Tuesday, August 05, 2008

Innovation Management - Taking Ideas to Concept

Recently a leading software company conducted a series of idea generation exercise involving all employees. The campaign was titled “India Innovation Network” and all employees were encouraged to generate & submit ideas. The campaign was very successful as employees submitted hundreds of ideas.

These ideas were meticulously documented and captured in their intranet portal. Company now faces a daunting task of how to select these ideas and how to converts the selected ideas into products.

Today, the biggest challenge for companies is to convert these ideas into product or product concepts. Unfortunately there is no easy way of doing this. As a innovation consultant, I have developed standardized processes to filter ideas and develop product concepts. The process vary from one company to another, however what I will be describing here is a general framework. You can adapt parts of this framework to fit the needs of your organization.

Generate & Capture Ideas systematically

In many of the creative workshops or brainstorming sessions, participants are encouraged to come up with ideas. Most participants come up with lots of brilliant ideas – but are too lazy to document them properly. As a result the ideas are often written down in a single line – in a way that only the person who came up with that idea can understand it and no one else. If these ideas are submitted as innovation ideas then it is almost impossible for others to understand it and take it forward.

At this point, I must emphasize that for any ideas to become reality will need efforts from other people: peers, superiors and stake holders. So if other people cannot understand your idea, then that idea has already lost its value.

To overcome this, make it a practice to capture the ideas in a systematic way. I recommend a standardized form in which ideas must be documented and entered into the system. Download a sample form.

Ideas that are filled in this form must then be archived in knowledge management system for further analysis.

Idea Assessment techniques

Idea assessment starts is needed when there are several ideas to be scrutinized. It is best to use a combination of internal and external experts for idea assessment – mainly to get a neutral opinion. Internal experts have a deeper subject mater expertise and can judge the ideas accordingly, while external experts have a wider expertise. Also the presence of external experts will remove the possibility of favoritism or faulty judgment of ideas.

Idea assessment team should first establish criteria for selecting ideas. Typically, ideas should be classified into low hanging fruits, medium, and challenging ones.

Company Strategy

Ideas must also be classified into categories based on the company’s strategy:

  • Ideas inline with the current strategy.
    This would typically be product extensions or modifications that will overcome the current shortcomings and result in wider usage. A good example will be iPod Nano as an extension of iPod. Similarly, Blackberry Connect on Nokia phones is an example of product extension.

  • Ideas inline with the long term business strategy.
    This would typically be new product introductions. Products that are similar to existing products – but are addressing. For example Nokia 3100 & Nokia 3110 – both low cost phones developed specially for the needs of India, and Dell’s introduction of printers.

  • Ideas which need drastic change in strategy.
    Some ideas are so dramatic that it requires companies have to change their strategy – or introduce a new service lines and build a whole new business infrastructure. Such ideas require major diversification of business. Apple’s introduction of iPhone is one such example. Getting into cell phone handset business marked a huge change in strategy for Apple. This required setting up a different line of business, a separate distribution system and a completely new support system. Similarly, EMC2 acquisition of Iomega. With this acquisition, EMC2 is entering into consumer products.

Once the ideas are classified, it becomes easier to decide on which ideas must be taken ahead. It is not a good idea to discard any ideas, instead, rank the ideas by a priority number in each of the category based on Market Opportunity Analysis.

Market Opportunity Analysis

All innovation ideas must be scrutinized for the possible market opportunity with that innovation i.e. what is the market demand for this idea. Since a detailed market opportunity analysis is unviable at this point of time, only a basic or a high level analysis must be done. Ideas must then be prioritized or ranked based on this market opportunity analysis.

Product Concept

All Ideas can be also be classified into Product Ideas or Service Ideas. Most ideas will either be a:

  • Product extension idea

  • Service extension idea.

  • A service extension for an existing product.

  • Productization of a service.

  • Manufacturing improvement.

  • Cost reduction ideas.

  • New product ideas.

  • New service ideas.

Classifying ideas into these categories will help making decisions on which ideas to fund for further development.

Feasibility Study

Ideas submitted will often fall into three categories:

  1. Feasible to implement it today.
    Eg: Develop a hybrid car or develop an electric car

  2. Ideas that will require technology enhancements to make it feasible.
    Eg: Develop Electric cars with a range of 300Miles per charge.

  3. Ideas are so futuristic that with current (or near future) technology the idea is not feasible. Eg: Develop a Nuclear powered car.

It is always best to implement ideas that can be implemented immediately – as such ideas have lower risk & higher returns on investments. However, companies that work on cutting edge technology products can also consider ideas in the second category (i.e., ideas will need technology enhancements)Futuristic ideas with high market opportunity must be presented to board or top leadership of the company. Futuristic ideas will need huge investments and a big appetite for risk – this means that only few companies can afford such projects, and its mostly the government labs that can undertake such projects. Motorola’s Iridium project was one such futurist idea, B2 bomber is also one such futuristic idea.

Market Requirement Specifications

Market savvy companies often keep themselves updated with the market demands. Such companies often conduct surveys to identify market requirements. If such market requirement study reports are available, then it must be used for idea screening. Ideas that match with market requirement specifications are the ones that should be taken up first.

GO AHEAD decision

Any idea generation sessions & submissions will have to be scrutinized and filtered before a GO AHEAD decision is made. The decision will have to be made by the BU heads and top leadership based on the budgets available and the potential gains. (Typically, larger the budget, higher the management level will be needed to make the decision. Ideas which are very futuristic or ideas that need change of business lines or business strategy will have to be approved by the shareholders or the board of directors or promoters. The professional management team should refrain from making such decisions.

Once a GO AHEAD decision is made, the next step is to develop a prototype or a simple “Proof-of-concept (POC)”. Prototyping or a POC will minimize the risks and increase the chances of success. People who submitted the idea must be involved in the prototype development, therefore allocation in terms of people, efforts & resources must be made along with the GO AHEAD decision.

Closing Thoughts

Idea screening is the first step in taking the raw ideas into a solid concept. Innovation is not easy – but getting ideas for innovation is. This results in people submitting LARGE number of ideas. But that poses the next challenge – how do I pick up the precious stones from the huge rubble of rocks?

In this article I have presented a basic framework for idea classification and filtering. This process though time consuming will result ideas becoming closer to reality. This exercise is the first necessary step in taking a raw idea into a concept.

The second step in the process of taking an idea to concept is called Prototype development and market analysis – which will soon follow this article.

Also See:

Ideas Classification Spreadsheet Template

Ideas Submission Template

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