Opening up the Stage Gates to let the new innovating world in?

Stage Gate hurdlesThere is no question the Stage-Gate process has had a significant impact on the conception, development and launch of new products. Yet there have been consistent criticisms of it, as the world of innovation has moved on. Today it is faster-paced, far more competitive and global and become less predictable.

The cries of the Stage-Gate process as being too linear, too rigid and far too planned, bordering on prescriptive have often been heard. The gates are too structured and the constant ‘creep’ of the controlling bureaucracy surrounding it in paperwork, checklists and justification has simply led to so much non-value-added work add to the moans and groans.

Surprisingly, the Stage-Gate concept was created in the 1980’s and led to Robert G Cooper’s different evolutions of this evolving and absorbing many new practices and experiences gained by different organizations across this time.

I’ve written previously on this blog site about the concerns within this Stage Gate system if organizations allow the ‘controllers’ to dominate over the ‘creators’ of innovation what can happen. We end up with “self-inflicted wounds caused by jumping hurdles and closing gates on innovation.

The idea-to-launch gating system is under more threat today than ever before.

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Self-inflicted wounds caused by jumping hurdles and closing gates on innovation

Many organizations have made Stage-Gate or a mutation of it, their ‘go-to’ innovation process that all innovation must ‘somehow’ pass through. Squeezing all types of innovation through this, for whatever people claim is a linear process, is simply wrong.

You can simply say: “we destroyed much to get sometimes so little out as the final outcome, when initially it was seen to be so promising.

The difficulty is that we are still struggling to find a real alternative, although there have been some recent noteworthy attempts, firstly by Jose A Briones and his Spiro-Level 3D approach and then by Paul R Williams, of the American Institute for Innovation Excellence, to move the discussions beyond the Stage-Gate process from this linear into more spiral concepts and beyond.

There has been an awful lot written on Stage-Gate, some people attacking it and suggesting it “guarantees mediocrity for your business”. Clayton Christensen has suggested “the Stage-gate system is not suited to the task of assessing innovation whose purpose is to build new growth businesses, but most companies continue to follow it simply because they see no alternative”

Stage-Gate has certainly earned its place for product management.

Stage-Gate is an ideas-to-launch process that encompasses a solid body of knowledge built up over the years and has for many become the blueprint for managing the NPD process, reinforcing effectiveness and efficiency as its core discipline. I would argue that’s it! It reinforces but at what cost? Innovation can actually miss out! Often it can also extract out much of the very process that we need from great innovation to leap forward and grow our businesses today. More on this later.

Employing this Stage-Gate methodology you can feel safe that there is behind it a body of knowledge on the best practice gleaned from studies of thousands of new product developments. The process takes you through stages or hurdles, passing through gates where ‘go/ kill’ decisions should be made. Organizations that thrive on having a ‘regime’ hold ‘fast’ to the Stage-Gate as their way to manage innovation. This rigidity of a given mindset is one of the real concerns about being totally reliant on the Stage-Gate. It works for product development that is more incremental in nature –the bread and butter of most businesses.

A really short history of the Stage-Gate first.              

Stage-Gate was developed, is registered as a trademark and certainly popularized by Robert Cooper. His first edition was published in 1986 in the early days of understanding the management of the innovation process. He has since updated with a second edition in 1993 and from this it gained its real traction as the recognized process, and established the term “Stage-Gate” clearly to manage within any product development process. His third edition in 2001 shifted the focus and became more taking the concept further on accelerating idea-to-launch. In 2011 he gave us a completely revised and updated fourth edition.  Robert Cooper reminds us that his Stage-Gate process has become the most widely used method for managing new products in industry today.

It has been suggested that this Stage-Gate process is a conceptual and operational map. Well, yes for NPD only maybe it is but today with all the other types of innovation needed to be considered by organizations it is NOT really capable of living up to this claim. I grant you can think through the process conceptually on how to manage this but I feel this grants Stage-Gate more than it really can offer. It is a stage-gate decision process for product development.

Do linear processes manage all the different types of innovation?

Organizations have become so use to thinking only product innovation they are attempting to drive ‘any’ innovation through the same system. This approach is placing so many self-inflicted wounds on the organization, often in the most painful way possible; through lost opportunities on achieving more significant growth, lost chances to fundamentally change the competitive game and ill-fitting attempts to fit innovation through this one process system.

