Fast Innovation

introduction

While invention is concerned with the creation of good ideas, innovation involves the creation of ideas and their transformation into economically viable market-focused products and services. Rapid Innovation is the art of delivering new products and services in less time, at lower costs, and with fewer ‘post-implementation’ problems.

Rapid Innovation combines three main concepts;

· Understand what’s going on in the market, what customers really want (and not just what you think they need) and understand the competition.

· Application of the concept of ‘Concurrent Design’ to remove barriers between teams and avoid sequential development.

And

· Use of Rapid Prototyping tools that can quickly prototype products, or simulate new services to help address issues and issues.

Innovation is about doing things differently and therefore fundamentally different from improvement which has to do with doing the same thing ‘better’. This paper explores how organizations can successfully and rapidly introduce viable new products and services.

Top Five Anchor Innovations

The ability of an organization to successfully innovate can have many benefits. This includes cost efficiency, market leadership, brand development and more. However, there are anchors that slow down an organization’s ability to innovate effectively. These anchors can result in lost market share, excessive development costs, unforeseen operational problems, or damage to the organization’s brand. The five most important innovation anchors are described below.

Innovation Anchor 1: Failing to understand the market

It’s easy to come up with a hundred ideas before breakfast but……

· Only one idea in a hundred will produce a viable product or service.

· Only one in a hundred products and services worth developing will become a market leader.

Therefore a process is needed to sort out viable ideas from those that are not. Eligible products and services are products and services that meet stated or unstated customer needs, and are therefore capable of generating economic profits. The sorting process creates a channel of ideas where only viable ideas emerge.

The key to successfully identifying viable ideas is understanding the market you operate in. This means meeting with potential customers and discussing what they want and understanding what services or products you are dealing with. Unless you do this, you run the risk of wasting a lot of time and huge amounts of money.

Innovation Anchor 2: Failed to work collaboratively

One of the biggest problems that occur in the development process is that activities occur sequentially rather than concurrently. This creates a virtual waterfall where activities are ‘thrown against the wall’ from one team to the next in a series of activities. The fact that ‘downstream’ considerations are not taken into account at every stage results in a lot of rework. Teams must return activities to early stages to correct errors, delay progress, and significantly increase costs.

Collaborative development, involving multi-disciplinary teams, is the key to the concept of Concurrent Design. Teams involving expertise from across the development path taking into account all aspects of the product or service life cycle being worked on can reduce by more than half the lead time from concept to implementation and reduce operating problems by 80% or more.

Innovation Anchor 3: Failing to empower the team

After forming the development team, there is a need to empower the team to make decisions. Complicated and poorly defined decision-making processes contribute directly to increased waiting times. Empowering a team means setting limits on what they can do and then allowing them to move on.

Innovation Anchor 4: Failing to provide effective sponsorship

The development team will face various problems and issues. The budget allocated to the team will be jeopardized and in a complex organization, the team will have to ‘shout’ for management’s attention and time. The purpose of sponsorship is to keep the development team’s profile high on the management agenda and to minimize the management burden placed on the team itself so that they stay focused on reaching the market rather than completing reports.

Innovation Anchor 5: Failing to utilize technology effectively

Technology is an important aspect of development, whether you are developing a new type of product or service. Of course, there is a need for email communication but the fifth innovation anchor is more concerned with the effective use of technology to reduce lost time and to share knowledge, such as intranets, webinars, and video conferencing. It also deals with the use of technology required to shorten the overall lead time such as the use of simulation tools, rapid prototyping, and pilot activities to complete the design of the final product or service.

By failing to address the five innovation anchors, your organization risks increasing development lead times by up to 300%, more than doubling overall development costs, and increasing the number of post-implementation changes occurring by more than five times that of Rapid Innovation Projects aimed at all five problem. NS. The issue of post-implementation change has a direct impact on overall costs through design shadows which we discuss next.

Shadow Design

The Shadow of Design is a concept that explores the increasing costs of changes that occur in the development cycle over time. This can be well understood through the following example;

· Changes during the concept/specification stage may incur a fee of £1.

· To make the same change when the team is actively involved in designing the goods or services, it would increase the cost to £10.

· If changes do not occur until prototyping takes place then the overall cost increases to £100.

· If changes occur later during the pre-implementation and testing phase, the fee increases to £1,000.

· Finally, if the changes are not implemented until after the service or product is ‘released’ then the cost increases again to £10,000.

A poorly organized development process that does not adopt Rapid Innovation principles will lead to five times more change in the pre and post implementation stages than Rapid Innovation projects.

Different Types of Innovation

Innovation is the generation and exploitation of ideas for the benefit of customers and organizations alike. However, we must realize that there are different types of innovations carried out by organizations. We must also recognize that there is a difference between innovations that are ‘new to our world’ and those ‘new to our organisation’. For example, you might develop a new service that your organization has never done before, but that is common worldwide.

