Your newsletter on applied creativity, imagination, ideas and innovation in business.
Tuesday, 1 November 2005
Hello and welcome to another issue of Report 103, your fortnightly newsletter on creativity, imagination, ideas and innovation in business.
As always, if you have news about creativity, imagination, ideas, or innovation please feel free to forward it to me for potential inclusion in Report103. Your comments and feedback are also always welcome.
Information on unsubscribing, archives, reprinting articles, etc can be found at the end of this newsletter.
GUEST WRITERS CONTINUES
I am delighted to introduce another guest writer today: James Kindley. James teaches marketing and new product development at Southern Methodist University in Dallas and also does new product development consulting for consumer products companies. It is through the latter that he has formed some insights into why most new products fail. James has been kind enough to share those insights with us in the article below. It is worth reading.
If you would like to contribute an article to Report 103, please contact me in the first instance, either with a proposal or a completed article if it has already been completed. (But, please do not write an article especially for Report 103 without discussing it with me first.)
INNOVATION INITIATIVES ARE NOT IMPROVING NEW PRODUCT SUCCESS RATES
Most new products fail because good people are chasing bad opportunities.
A majority of companies we have studied have no lack of growth opportunities but often pursue ones that are incompatible or inappropriate for their resources and capabilities. This means that failure is built in at the beginning of a project. Our studies have also revealed that the difficulty of choosing the “best” or “right” opportunities is rarely acknowledged or understood, even in sophisticated companies.
The choice problem has several causes that we have observed and studied within a number of consumer products firms. The good news is that these studies indicate that you can take several steps that will improve your choice making process that will result in far higher new product success rates.
Innovation is rarely a problem
Much attention in new product development is focused on idea generation with the common belief that the more ideas you have, the more likely it will be that you will have a good one. Brainstorming sessions will often produce hundreds of ideas. This is what most people define as “innovation”.
Developers then tend to quickly screen the ideas and opportunities based on their intuition and experience. This works reasonably well when ideas are “close to home” such as line extensions and product improvements where intuition is grounded in experience. However, this is a very poor way to make judgements about new markets and new to the firm products, because it is essentially guessing, or worse. And yet initial screening of ideas and potential opportunities is almost always done in a non-objective and expedient way using anecdotes and gut instincts to select projects. Poor results should not be surprising.
Our research has shown that most really new opportunities are seldom obviously good or obviously bad. We have identified several requirements necessary for improving your odds of selecting good opportunities from bad at the beginning of the process. The implementation of these requires some changes in management thinking, small increases in investments at the project’s beginning, and more patience in the screening process.
Three keys to choosing the right opportunities and increasing your new product successes:
1. Approach opportunities with humility and avoid hubris
Humility is the most important requirement for success. You have to be willing to acknowledge that you just don’t know when you really don’t know. This is an extremely rare management trait, especially if you have had past success. It is also exceedingly rare in “creative” types. The arrogant designer comes from a long line of Frank Lloyd Wrights and Le Corbusiers. Without a doubt, old and wise managers sitting around a board room table choosing among ideas because “my wife would like it”, or “the market’s got to be huge, teenagers are going to love it ….” have produced some of the biggest new product bombs ever. Hubris is usually fatal.
2. Acquire KNOWLEDGE about more than just your markets and customers
Over 50% of companies admit to doing a poor job of market studying and planning at the beginning of a project. Many don’t even do a preliminary study. (ref: Cooper) However, even when care has been taken to “bring in the voice of the customer” with good research, developers still only have a part of the knowledge set they need.
Our studies have identified six “points of opportunity/problems” that are interrelated, common to all product development projects, and unique for your company.
These six points are illustrated in the following diagram:
Our findings revealed that product teams generally have weak or often no knowledge about these critical points and often have biases toward one of them that negatively distort their new product development efforts. (Our group has developed several interesting and effective tools that allow for “cheap and quick, good enough” research. Perhaps Jeffrey will let me write another article about them.)
Customers – no one argues the value of customer input and the need for understanding behavior and values. In spite of that, though, surprisingly few companies engage customers early in the process; many never involve them until products hit the shelves. This may be because the actual customer is undefined or even unknown. It may also be due to the expense of traditional market research. Compounding this problem, many companies do very limited segmentation analyses that can often lead to significant market opportunities.
Users – products are often used by someone other than the customer but the actual user is often ignored or neglected, as above. Very few bird baths, for example, are designed for the real and different bathing needs of various birds, but are mostly styled as garden ornaments (for the Customer).
Competitors – innovators are always looking for a competitive distinction. In fact the present popular focus on innovation is all about finding meaningful ways to compete. However, most companies we have studied have narrow competitive horizons and often scant information about even the companies they feel they compete with closely. Their managers rarely step back and ask themselves strategic questions such as - Do you make movies or entertainment? And they almost never answer those questions clearly.
Partners – Suppliers are sources of opportunities and problems in the process. This should be obvious, but engaging them is complicated.
Retailers/distributors – consumer product companies, and in particular their sales forces, are heavily biased to key retail inputs. Often these are the only inputs heard by the new product developers. The danger of this is that it might be right for Wal-Mart but very wrong for your customers and your other retail partners.
Capabilities - is your thinking too narrowly focused on what your company can do? Are you trying to fill a factory or keep machines running? Do you have the technologies, the funding, and so on required for your innovation goals? This is the “fit” issue, but that oversimplifies it as the dynamic of what you are versus what you might be is an ongoing management conundrum.