Original fresh ideas get morphed into completely different end products that seem to become more incremental the further they have to accommodate all the jumping over these hurdles and passing through the stages and gates. It becomes the skill in trying to avoid being ‘killed off’ for often a lack of validation (often obscure)  and that famous cry of “give me proof” often of the unknown- how can you?

Stage-Gate ‘plays’ right into the hands of the bean counter, the risk reducer, the keeper of maximizing productivity, efficiency and effectiveness. Each gate, each hurdle forces the denominator down, mistakenly thinking this is reducing cost risk (often of the only true innovative part) and effective management of time will serve the organization well. This fuels the short-term protectionism we all cry about today, as well as it adds even more to the long-term detriment of mediocre innovation entering the market. We are still failing to ignite growth and continuing to disappoint customers with underwhelming offerings that still doesn’t meet their needs.

The Stage-Gate is not the panacea for managing innovation

I would argue we should stop regarding the Stage-Gate as the panacea for managing all of your innovation needs. Stage-Gate handles the incremental product cycle fairly well, but when you are on a more open innovation platform collaboration it struggles to be flexible, agile and fit the different challenges presented by the collaborating parties.

True innovation goes through such an iterative process; processes like Stage-Gate are simply not equipped to manage all of what this entails. Nor does it really pick up well on the growing impact any potential new business model innovation might signify, as it constantly wants to refer back to excepted existing practices and the structures in place and not novel or radically altering ones that can challenge the existing business model. Can you imagine something completely breakthrough or totally disruptive being forced through a Stage-Gate NPD process?

What also does happen when you have to work through separately the potential of the service innovation dimension or the myriad of other types of innovation? Too often we retrofit service instead of running this in parallel.

We have arrived, it seems to me, at a certain point where innovation is often being projected forward to a given solution and then worked back, so it can pass through the Stage-Gate system. Sometimes this is right if you spot a unique opportunity for a job-to-be-done need but we have to be more than careful of this ‘forming’ habit, it can exclude even greater insights and discoveries even here.

Recognizing limitations AND managing in new and different ways.

So we can recognize that Stage-Gate can work well for incremental and well planned out innovation but it ‘stutters’ and can ‘die’ when you need radical, new-to-the-world breakthroughs as you enter those far too many unknowns to try to run them through a system.

Whichever way you ‘wrap’ Stage-Gate it is still a linear process that has to go through justification at each stage and pass through the ‘gate’ in resolving the criteria expected, before it can go on. Irrespective of the innovation this can often load the process with bureaucracy, internal politics and tensions. You increasingly focus on preparing for these ‘gate’ meetings, losing valuable time often not on the idea and concept itself.

Invariably the questions asked to justify and validate requires much rethinking, leading too aspects of the proposal rewritten and then resubmitted, turning even more into growing time delays. This leads to escalating upwards through the gatekeepers to the senior manager, who is not fully engaged in the process, you lose even more time, he often does not have context, you lose precious opportunity, and you lose money in delays while this all gets sorted out, eventually and it goes on and on with growing conflict and tensions.

There is also a shift to ‘status and attainment’ on sitting on these reviewing committees rather than bringing real ‘value and benefit’ and often this gets confused to the detriment of the process . The process often dominates not the product concept itself. Stage-Gate might have become simply a safety first decision-making tool than an actual NPD process to help and assist.

You begin to justify the many unknowns somehow, you cater to the constant demands for proof at every step of the way, or otherwise you will never get your products out of the door.

We just end up with wicked compromises and the original idea deserves better, much better than that.  If we were honest with ourselves, we shave things off, we dilute, we radically alter what were initially great looking concepts and reduces them down to a pygmy of the original ‘wow’ concept.

