How to Close the Innovation Gap


When you hear the word “innovation” it is likely that what first comes to mind is a new ground breaking technology.   The reality is that there are many types of innovation and the inspiration for those innovations can come from many sources.  Incremental innovation, most common,  improves  a current offering; process innovation improves how you produce or deliver a product; service  & business model innovation improves customer interaction &  experience;  frugal innovation delivers more with less –targeting lower cost offerings typically to emerging markets, and the most publicized type of innovation, radical, breakthrough, disruptive innovation which significantly changes what the market and customer expects.   

With so much input, filling the innovation funnel with ideas isn’t a problem for most companies – feeding the funnel with a balanced and steady stream of good ideas that are both achievable AND align with product, business and company strategies presents the greatest challenge.   Lacking a collaborative, disciplined, systematic approach to selecting the best ideas that are translated into achievable, profitable offerings continues to challenge even the most notable companies.   

Therein lays the greatest challenge to closing the ‘innovation gap’ – the gap that exists between what executives establish as strategy and expect versus what their organizations deliver. 

To close the innovation gap, you need structure and process to align ideas to strategies while retaining collaborative flexibility to creatively develop and prove out the innovation (or fail fast) to earn a healthier return on your innovation investment. This is exactly what 78% of top innovators do and they reap the benefits of 27% more growth than average innovators over the next 5 years (PWC 2013, “Breakthrough innovation and growth).

But let’s step back up for a minute and drill into the challenges of innovation, how innovation management processes can help you overcome those challenges, and why the cloud plays a key role in closing the innovation gap.

The Challenges of Innovation

The innovation gap is a real and presents a major problem for most companies  regardless of the industry.  Gartner’s 2012 CEO survey revealed that growth is the number-one priority for CEOs, with innovation as the primary driver. However:

So, what’s causing this disconnect? A lack of innovation management, which leads to:

Banking on the wrong ideas

It is critical to have a disciplined innovation process that allows discovery of the great ideas. The Success vs. Cost Curves For New Products illustrates this point beautifully. As you winnow down ideas and move them forward into development and commercialization processes, the investment (of time and money) and cost (of failure) increase greatly.

An inability to keep up with the fast pace of innovation

You are also bumping up against the fast pace of innovation – new products, new services, new business models, emphasis on the full customer experience --  leading to new opportunities for product failures – if you are not choosing the right product to put into development.

Lack of connected access to information

When you look at the product innovation processes, most information is scattered in various point tools, mega spreadsheets, presentations and various documents.  The most important priority for most companies is managed using disconnected processes and tools

  • Customer needs, competitive input, financial analysis are in spreadsheets
  • Business cases are a combination of spreadsheet and presentations
  • Requirements are stored in documents posted in a vault or file cabinet

What do you do to keep all the key stakeholders critical to delivering the correct translation and delivery of the idea in alignment with the business case?  Try to glue everything together with a document sharing solution? 

Competition that leaves you behind

Competition moves at hyper speed. You have:

  • Compressed product lifecycles with very narrow launch windows
  • Increasingly complex requirements, compliance regulations, supply chain risks to manage
  • Evolving full customer experience business models 
  • Customer needs to balance
  • Market demands for Internet of Things connectivity 
  • Pressure to be global, expand into new markets

Without a systematized process to manage these challenges, you’ll constantly scramble just to gather the critical market opportunities – never mind getting ahead.

Numerous product value chain challenges

Your business relies on new products to grow, so you have to make sure your product value chain is firing on all cylinders. That means:

  • Ensuring each idea prior to investment is evaluated from a 360 degree perspective   to align within a balanced portfolio of growth strategies and confirm it can be delivered as described within time, budget, resource constraints
  • Synchronizing processes, resources, and schedules to develop the offerings
  • Commercializing these products across multiple sales channels and manufacturing sites.

