by Peter Sherman
Today’s hyper-competitive business environment is creating a need for even more new products, new services, and new processes. Design for Six Sigma (DFSS) offers a generalized and effective approach for designing new products and services from the ground up. One of the more popular DFSS methodologies is define, measure, analyze, design, verify (DMADV).
Unfortunately, DFSS doesn’t address how new ideas are generated in the first place nor does it offer a framework for creating a sustainable innovation process. The innovation or ideation process starts much earlier in the typical DMADV process. See figure 1.
Unfortunately, DFSS doesn’t address how new ideas are generated in the first place nor does it offer a framework for creating a sustainable innovation process. The innovation or ideation process starts much earlier in the typical DMADV process. See figure 1.
The focus of this article is two-fold: first, discuss innovation and its importance to an organization. Second, present a suggested approach for developing and implementing a sustainable innovation process in your own company.
Invention vs. innovation New ideas, more ideas, better ideas. Ideas are the life-blood of most companies, whether it means generating incremental revenues from new products or services, preserving revenues and customers, or reducing costs through new processes to more effectively manage the business. According to a Conference Board 2007 global survey of CEOs, executives’ No. 1 concern is “sustained and steady top-line growth.” Without a constant flow of ideas, a business is condemned to obsolescence.
Historically, invention was the traditional approach for creating new products and services as personified by the lone genius operating in his lab. Thomas Edison or the Wright Brothers come to mind. Gradually, invention in the United States was performed through large corporate research and development (R&D) efforts by companies such as AT&T (Bell Labs), Xerox Corp., RCA, Eastman Kodak Co., and IBM. These internal research labs spawned significant technological breakthroughs and patents such as the transistor, semiconductor, laser, etc.
Innovation is different from invention in that it goes beyond the solitary genius or traditional corporate R&D. Innovation involves leveraging your company’s combined internal core expertise (market research, marketing, engineering, R&D, manufacturing, or distribution) to develop new products or services. It also means working closely with external groups including customers, vendors/suppliers, academia, and even competitors. As A.G. Lafley, CEO of Proctor & Gamble describes, “Innovation is a team sport that uses the expertise of people from a lot of different fields. It lets you make unlikely connections that enable you to solve wickedly hard problems. It ties that idea to a better customer experience, and results in increased sales and profits.”
Creating a sustainable innovation process is even more challenging. Examples of systematic innovators include P&G (household and beauty care products), IDEO (product design), Google (web-based tools and applications) and IdeaLab! (serial entrepreneur of new business models). The innovation process within these companies share the following characteristics:
A strong commitment from executive leadership with clear direction
An inclusive approach that brings together all key stakeholders to encourage idea generation and knowledge-sharing.
A streamlined yet disciplined process to screen, evaluate, prioritize, and recommend ideas to management for approval.
A framework for quickly testing the feasibility of concepts
Leadership commitmentMost initiatives that fail aren’t due to the inherent nature of the initiative or program itself. They die because of the lack of senior management commitment. Even the best of new programs or initiatives require the backing of a senior executive(s). Leadership must be very clear about the mission, how it supports the strategic agenda, and articulate specific goals and objectives, such as, “Within five years we expect to generate 50 percent of our revenues through new products/services introduced within a 36-month period.”
Leadership commitment also means aligning resources, capabilities, and needs. Before ideation, business plans must identify opportunistic markets for the company. Determine priorities for new product/service development in specific arenas according to resources, capabilities and needs. Establish a case as to why this market, why this time. In this way, target constituencies can be identified for exploration. A shotgun approach to the marketplace will dilute resources and result in ideas that may target niche groups or segments that don’t leverage brand equities adequately.
An inclusive approachThe successful innovation process brings together stakeholders from all disciplines (internal and external) to participate in identifying/defining opportunities, refining concepts, product refinement (as it matures in the test stages), and defining success. These stakeholders include internal groups such as marketing, sales, engineering, operations, and R&D, as well as external organizations including customers, vendors/suppliers, academia, and even competitors. It should be recognized that success isn’t defined by numbers alone or that one number will establish the threshold for moving forward.
Internal competition—particularly in larger organizations—hampers communication because it encourages groups to hoard information. To bring together all stakeholders and encourage information-sharing, a level of trust must be created. Consider allowing the sponsoring innovation group to be completely independent (i.e., politically neutral) of the corporate structure to avoid such political landmines. To this end, a dedicated innovation screening team represented by key stakeholders in the organization coordinates and manages the day-to-day activities of the innovation process. This ensures that the process becomes operational. The screening team works closely with the innovators to facilitate the ideation process and foster communication with other innovators.
The next challenge is to determine the means of how information is going to be shared with your stakeholders. The web offers an extremely effective, secure, reliable, and low-cost means to communicate and store information, distribute tools and templates, and show status in real time.
Finally, a proper risk-reward model is critical to encouraging participation in such an innovation program. This might include combinations of formal recognition, gifts, or even monetary awards. Some companies offer equity stakes in the company (in the form of stock options or restricted stock) as an incentive for employees to come up with meaningful ideas. In 2005, Ericsson embarked on an innovation initiative to stimulate employees to think differently about how new telecommunications devices and services could be developed. Ericsson initiated an “Idea Competition” to its 2,000 U.S. employees The screening criteria was very basic and simple, including New Customer Potential, Retain Existing Customers, and Revenue Growth. Within four weeks, 856 ideas were submitted. These were initially screened down to the top 20, which were further screened to the three winning ideas. The winners were awarded cash prizes ranging from $3,000 to $10,000.