Lean and rapid principles have some foundation value

I think where Dr Cooper has continued to explore in his Stage-Gate journey has been the move towards his lean and rapid principles. Those are closer to universal needs of all innovation. These are

  1. Have a clear customer focus
  2. Ensure as much front-end loaded as you can in assessment and testing
  3. Spiral development- find ways to be more iterative and greater community engagement
  4. Push for more holistic approaches of effective cross-functional teams
  5. Seek the right metrics, accountability allocation and continuous improvement
  6. Focus on building a more effective portfolio management through funnelling and appropriate resource allocation
  7. Looking to keep pushing for a flexible, adaptable, scalable and efficient process

These are useful ‘generic’ contributions to finding better solutions to having an updated innovation process, irrespective of type (of innovation). A lot about the Stage-Gate has organizing value to incorporate with this more holistic design of a process to manage all innovation ,it should certainly not be discarded but looked at with a different perspective.

What is called for, in my opinion, is to build even more on these lean and rapid principles but also to recognize and go ‘simply beyond’ the often fixating obsession of applying a product development process with decision gates that many currently have. Although it is not a bad organizing principle for business decision checkpoints, we ‘just’ need to go way beyond this to obtain the increased need for flexibility required, by considering all the different types of innovation an organization needs to consider and cater for them in some form of reviewing approach, if we can.

We need a different more agile, adaptable process that deals with innovation outside the ‘norm’ of managing incremental NPD, if we are ever going to move beyond the present, more common incremental mindset prevalent today.

The need to build and extend our capabilities and processes

We must certainly stop trying to treat all innovation projects with the same ‘Stage-Gate’ brush, squeezing it through the same process. We need to develop different ‘templates’ but have perhaps a common recognized set of decision points or organizing principles.

We certainly need to offer more autonomy to teams through a more robust Innovation Governance structure, this is for me critically important. We need to shift the mindset from ‘Go / kill’ to greater informing choices and options to consider. We need to be less reliant on data, more ready to sense, listen and make informed decisions as we go. We must make sure we capture the alignment with senior management on the strategic goals, the priorities and allocating appropriate resources according to the innovation type and challenge.

We need to allow for a greater freedom of thought, of investigating ‘breaking’ ideas, encourage explorations along the way. We need to push for more experimentation, conceptual work, design modelling so as we learn we can quantify, as we quantify we gain increasing identification and organization alignment. We know much of innovation is unstable, throwing out fluid information that is often contradictory; we need to capture these differences in more flexible, intuitive ways.

This calls for a lot more agility in thinking, in accepting often erratic behaviours to see if we can suddenly leap ahead. Hurdles, keeping to prescribed steps and trying to pass through decision gates needs some very fluid approaches but can still be in disciplined, informed ways but with totally different mindsets of searching for ‘better’ innovation outcomes.

The innovation system required today needs to be more flexible, adaptive, agile and scalable.

The system should not dictate innovation, it has to be more adapted to our different innovation needs and their circumstances so we can maximise innovation’s potential to lead growth.

We need to recognize that a breakthrough concept, a disruptive game changer, a new business model proposition or a multiple type innovation (product, service and BM) need different approaches, all much faster to be developed but with increasing levels of uncertainties being built into the ‘system’ not just taken out because we are uncomfortable with this or unsure how to handle this. Simply ask others to help you, there is no shame in this.

There have been significant changes in our understanding of innovation since Stage-Gate was first introduced. In the process, the culture required, the ways to manage, to align and to develop have all evolved. We must stop being a slave to the innovation system in place, often left over through legacies in the system and find ways to go beyond the often rigid, linear Stage-Gate process that organizations are locked into.

Innovation is complex and adaptive

Innovation should be understood as a system that will always have non-linear behaviours, it cannot be stage-managed in isolated events. It is complex and adaptive and the more we recognize the power of unpredictability, the significant variations, need for constant interactions and the careful selection of those ideas that need to be carried forward, the closer we might get to finding a more universally accepted innovation system.

Let’s stop trying to force innovation by jumping hurdles and closing gates that often do not apply, so we end up with self-inflicted wounds because we were on the wrong track.

An Ideal Innovation Client Engagement Process

Some years back I came across a visual suggestion of what a client engagement should entail. I had been for years ‘casting around’ looking for something that gives the process a good structure and clarity. So I reworked it for my ‘ideal’ way to approach the client engagement process needed for my innovation work and made it into this visual.

Take a look below as my preferred way to approach innovation in any engagement.

