Businesses that use innovation effectively have both a high level of competence in an area of technology but also a deep insight into markets and customers who might benefit from that technology.It is important to distinguish between Invention and Innovation.
An invention is a discovery, usually technical in nature. Innovation is the process of putting a new idea to practical use. In the context of organisational competitiveness, we can concisely define this as:
“The successful commercial exploitation of new ideas”.
Why you Should Think About Using Business Management Methods for Innovation
A number of studies have highlighted good reasons for imposing some form of business control on the innovation process and some of the issues are shown below in the key ingredients of innovation. Very little of the actual project budget is usually spent in the early phases and this often consists of staff time which is likely to be incurred anyway, regardless of the project.
The Key Ingredients of Innovation
By contrast, typically 85% of costs associated with the project, including future capital costs, are in fact committed by the end of the concept stage. At the same time, (probably because actual project expenditure is low in the early stages), management attention is not drawn strongly to the project at a time when there is an opportunity to influence the outcome compared to later stages.
Initiatives to Drive Innovation Best Practice
As part of a DTI initiative to drive best practice in innovation, audits were carried out of 80 European and US companies between 1994 and 2004 by the Time to Market Association in a programme partially funded by the DTI and implemented by Mike Henry and Steve Greenhalgh of Time to Market Solutions. This consisted of a combination of a questionnaire and interviews within companies drawn from all market sectors. The central hypothesis of the study was that best practice drives higher business performance.
What Elements Should you Measure?
The performance elements measured were: Customer Satisfaction; People Satisfaction ; Business financial measures; Business non-financial measures. And the practice elements identified were: Process mapping; Teaming; Reviews; Product Definition & Voice Of Customer; Metrics and Partnerships. The performance elements measured are shown below in Average Performance and Practice
The Process of Technology Management Using Product Planning and Project Selection.
The study generally confirmed the hypothesis. Those businesses which were deemed to have better innovation practice elements were seen to exhibit superior business performance. Summarising the approach of this study we are able to identify 3 fundamental pillars of innovation which need to be nurtured within a business. These interconnected and overlapping pillars are below in the Key Elements of Successful Innovation:
Why Using a Clear Product Strategy Helps Capture Dynamics
Having a clear product strategy is a means of capturing the dynamics of the target market and our response. It defines the product portfolio we would like to have in the future and expected returns along with the development work that is needed to achieve this. It need not be complex and can be illustrated in a simple “road map”.
Using a Roadmap is a Simple way of Seeing Your Plan
In practical terms this can often be represented using a single page product roadmap. The top half of the map typically shows the product lines that we have or intend to have with target revenue streams. The bottom half shows the development activity that will be needed to deliver the plan and does not involve just technology related projects but may include supply chain and marketing activities for example and as such it also captures the relationship between the three pillars. An example of a typical road map is shown below:
Creating a roadmap covering past and current product lines can be an excellent way to prepare for exploration of future product opportunities and options. What other ways have you seen working well for formalising the innovation process and making it work within your business?