what’s the value of innovation management?

Delivering new product concepts to market – the key value-add and reason-for-being for many organizations – is an elusive process to manage. Over my career, I’ve become fascinated by the challenges of driving meaningful, profitable innovation programs. I want to share a few diagrams I’ve sketched out to help product managers, design leads or innovation managers visualize and explain the core process to their colleagues.

There are 3 key concepts critical to successful innovation management: The Roadmapping Process; Continuous Innovation; and The Value of Lean/Agile/Design Thinking.

The Roadmapping Process

The first diagram covers the overall process of developing a proper roadmap, ranging from managing the collection, creation & curation of “good ideas”, to design exploration/prototyping, through to testing those ideas via provocative demos, to properly scoping and assigning a preliminary business case to each idea:

The end goal of a proper roadmapping process is a managed portfolio of development risk with a clear list of dev priorities. In general, “design thinkers” love the left side of the chart, while “business thinkers” love the right. Many times “business thinkers” think the front of the process is somehow wasteful, while “design thinkers” believe the end of the process sucks the life out of their market vision. I think the real challenge is when either design-thinkers OR business-thinkers naively believe the innovation process looks something like this:

The above diagram effectively represents someone’s “creative ego” – either a designer who is infatuated with a singular idea (but should know better then fixating on one concept because ultimately customers should decide) or a business manager who happened to have one idea in the shower and thinks they’re a creative wunderkind (but don’t know any better, because they’ve never experienced formal design training, so they don’t understand HOW to systematically create and compare multiple ideas). Either way, the idea gets pushed through without the upfront exploration or evaluative checks needed to determine its actual worth. Then your product development process is simply riding the roller coaster of the hype cycle:

Continuous Innovation

The second diagram is my extension of IDEO’s popular Venn diagram about Design Thinking. In any truly innovative company, the core processes of customer research, technical research and prototyping/validation should be endless, continuous, cyclical functions:

The challenge with continuous innovation: Too many “business thinkers” don’t get the continuous investment required to stay ahead of the competition; they think “innovation” is something you do once at some fun offsite brainstorming session with lots of post-it notes. They don’t understand the critical value generation coming from their Design or R&D teams, open innovation efforts, or investing in prototyping. This seems especially true of business leaders who transfer from heavily commoditized categories into truly innovation-driven categories.

An easy to understand example of continuous innovation comes from the auto industry: Automakers invest in design to generate future concepts, then also invest in making flashy showcar prototypes which they put out in public to gauge reaction. They take that feedback and put it back into the actual roadmap prioritization and product development processes.

The Value of Lean/Agile/Design Thinking

The third and final diagram attempts to visualize why early stage prototyping, visualization and other “creative” functions deliver massive value to organizations – value that is often grossly underestimated by other process-driven, analytical functions like finance, supply chain, etc. I thought of this diagram as sort of a theorem-like setup:

In essence, I’m trying to diagram the paradox that while people value ideas greatly (especially their own!), ideation is just a tiny part of the development cycle (let’s generously say 10% of the overall effort). Yet idea curation plus the process of prototyping & testing of those ideas (another 10%) largely determine if an innovation will be successful or not. Pareto’s principle rears its ugly head.

So here’s the rub: Although 20% of the effort and resources will account for half of the market value (i.e. half the value is the correct idea, the other half is the idea delivered), the other 80% of the effort and resources is required to actually reach the market. On the one hand, this is why so many Kickstarter programs fail – its very easy in today’s world to make beautiful working prototypes, but brutally difficult to bring finished goods to market. On the other hand, this is why so many big corporations squander their resources – they don’t sort out if ideas are valuable or not before pushing them all the way to market.

So that is why organizations need to deeply value their creative teams, product management teams, R&D groups, etc. and actively invest in the messy front-end process of pulling together ideas, threshing them out in prototypes, then being brutally honest when prioritizing development resources. Because if you screw up the front 20% of the process, the remaining 80% of a company’s functions are ultimately dead meat.

Conclusion

There is a tough balance between getting team members excited about the future while delivering on the expectations of the present. The ideal situation is to be spoiled with great ideas but fiercely rigorous about development priorities and resources. Its not foo-foo magic – from ideation through to warranty service, innovation can be very systematic, very process driven. The challenge is finding the precious few leaders that can bridge the gap between the “designers” and the “MBAs” to ensure that real value ultimately flows to your customers.