The critical discovery phase I regard as vital

For me, the more you invest in the pre-contribution, the discovery phase, the higher likelihood of better results that meets both the ‘known’ and ‘unseen’ innovation issues. The problem or dilemma we all have engaging with clients is that ‘until the clock is running’ and we have a signed commitment, these investments in scoping are often (perhaps always) understated by the client, misunderstood by the advisor and no fees or solutions have been generated.

Nobody likes that but it is often a mistaken false economy.

Partly the client can  get too close to the (immediate) problem and can’t “see the forest for the trees,”often never recognizing the intangibles that make up so much of innovation. Also partly they don’t have the complete picture or don’t invest enough time themselves in thinking this through thoroughly enough before they seek external help.

On the advisory side, OK, we all have gone though (sometimes painfully) adjustments in scope but often those final proposals made without a proper discovery become a real sore spot by others within the organization, let alone within the clients. Also not knowing before you ‘jump’ in does not help build relationships or deliver the results expected

Also as an example, those with less vested interest in the result but only are responsible for the corporate procurement part, often like to judge the milestones against payments and apply sometimes their restricted knowledge against this suddenly ‘rigid’ (cast in stone) proposal, allowing for little flexibility.

The better the discovery phase, where ‘skin’ on both sides is in the frame, the better. You reduce conflicts and loss of time in any renegotiation and give more time to the project, not in justifying changes and the reason for increasing costs.

The argument for this pre-investment is more relevant for innovation work

My argument to overcome this is making a request, often as a ‘must have,’ of getting some client investment in Dollars or Euro’s for investing in a more robust “discovery” phase as shown below, in its two distinct parts. This becomes especially important for innovation as it can reveal much unseen or poorly recognized as that essential needed value to be the real difference in successful innovation or not. It can also offer real value to the client for evaluating alternatives and (revised) agenda setting for the  work going forward on a more complete view and clearer mandate of scoped work.

Agility’s ideal approach to the innovation client engagement process

Then and only then, you generate the scoping document and the clients attention, engagement, better identification of the places for return on investment and general satisfaction, rises significantly.

This process makes sense to me

Hopefully it does for you as well? As for the clients, well realistically it is sometimes a tough sell and you run the risk he takes the discovery and goes elsewhere. This would certainly not be the first time this happens, irrespective, unless you have some form of lock-in and I find MOU’s always should incorporate a clear mutuality in them to reduce this risk and allow for that greater horse power of combined intellectual property emerging from this discovery investment.

So it looks on first view complicated perhaps?

I think as you explore the stages of Discovery, Generation, Conversion, Diffusion & Acceptance its steps offer a clear client engagement roadmap and expectations can be managed through this. I feel it raises the confidence within the relationship.

Sadly I’ve lost the original one somewhere deep in my files, when I find it I’ll attribute this accordingly, as it gave much of the structure shown above and it just resonated with me. Sometimes switching computers messes the essential brain source!

The Case for Re-engineering Your Innovation Process (part two)

There are a host of reasons ‘renewal’ might be needed to be explored as part of a more radical redesign of your innovation system. Today, when markets are especially tough, looking long and hard at what you have and jettisoning what you don’t need becomes essential to reposition yourself as leaner and more flexible, far more agile.

Looking to be capable in incremental innovation is simply not enough, we need to be at the same time achieving more distinctive and breakthrough innovation. This is the higher demand point that is expected from the innovation system within organizations,  and regretfully this is not happening as much as it should.

There are many pressing needs why organizations have to ‘shape up’ and make some adjustments to their innovation activities. One of these is simply don’t ignore the need for looking to explore a re-engineering of the innovation process. It can really make a lasting difference to the fortunes of the organization.

Herein this second part of the case for re-engineering are some thoughts to offer and support this call for a more in-depth look at redesigning your innovation process.

What is valuable, what is not?

What does give you real value within the existing process? What are really non-added value activities that have been implemented over time to defend, to protect, to layer on the existing? Perhaps having a fresh perspective, driven by changing market conditions, you can challenge many present activities as work that might be unnecessary, as you make a greater focus on optimization and speeding up, consolidating activities, as part of your needs to adjust and meet this market change that is happening at present.

The need for focusing on new responsive outcomes not just task or unit inputs and process outputs does need radical rethinking.

To be more responsive you might need to place into the innovation system a higher sense of urgency, of reducing time to market, of delaying certain decision points closer to the end. You need to be more adaptive to these changing market conditions and this might need some radical rethinking by challenging existing practices and norms.

