Innovation Management 4.0 & Why It’s So Hard!
It’s a long-standing debate I have; how does large enterprise hope to innovate and compete versus the more agile, no rules start-ups?
The innovators in order to create, require freedom, while the executives require results, especially when every few days they must again report to the markets on their latest short-term performance metrics.
Many large enterprises mistakenly think all innovation must disrupt, but those running successful innovation programs know that there is an ideal balance between developing new ideas and predictable revenue and margins based on evolutionary, iterative innovation. To succeed, a new product doesn’t have to be majorly disruptive; it has to fit the overall customer-centric strategy and meet target costs and forecasted revenue over time.
Fundamental to an innovation program is the enablement of an ecosystem of data and communications across the ideation and design brains. It’s a series of technology solutions to support portfolio management, front end ideation, product development and launch — with a single, integrated, cross-functional product view. The solution must manage the innovation process from the time the decision is made to invest, all the way through the product’s end-of-life.
Struggling To Maximize Their Innovation Investment
To achieve evolutionary, customer-centric and disruptive innovation is not easy and in fact recent studies suggest while 75% agree innovation is business critical, 90% admit they are often slow to market and always over budget. Worse still, over 8 out of 10 admitted they had little or no time to ensure they’re investing in the right things!
Poor Innovation Impact
My day job (putting great people into great projects and businesses) allows me the great luxury of talking to many people embedded in the product innovation journey and over the last few months it’s been interesting to hear of the macro and micro impacts from poor innovation…..
Lack of customer-centricity
From the latest surveys and certainly from my conversations, it’s consistent 2/3rds of programs fail in achieving this and often find late in the game product failures in the marketplace are the result of poorly defined product requirements.
Lack of ideas
While the CPG and Retail sectors are generally doing well with ideation, all other sectors appear to struggle, with a clear lack of focus and priority around the idea generation and management processes. Generally most lack a central cohesive point for ideas to collect, nor anyone or any group of people who will manage and evaluate those ideas. Ideas and feedback are the “air” that an enterprise needs in order to breath!
A balanced view
To me, every business wishing to survive and thrive in the 4IR needs to position the innovation strategy as the driver. The product and project portfolio breakdown, provides the game plan of how the business plans to deliver on its 4IR, Customer-centric strategy.
Ideas aren’t just for new disruptive products, but ideas on how to better service and maintain in the field, how to evolve existing products and services in order to meet the goals and targets of the business in the short, medium, and long term.
Impact @ Scale
Yes, generating great ideas needs an “any idea is worth considering” approach, but the bottom-line is: does it impact the customer, does it make a difference, does it improve your brand, its legacy and over time improve the real bottom-line?
Frequently this stands out as the main issue when developing new ideas and when existing people are over-committed they lack the time to breath, think and innovate.
So What’s Holding Us Back?
To me, at a macro level, it feels like “fiddling while Rome burns”! And generally a failure to make innovation the priority, a sense of urgency and a short-term focus.
But, at a micro-level it’s a series of common and very fixable problems:
- Limited idea pooling
- Disconnected ideation and design processes, together with data silos
- Selection of the wrong ideas
- Failure to take an end-2-end lifecycle view
You see, insufficient enterprises leverage their entire ecosystem, missing out on the intelligence of their suppliers and of course customers. When ideas are generated they are frequently taken and stored in isolation in non-integrated software such as excel or powerpoint, creating huge backlogs of data and a slow Time-to-Market, together with even after launch not adjusting products or even retiring them.
When deciding on the right ideas to invest in, the enterprise must have the ability to measure the potential value consistently so that they can be evaluated on a like-for-like basis. Consequently, investment decisions can end up being based on much more than a “gutfeel”.
Innovation Management 4.0
To manage innovation is like managing cash. In fact unless innovation in the 4th Industrial Revolution is managed at the senior most level, you may not need to worry about cash! The executives need a comprehensive view of innovation performance and must be able to see whether the strategic enterprise objectives are being met. Obtaining that view means bringing together information and data from a large number of different functions.
Innovation management in the PLM space, is how companies work with their stakeholders and what they want for new products, add-on services, or product evolution. Innovation management involves working with the ecosystem to brainstorm, identify and capture new ideas.
Getting Innovation Management right means potentially new sources of revenue, higher revenues, increasing market share and far higher customer loyalty.
Key Capabilities for Innovation Management
- Idea management: the enterprise needs to be able to gather, evaluate, share and comment on ideas from their customers, partners and employees.
- Partner collaboration: many companies have relied on internal teams for their research efforts. Digital transformation now requires companies to be able to securely collaborate with new types of partners on new ideas and research.
- Information management: in order to maximize their learnings and promote cross-organizational learnings, companies should be able to securely and rapidly share, slice and dice information internally and externally.
- Portfolio management: a common way to understand which ideas to pursue is by using portfolio management techniques. Companies can rate ideas against corporate goals, technology roadmaps, competitive pressures, market potential and more.
At the end of the day, organizations with strong innovation management make better decisions that lead to products and services that surpass the expectations of consumers and directly contribute to the top and bottom line.
See you next time around when we look to pull Innovation Management together through a Platformization 4.0 approach to New Product Innovation and Lifecycle Management.