explain this model and its reasoning.

The evaluation of ideas is becoming more refined also before ‘it’ ever enters any ‘funnel’ or evaluation process. In many open innovation initiatives the bigger company is not looking for ideas, they are looking far more for at least partly ‘hard baked,’ or proven concepts, that they can quickly scale or ramped up. The concept of ‘just’ ideas is not a reality for many any more, they are to time consuming and costly in resources and energy. They want quicker answers in growth contributions from outside. Scaling up quickly to ‘grab’ the opportunity.

The larger organization involved in open innovation, or its search and relating of ideas are based more on a concept that has some proven value is changing open innovation.

These ‘ideas’ are exploring different connecting points across varied sources and collaborators. They go through a clear match in strategy, capability, cost, return and value in a risk assessment before and they might even loop back for further research, before they enter the internal innovation process of going through idea conversation to meet commercialization objectives. Then and only then, do you enter the more classic innovation process of converting, confirming and concluding concepts before entering the market place. This inside-out process follows each organizations established stage gate or criteria milestone system of checks to process these concepts through to commercialization, often called the process of innovation ‘attrition’ or validation.

There is much more to bringing in from outside-in with a high level of Business Develpment actions and then a more inside-to-outside development process to take it through or spin it back out. This whole process is so much more than the present concept that ‘just’ ideas enter the internal process, are ‘staged-gate or managed through the equivalent accepted internal process that we seem to talk about today. Ideas are entering into this in a far more refined (defined) way than is often not fully appreciated and these are far more in the middle of the whole innovation development process.

This for me is the new emerging funnel, the extended funnel that depicts more of the present practice surely? Do you agree?