Firstly what is achievable within the existing system?

What is possible with leveraging different technologies, collaborative platforms, more flexible structures and exploring synergies across the whole innovation system? If you were able to cut across existing boundaries, changing existing controls and constraints presently imposed and challenge the existing structures, what would that achieve?

Of course you begin to challenges sensitivities, threaten personal silo’s and comfortable routines built up and nicely established, you challenge existing attitudes.  All of this has increasing ramifications on existing structures so you have to move cautiously and in thoughtful ways.

Focus on those that might be effected most, that can block and challenge, then set about to offer them a clear alternative. One that they can see a different potential and ‘richer’ promise than often just the protect and defend of the daily grind. You need to paint an inspiring vision and some details of the journey and outcomes expected. Get them involved, excited and wanting to change, those that don’t, well it just simply will get harder for them to block real progress if you can gain real momentum and early success is quickly seen and felt.

A more radical rethink needs a reason

When we are evaluating the existing business processes, there will always have a certain structure and measured set of activities within it. These are designed to produce existing acceptable results from a set of particular outcomes that might have worked, but I expect, really expect, you were not really happy with the results, it seemed to give a certain disappointment. If you are truly dissatisfied with your innovation outcomes then you need to see these existing systems and structures as an obstacle and barrier to a different innovation path.

It is when the dynamics change, then you need to be alert and ready.

What if you needed from your innovation process, the shift to a real need for building in agility and higher market responsiveness for example? Changing the existing process is unlikely to work it needs re-engineering. You certainly don’t just change just for the sake of it, this does not make sense but changing it for a new strategic purpose does. If you markets are changing, if we are moving towards more volatile trading conditions this provides the strategic intent and motivation to change.

Are you ready when the CEO enters your office and expects different innovation?

In the coming months and over the next few years CEO’s will be finding their way to your executive office, more and more. Or equally to the marketing teams office or R&D centres, demanding far more from innovation. As responsible for managing within the innovation system do you have you a complete ‘handle’, an in-depth understanding, of what is truly possible to respond to this increasing demand from the CEO? Not just knowing your existing innovation system and structure but what are the possible options and ways to rise up and respond to a new set of challenges?

I would suggest that you should be already working on it because the way we are all doing business today, is certainly about to change, if it is not already under-way.

It happened to me some years back

I recall one event many years ago when it was expected to improve productivity within the system by 15 to 20% in the organization I was working for.  Admittedly not the innovation system but the whole organizational system. I had to go out and deliver this as my area of responsibility across a global operation. Equally there was a further demand to reduce operating costs by 15% and standardise the process so it could be understood and totally visible to the CEO.

The outcome delivered was 25% improvement in productivity and 25% saving in operating costs to channel differently. Both outcomes allowed for increasing throughput desperately needed and holding operating costs so as this allowed us to channel much of this to different new value adding activities to raise performance even further and drive through more volume.

It took a significant amount of time, commitment and resolve to alter structures, systems, processes  and the mindset across a global organization that had been very defensive in its local organizations. What it did do is radically altered the market competitive position of the total organization and gave the customer more of what they wanted, a guaranteed delivery to his desired needs when it was expected.

Why can’t these types of results be applied to the innovation system you have?

Don’t be dismissive simply because my example is a business process re-engineering one, what do you think innovation has become? It is a business process, with its entire supporting infrastructure, systems, management structures, processes, controls, culture and practices. Recognize the beast that lurks across your organization called innovation in all its forms, it can make or break you, it is that important to your future.

Innovation needs to find slack, it needs to utilize technology, it needs to find new ways to combine and explore. To achieve this you need to engineer time, to save on your existing costs, to improve on your existing process and to allow for experimentation, fresh generation of ideas and concepts and allow for the three ’S’ needs. You need to stretch, to scope and too scale differently on your innovation activity if you want more real distinctive innovation breakthroughs that truly accelerate growth.

What are my three big imperatives (BHAG’s) that push you towards re-engineering innovation.