How to Close the Innovation Gap

When executed effectively, the discipline of Innovation Management allows you to select the best ideas and then translate those ideas into products that meet strategic objectives. This can become a fairly straightforward process:

Brainstorm and vet ideas

Gather the innovative expertise and wealth of creative ideas that already exist within your company by:

  • Capturing ideas from multiple sources and identify key themes
  • Leveraging social collaboration and cross functional expertise to refine each idea’s alignment, feasibility and achievability
  • Voting to determine which ideas to advance in the innovation process
  • Developing the best ideas into a business case
  • Creating an execution plan that uses your resources (people, money, and time) wisely

What this looks like in practice

A furniture manufacturer leverages a cloud-based Innovation Management solution to enhance collaboration across a wide variety of stakeholders that may otherwise never meet, including stores and designers.  A central idea repository captures the ideas and then analysis tools enable the manufacture’s leadership teams to make more informed funding decisions by:

  • correlating the value of each proposed idea to the business and being able to demonstrate the alignment and business impact to the company’s strategy
  •  providing a slice and dice summary of proposed ideas to evaluate alignment and budget needs

Determine if the product fits within your strategy

A four-pronged approach works best:

  • Evaluate new proposals within the context of portfolio objectives and constraints
  • Balance new offering selection against top-line strategy and bottom-line constraints
  • Use consistent process and analytics to equalize evaluation criteria
  • Integrate with project management to continuously monitor investment progression through funnel

What this looks like in practice

A leading multinational computer technology company leverages a cloud-based Innovation Management solution to establish a disciplined innovation process and uses the solution as a central innovation platform to consolidate all ideation proposals and perform investment analyses.  This allows the business to collaborate in a standard process more effectively and help leadership make faster, more informed funding decisions against a consistent set of information:

  • Ideas with high potential are selected and pushed forward into the scoping and proposal phase. A business case is formalized and refined in terms of resources required and benefits.
  • Correlate the value of each proposal to the business and demonstrate the business impact to the company’s strategy.
  • Provides what-if scenario and evaluation against budget and resource constraints to ensure they have sufficient resources to address the pipeline of proposed ideas.

With increased visibility, executives can make much faster decisions and focus the team and financial investments on those most likely to come to fruition.

Manage the requirements

Requirements is the translation of what it needed to deliver the idea to the market – what the customer asked for and regulatory requirements are just a few of the considerations.      Managing requirements is a highly collaborative, iterative process of collecting, analyzing, refining, prioritizing and finally validating that the proposed offering meets the defined requirements.  Tracing requirements from ideas through the entire development process is a critical step in which many companies struggle and ultimately fall short. The best approach follows these steps:

  • Collaboratively develop and refine product requirements that translate ideas into concepts
  • Define and link requirements through their lifecycle from customer idea to marketing definition to design definition to test execution results
  • Capture dependencies across requirements
  • Analyze requirements against priority, scope, achievability
  • ”Right size” requirements without compromising the business case
  • Put a process in place to manage changes to scope

What this looks like in practice

A cutting edge manufacturer of wide range of fiber optic products has put a process in place to help their R&D department deliver the requirements promised to customers. They have done this by using a closed loop design process.

This process allows the engineering, product planning and product management teams to quickly review where they are in the requirements development process and easily collaborate around those requirements. It also eliminates “requirements drift” and ensures the entire team can deliver on those requirements.

A direct link between the ideation phase of requirements management to the actual product development of fully qualified concepts provides the manufacturer the visibility, traceability, and control to ensure final products contain all requirements, thus accelerating time to market and increasing top-line revenue.

How cloud-based technologies can help close the innovation gap

Cloud-based technologies are meant to simplify the way we do business, and those benefits are far-reaching:

  • It lowers IT costs and removes IT barriers
  • It improves opportunities for collaboration and streamlined communication
  • It reduces risk
  • It lets us scale as we grow – without increasing capital expenditures
  • It allows faster deployment

When it comes to closing the innovation gap, the cloud can enable three important elements: speed, social collaboration, and analytics for more informed decisions.

The cloud helps us respond quickly to technology that is changing the rules of engagement, like mobile devices, 3D printing, big data and the Internet of Things (IoT).

Companies that use cloud-based collaboration technologies see quicker returns on their investment and enjoy greater innovation and internal efficiencies.

Embedded analytics innate in the cloud allow companies to make more informed decisions at critical points along the product development cycle; analyze customer data to develop better, more relevant products; bring in new capabilities and functionality quickly; and respond to the market shifts faster.

 3 step strategy to close your innovation gap

  1. Map out your current innovation process and define your vision of the process to align current and new investments to business strategies and retain visibility to react when investments don’t execute to plan.
  2. Identify areas of greatest need and provide key stakeholders the essential information they need to fill the innovation pipeline with a steady stream of high yielding ideas.
  3. Evaluate whether a cloud-based Innovation Management solution could help your business – consider soliciting the services of a business partner or other trusted advisor to help you objectively determine steps to improving your innovation gap.

Edited by Peter Bernstein

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