Context - do you have mechanisms that keep you informed of environmental, governmental, cultural trends and impending changes that could affect you?
Having real, actionable knowledge for all of the points above and having a
clear understanding of your biases will greatly increase your chances of selecting
your best opportunities and developing successful programs for them. Knowledge
really is power for new product success.
Be willing to make mistakes, learn, and change course
A lot of good attention and advice has been put forward about this key characteristic for success. A willingness to learn by doing is part of the knowledge acquisition process for all the points outlined above. Usually, however, iterative learning begins after projects are under way. Bad projects are hard to stop, especially when larger investments have been made and especially if you have to tell your top management that their intuitive wisdom has turned out to be wrong.
Our observations indicate that almost always companies are better off going back to the beginning and selecting another opportunity. More often than not, though, they continue to throw good money after bad.
But restarting the process requires humble management with knowledge
jameskindley at yahoo.com
This material is excerpted from Mr. Kindley’s workbook, Create Great New Products, that accompanies his New Product Development Course taught at the Cox School of Business at SMU.
CORPORATE INNOVATION MACHINE
Some of our clients – and several prospective clients – have asked us to provide an integrated package providing not only Jenni Idea management, but also a comprehensive innovation training and consulting service.
Since keeping our clients happy – and innovative – is our primary purpose here at jpb.com, I've written up our model for turning a company into an innovation driven firm: the Corporate Innovation Machine Strategy. Here's an outline of the Innovation Machine Strategy. You can also download the white paper from http://www.creativejeffrey.com/innovation/...
The corporate innovation machine is a model for understanding how to implement an effective, idea management based innovation strategy in your firm. As with any machine, the corporate innovation machine comprises several components, all of which must work together for the machine to function properly. When the entire machine does work, it builds ideas, evaluates those ideas and implements the best ideas as new product, service and operational improvements which translate into increased revenues for your firm.
Powered by management
The corporate innovation machine is powered by management. Just as the most sophisticated machine will not run without a power source, likewise your corporate innovation strategy will go nowhere without top management taking the lead.
Management's main task is to create within the organisation a culture of innovation which will empower workers to think creatively, collaborate on ideas and contribute their ideas to the company. This is not an easy task, but done well it will make construction of the remainder of the innovation machine a relatively easy job.
- Ensure there is an environment of trust
- Establish innovation goals
- Designate responsibility and resources
- Develop a communications plan
- Demonstrate innovation
- Reduce creative risk
- Establish a rewards scheme
If management is the power source of the innovation machine, then the idea generator – the tools and techniques for generating ideas – is the motor that drives the innovation process.
In order to understand how the tools and techniques function, it is important to understand a few key principles.
- Creativity versus innovation
- Individual creativity versus organisational creativity
- Creative collaboration
- creative teams
- brainstorming groups
- open collaboration via Internet/intranet
- Squelching (avoiding)
Tools & techniques
Organisations should have a small “toolbox” of tools and techniques for facilitating innovation. The central tool should be an idea management system capable of soliciting, capturing and evaluating ideas. Properly used, such a tool permits a steady stream of innovative ideas for implementation. Other tools, such as skunkworks, brainstorming, creative spaces and creative meetings further your organisation's innovation potential. Available tools include...
- Suggestion scheme idea management: flawed
- Campaign based idea management: best approach
- decentralised management
- total open collaboration
- open to entire workforce
- intuitive & easy to use
- semi-anonymous idea submission
Idea quality control: evaluation
The more successful an idea management programme is, the more ideas it will generate. As a result, you need an efficient quality control system. Some organisations have highly structured systems comprising multi-stepped systems for reviewing ideas. While this can be effective, it is also important to retain flexibility in the system. If an idea is clearly a winner, it is often wise to "run with it" immediately, before your competition learns of the idea.
Idea quality control has several components
- Gut feeling
- 5x5 Evaluation matrix
- Open analysis meeting
Output: implemented ideas
Once ideas pass all required quality control processes, they are ready to be implemented. Most companies already have effective implementation procedures for new products, services or operations. If you do not, you should run ideas campaigns on improving these procedures.
In addition, it is important to...
- Monitor the results of the idea implementations
- Communicate, via the communication plan (see above)
- Reward the people who have submitted and implemented ideas
Maintaining the machine
It is important to monitor the results of your innovation strategy and tweak it over time in order to improve results. A major review after six months and annually thereafter allows you to evaluate the results, determine weak points and improve the functioning of your innovation strategy.
We are developing a comprehensive training + facilitation + consulting package for companies that want to implement the Innovation Machine strategy. Best of all, it is available whether or not you invest in Jenni idea management (although we think it works better with Jenni). For more information, contact me at email@example.com or on +32 2 305 6591.
Again, you can download the white paper from http://www.creativejeffrey.com/innovation/.
SEE JEFFREY TALK ABOUT CREATIVITY
I shall be giving a mini (90 minute) workshop on “Pushing the Limits of Our Creativity” in Brussels on Wednesday, 9 November at 6:45pm. The workshop is part of Thinking Outloud, an informal group which meets twice a month to do experimental mini workshops on subjects related to creativity.
If you are interested in attending or if you are interested in being added to the Thinking Outloud mailing list so you can be informed of future workshops, please send me an e-mail and I will add you to the list.
INFORMATIONWEEK'S 500 MOST INNOVATIVE USERS OF TECHNOLOGY
InformationWeek magazine has published their InformationWeek 500, a survey
of America's top innovators in terms of IT use. Read it at
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