  1. We need to improve the operations around innovation. We need to improve the formal and informal aspects of managing within the innovation system. We have to adapt our organizational structures to improve the balance between local and global responsiveness. We need to capitalise on all the information systems, communication technologies and infrastructures we have introduced progressively over the years and not harmonized or integrated fully. We need to account more for open innovation. Finally we need to look harder at what adds real value and what doesn’t and rebalance the two
  2. The scope within the operations is increasingly complex and we need to reduce this. We need to build more scale where it matters to outperform competitors and outperform in (deteriorating) market conditions. We need to add flexibility, we need to maintain a standardization in approach, we need to add a higher risk profile into our innovations.  We need to share in a more inclusive innovation strategy and we need to maximise our global processes to help deliver in reducing time frames. We need to make innovation life simpler.
  3. The chance to build fresh capabilities into your innovation systems. When you need to reconsider innovation beyond the existing incremental you have delivered you need to find compelling value propositions. To achieve this everyone involved needs to lift their heads up and find some solid, decent time to be allowed to think through this challenge. Knowing the (changing) innovation strategy and the need, being more included in this dialogue, adding their personal insights built on solid market understanding and not just through reliance on other people’s focus reports. Having a growing sense of trust that the outcomes of any re-engineering will release them.

We need to build  new competencies and capabilities into our innovation system, so as our people engaged in innovation can be able to contribute to improving more helpful processes for them to do their job and, feel engaged in a more compelling work experience. A place where their contribution is truly valued and seen, feeling included and able to ‘freely’ reach out across internal and external networks. Placing real trust and investing in the skills will open up individuals to want to take on new experiences and challenges. They can see they are making a real difference.

So any first step is to see and then respond.

So what do we really need to do to seize emerging opportunities quicker, at tomorrow’s new innovation speed?

Six simple opening steps to begin to think through

  1. Redefine our need from innovation
  2. Sketch out an opening road map of how to tackle any re-engineering of innovation
  3. Identify some opening improvement opportunities that can really galvanize change and significant for the organization can get behind.
  4. Take a hard look on what you need to achieve for any change like this and what it means in efforts and resources. Often not as much as you initially think.
  5. Begin to organize and draw in a team that can undertake the redesign and can share in this. This calls for expertise but seek out a real diversity of opinion but can all come together as a united team once the debating has run its course and results come in.
  6. Seek a growing commitment from those around you, determine the appropriate approach and be ready to clear the decks and take the initiative out of your office into the heart of the organization.

So, concluding my opening case for re-engineering innovation.

As I suggested in my opening remarks in part one of this, innovation as we know it today is grinding to a halt for many. The existing treatment and values we offer in innovation’s name are tired, over worked, often over engineered and under delivered into the market place to make real difference.

We need to radically re-engineer the innovation systems and structures to offer a better value from all the innovation activity that is going on within organizations. In  not recognizing the crisis within, is not providing the opportunities to explore & extract the best opportunities we can deliver to meet our customers needs and what markets are looking for in growth and stimulus today.

We have available more means at our disposal to move from the existing to the preferred than ever before. Innovation needs to go back to being the real option for significant growth by offering something that ‘wow’s’ the consumer and creates fresh new markets, found by tapping into the unknown needs and jobs-to-be-done that our consumers are trying to achieve with the existing products and services but failing.

We are in volatile times or heading towards them. The markets and consumers requirements are changing, much is by being forced into making change and they, our consumers, don’t like that. So we have to find different ways to meet these changing conditions with radically altered approaches within our innovation management to respond and be more agile, to draw the consumer back in.

Without question we do need to put back the ‘wow’ factor back into innovation if we want to first survive and then begin to thrive in more compelling ways and in tougher times.

There is a time for this need to re-engineer what we do in the name of innovation and this might actually be that time

The Case for Re-engineering Your Innovation Process (part one)

Real innovation is slowly grinding to a halt in many organizations. If the top leadership are not totally engaged in driving innovation it struggles, it grows in complexity; it gets bogged down in the internal politics of self-preservation and delivers only a ‘watered down’ end result, seen far too often to be a lasting sustaining solution, which it is plainly not. When are we going to recognize that innovation, as we have it organized within many organizations today, is failing to deliver on its promise of providing the growth expected and so often talked about by the CEO?