The innovation screening processAny innovation process must strike a delicate balance between being simple enough as to encourage idea generation and yet follow a disciplined approach. The key steps in the innovation screening process include: Analyzing, evaluating, prioritizing, recommending, and approving of ideas. A diagram is a useful technique to understand all the key suppliers, inputs, processes, outputs, and customers (SIPOC) of the innovation process. See table 1.
Invention vs. innovation New ideas, more ideas, better ideas. Ideas are the life-blood of most companies, whether it means generating incremental revenues from new products or services, preserving revenues and customers, or reducing costs through new processes to more effectively manage the business. According to a Conference Board 2007 global survey of CEOs, executives’ No. 1 concern is “sustained and steady top-line growth.” Without a constant flow of ideas, a business is condemned to obsolescence.
Historically, invention was the traditional approach for creating new products and services as personified by the lone genius operating in his lab. Thomas Edison or the Wright Brothers come to mind. Gradually, invention in the United States was performed through large corporate research and development (R&D) efforts by companies such as AT&T (Bell Labs), Xerox Corp., RCA, Eastman Kodak Co., and IBM. These internal research labs spawned significant technological breakthroughs and patents such as the transistor, semiconductor, laser, etc.
Innovation is different from invention in that it goes beyond the solitary genius or traditional corporate R&D. Innovation involves leveraging your company’s combined internal core expertise (market research, marketing, engineering, R&D, manufacturing, or distribution) to develop new products or services. It also means working closely with external groups including customers, vendors/suppliers, academia, and even competitors. As A.G. Lafley, CEO of Proctor & Gamble describes, “Innovation is a team sport that uses the expertise of people from a lot of different fields. It lets you make unlikely connections that enable you to solve wickedly hard problems. It ties that idea to a better customer experience, and results in increased sales and profits.”
Creating a sustainable innovation process is even more challenging. Examples of systematic innovators include P&G (household and beauty care products), IDEO (product design), Google (web-based tools and applications) and IdeaLab! (serial entrepreneur of new business models). The innovation process within these companies share the following characteristics:
A strong commitment from executive leadership with clear direction
An inclusive approach that brings together all key stakeholders to encourage idea generation and knowledge-sharing.
A streamlined yet disciplined process to screen, evaluate, prioritize, and recommend ideas to management for approval.
A framework for quickly testing the feasibility of concepts
Leadership commitmentMost initiatives that fail aren’t due to the inherent nature of the initiative or program itself. They die because of the lack of senior management commitment. Even the best of new programs or initiatives require the backing of a senior executive(s). Leadership must be very clear about the mission, how it supports the strategic agenda, and articulate specific goals and objectives, such as, “Within five years we expect to generate 50 percent of our revenues through new products/services introduced within a 36-month period.”
Leadership commitment also means aligning resources, capabilities, and needs. Before ideation, business plans must identify opportunistic markets for the company. Determine priorities for new product/service development in specific arenas according to resources, capabilities and needs. Establish a case as to why this market, why this time. In this way, target constituencies can be identified for exploration. A shotgun approach to the marketplace will dilute resources and result in ideas that may target niche groups or segments that don’t leverage brand equities adequately.
An inclusive approachThe successful innovation process brings together stakeholders from all disciplines (internal and external) to participate in identifying/defining opportunities, refining concepts, product refinement (as it matures in the test stages), and defining success. These stakeholders include internal groups such as marketing, sales, engineering, operations, and R&D, as well as external organizations including customers, vendors/suppliers, academia, and even competitors. It should be recognized that success isn’t defined by numbers alone or that one number will establish the threshold for moving forward.
Internal competition—particularly in larger organizations—hampers communication because it encourages groups to hoard information. To bring together all stakeholders and encourage information-sharing, a level of trust must be created. Consider allowing the sponsoring innovation group to be completely independent (i.e., politically neutral) of the corporate structure to avoid such political landmines. To this end, a dedicated innovation screening team represented by key stakeholders in the organization coordinates and manages the day-to-day activities of the innovation process. This ensures that the process becomes operational. The screening team works closely with the innovators to facilitate the ideation process and foster communication with other innovators.
The next challenge is to determine the means of how information is going to be shared with your stakeholders. The web offers an extremely effective, secure, reliable, and low-cost means to communicate and store information, distribute tools and templates, and show status in real time.
Finally, a proper risk-reward model is critical to encouraging participation in such an innovation program. This might include combinations of formal recognition, gifts, or even monetary awards. Some companies offer equity stakes in the company (in the form of stock options or restricted stock) as an incentive for employees to come up with meaningful ideas. In 2005, Ericsson embarked on an innovation initiative to stimulate employees to think differently about how new telecommunications devices and services could be developed. Ericsson initiated an “Idea Competition” to its 2,000 U.S. employees The screening criteria was very basic and simple, including New Customer Potential, Retain Existing Customers, and Revenue Growth. Within four weeks, 856 ideas were submitted. These were initially screened down to the top 20, which were further screened to the three winning ideas. The winners were awarded cash prizes ranging from $3,000 to $10,000.
The innovation screening processAny innovation process must strike a delicate balance between being simple enough as to encourage idea generation and yet follow a disciplined approach. The key steps in the innovation screening process include: Analyzing, evaluating, prioritizing, recommending, and approving of ideas. A diagram is a useful technique to understand all the key suppliers, inputs, processes, outputs, and customers (SIPOC) of the innovation process. See table 1.
Figure 2 represents a suggested generic innovation process. It’s designed with specific gates including idea generation, screening, recommendation, approval, and testing. 
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