Larger organizations, let’s face it,  are so caught up in the incremental trap. Risk mitigation rules at every level of the management of innovation, as it ‘churns’ slowly through the complex innovation process, built up over the years. If an organization is totally happy with spending all its knowledge and internal resource on providing incremental products to its customers and gets away with it, then fair enough but does it have to be so?

Alternatively, if shareholders, customers and competitor’s sense there should be far more, then the organization is travelling a road that indicates the pathway to decline. The worry becomes simply, can it reverse this mind-set of incrementalism and risk mitigation in driving its innovation? There is a different pathway on offer but to travel down it, you have to think about some serious form of radically altering your existing innovation structure and processes.

Much has happened in innovation in the past ten years.

Often you wonder if any new understanding really has permeated through the outer skin of some organizations, perhaps with the notable exception of open innovation. We have greater technology, software, and understanding of systems, people, and structures than ten years ago. We are better at measuring innovation in inputs, throughputs, outputs and outcomes or have the potential to do this. Of course, that is, if we chose too.

The real issue for me is that much of this potential, these potential advancements are often seemingly being ignored, or certainly not fully leveraged. We just keep adding more and more on top of the existing systems, instead of stepping back and looking for a more radical redesign, one that can change the innovation dynamics. The one that transforms and goes well beyond our existing slow growth reality, seen today based on present performance of so many. The extra margins of profit today are more likely to come from reducing not enhancing.

So why do I argue we need some radical re-thinking of how we manage innovation?

Well most of the economies are flat on their back; the money in the pocket of the consumer is dwindling and less certain than in recent years. Many of our larger organizations continue on in their juggernaut fashion, believing they are that irresistible force that is indestructible and that they can keep on going offering increasing extensions to existing products, passing on higher prices expecting those higher sales. Will this last? I doubt it.

They are busy chasing higher revenue, not so much in existing markets but more by expansion into new markets. Much of the existing market activity is quickly negated by competitors, which stalk every move and cover off any short-term advantage to try to regain the status quo. Layoffs, reductions across the board just continue to eat into the very fabric of the organization to extract profit, often at the price of real innovative growth.

Organizations are increasing their complexity by the very nature of the business model they are pursuing.  They are reducing decision-making away from the markets and the field and centralizing this, therefore requiring the building up of the necessary controls to make sure there is compliance and fulfilment of these decisions. They are increasingly remote and losing the very trust of many of their employees by this ‘drip by drip’ set of actions.

Complexity comes with a growing cost.

It is slowing everything down. More people are spending all of their working days coordinating and justifying more than ever. The productive person, seen before to be the one producing something new or different is today plainly different. They are more likely seen as dynamic by the way they respond to requests, the way they communicate and coordinate, the way they chase and monitor. They shut down more in creativity by their need to satisfy growing demands placed on them.  Organizations are employing hundreds, if not thousands caught up in feeding the machine not driving the value-adding process. We spend increasing more time in seeking out efficiency and being more effective but effective at what? Certainly not on working with great innovation in the majority of cases!

The need to shift from efficiency to agility for innovation

Our focus is on efficiency and control, delivering more and more incremental better products, trying to stay one step ahead of competitors. By being in increasing control by planning and knowing your outcomes well ahead of the real need you are running your process to minimise risk and variation. The need is to have constant visibility and anticipating obstacles by employing the means to make this happen, being in total control, taking out uncertainty, taking out experimentation and replacing it with certainty. Six sigma enthusiasts must be delighted.

What if we changed this?

We want to bring in agility, the ability to adapt quickly to changing market conditions, to lead market change that increasingly shows signs of volatility and uncertainty. Would our existing ruthless grinding execution machines be up to the different challenge? Challenges like building in accelerating effective exception handling, separating the prevailing present business and application logic to be driven by different innovation logic of rapid, more radical, responsive product and service offerings that provide solutions that get closer to meeting some often radically changing customer needs. We need to be looking to take greater variation and turn it into a market winning advantage.

To achieve greater agility we need to cut rework, we need to seek faster problem resolution and reduce cycle times way down, reduce downtime involved in waiting for escalating decision-making of the past, minimise any backlogs and combine current innovation into bigger big bang solutions that can cut through market uncertainties to maintain your share of wallet, mouth or band width. We need the principles of Six Sigma but with distinct differences.

A corporate culture dominated by Six Sigma management theory will be primarily incline toward inwardly focused, continuous improvement types of innovation activity — process, customer service, systems, operations, and so on. The aim is small, incremental innovations that really can add up but only can go so far!

Seeking a more entrepreneurial environment

A culture that fosters disruptive or encourages distinctive innovation is going to be more entrepreneurial, more outwardly focused on new markets, technologies, and business models. The goal is to find big new growth platforms that add significant chunks of revenue and profit.

Innovation is uncertain, unsure territory and requires sometimes a significant level of unstructured thinking to spot the emerging patterns and opportunities; the innovation system needs to build this in as slack. We need to ask the underlying question is whether the discipline of process management will fertilize or strangle those new ideas that come from light-bulb moments of brilliance”

The need is for a different orientation

We cannot make money without innovating for growth, and we cannot save money by not having efficient processes. What we need is to strike a new balance from what we know that works and what we know is questionable if the activity does not have a real value add component to it.

The task would be to re-invent how we work to carry out this. We need to focus on the fundamentals within our existing processes and even be ready to tear down many of the current ways of managing innovation within the business. We need to seek solutions from a fresh perspective. When you begin to question you begin to re-engineer.

Part two, published tomorrow, will delve further into this case for re-engineering innovation.

Linking innovation context to the process

Time passes extremely quickly, particularly when you enjoy yourself, or so it seems for me. I was surprised, going through some of my past blogs, the time between related entries on the need for having in place a sustaining competitive advantage framework on innovation, has been longer than they it should have been. This blog is the third entry on this subject.

Always, always and always do I see organizations struggle to align themselves for their innovation activity, why is this? Either alignment of innovation into the strategy they are (assumedly) following or shaping innovation into the context of where and how innovation can fit.

I’ve written on this often enough actually, and argued the need for building a more sustaining innovation framework.  I have been working for some time within one of my formulas on this with its given framework of II + EE + MLC + OC + RNE build towards = SCA. I somehow suspect you need nudging on what this means

Required past reading possibly needed here.

Without duplicating more than necessary you need to go back and read two previous blogs on this

The first was written in August 2010 and entitled “A formula for Sustaining Competitive Advantage through Innovation”. The link is here:  http://bit.ly/95kCI1

The second was written in June 2011 and entitled “Sustaining is Pivotal to Making Innovation Progress”. The link is here: http://bit.ly/lPLssm

Both offer a helpful introduction to the framework and formula.

The next part of the equation

This blog ‘advances’ this framework by attempting to link the context of innovation into a process to think through. I say attempting because we need to accept each building process is different, and unique to the organization and the circumstances of what they want innovation to achieve, besides the standard reply “growth and profit”. Doesn’t this always sounds like the famous question asked at beauty pageants: “So what’s the most important issue for you?” asks the compare with the reply “world peace”. Oh, I wish it was so simple.

Those leaders that talk of “growth and profit” from innovation seem to reduce it to just a sound bite, I just wish it was so simple. I do wish the majority of our business leaders would get ‘into’ innovation understanding a lot more. Innovation breaks down always outside the CEO’s executive door and it really does need them to step outside and get more fully involved as it is a major area to succeed at if a longer tenure is in their minds.

Still, I digress. Here I outline how I see a typical linking through of a context to innovation in a ‘flow through’ process that is shaped along the II + EE + MLC + OC + RNE build towards = SCA, framework.

Innovation Alignment, Context & Process

Innovation Alignment to the Corporate Strategy does need working through. It needs linking to business goals and strategy, to the role innovation plays within this, the type of innovation portfolio you wish to design and work upon and the delivery and adoption needed so the organization ‘aligns’ itself. You need a thinking-through process to align context into activity.

This takes time, it needs sustaining effort but it needs leadership to understand the critical connecting parts to do this. It needs a defining framework that I see as separate to what I’m offering here. On my present rate of outlining this it does seems sometime next year for that – not good news for those interested.

Watch this space

Actually let me share a little secret between us,  I’m working on a more radical, visually appealing and exciting way to approach this now but within a joint collaboration around this critical issue. So, who knows this might be discussed earlier than my past track record of once a year to move from one aspect to another. It needs to be and I’m sure my collaborating partner on this will be pushing me a lot harder going forward.

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.