There are two groups of innovative activities.

1. Continuous Innovation- innovation that does not fundamentally change the market. These are further subdivided into Evolutionary and Revolutionary Innovations

2. Disruptive Innovation, namely innovation that creates new markets or changes existing markets so that they are not feasible for competitors operating in them.

We will now explore both in more detail.

Innovation Type 1: Continuous Innovation

These are innovations that do not fundamentally change the market and instead expand existing markets through products and services that offer better value to customers and the organization itself. Organizations that are already in the market compete with each other with continuous innovation. There are two types of Sustainable Innovation; Evolutionary & Revolutionary.

Evolutionary Innovation

This type of innovation provides additional development of existing products and services. Usually innovations that customers expect, such as faster computers, better fuel injectors, or customer service that previously only operated Monday through Friday but have been extended to 24/7.

Most innovation activity is focused on evolutionary change, often driven by a combination of cost efficiency targets, market shifts, or the development of new technologies.

Revolutionary Innovation

Also referred to as ‘Disconnected Innovations’, these are unexpected innovations that do not fundamentally change the market in the short to medium term. For example, the introduction of the first car did not fundamentally change the market for people selling horse-drawn carriages because new cars were so expensive that only a small proportion of the population could afford them. Another example is the introduction of closed double glazed windows to replace ‘secondary double glazing’ and single glazed windows. The introduction of a new type of window offered people the option of buying a window that was more expensive, but more efficient, or sticking with cheaper single-glazed windows. Gradually the market changed until no new house was built without double glazing in the developed world.

Innovation Type 2: Disruptive Innovation

It is an innovation that creates a new market by applying an entirely new value or technology which eventually takes over the existing market.

We already mentioned that the introduction of the first car was a revolutionary innovation because the market for horse-drawn vehicles did not change substantially. Then, with the introduction of mass-produced cars (such as the Ford Model T), the market changed radically and quickly led to the demise of horse-drawn vehicles. Therefore, revolutionary innovations become disruptive innovations from time to time.

Other examples of disruptive innovations that have taken place include the introduction of the UK’s National Health Service, the advent of digital photography (replacing film) and the ubiquitous USB Flash Drive which has replaced the ‘floppy drive’.

Before the First World War, most of the ice used in Europe was shipped from Canada. Over the years, ice cutters have introduced a number of innovations and improvements that result in reduced costs. However, there is no way to compete with the introduction of electric refrigerators/freezers that can make ice on demand. Regardless of how many further ice cutter innovations are applied to their process, the disruption caused by the introduction of new technologies fundamentally changes the market and prevents existing players in the market (in this case Canadian ice cutters) from competing.

Disruptive innovations are usually new to the world and can quickly create new markets. Since the introduction of the disruptive first refrigerator/freezer, there have been many further evolutionary and revolutionary innovations on the market but the market as a whole has not changed.

Defining Rapid Innovation

Rapid Innovation is a term used to describe the rapid generation of ideas, development, testing and introduction of viable products and services. The aim of Rapid Innovation is to achieve three ‘parts’;

· Reduce waiting time by half

· Half fee

· Halve the number of problems

In most cases, a successful Rapid Innovation implementation can achieve far more than the three sections suggest.

Eight Aspects of Rapid Innovation

There are eight aspects of Rapid Innovation and these are summarized below;

· Senior Sponsor

· Cross-Functional Team

· Market/Customer Engagement

· Metrics for Success

· Whole life cycle considerations

· Integrated Plan

· Gate Review

· Mapping Technology

We will describe each of the eight aspects below.

Senior Sponsor

Senior sponsors, ideally at the board level, should be allocated to champion the project. The sponsor should be responsible for leading the gateway review (see later) and for establishing project success metrics. The sponsor must also represent the project at the board level and be actively involved in helping to resolve disputes between the team and other parties and promote the product/service throughout the organization.

Cross Functional Team

At the heart of Rapid Innovation is the need for cross-functional teams placed together. The team structure and operating practices should consist of;

· No more than 10 participants are selected to cover all the skills required for the project

· All volunteers

· Consistency in the process from start to finish

· Full time for the majority, and ideally all, of the team

· Shared location

· Empowered to make decisions

· Managed by one ‘development leader’

· Protected from unnecessary interference

For larger projects you may need to consider multiple cross-functional teams working together, with each ‘sub-team’ following these parameters but with the added element of frequent cross-sub-team meetings, shared metrics between teams and with all teams report to one overall manager.

Market/Customer Engagement

Clear market analysis and direct customer involvement in the specification of new products and services are essential for Rapid Innovation. This may require an NDA (Non-Disclosure Agreement) to be set up if commercially sensitive issues may arise but without an understanding of the customer’s needs, there is a high chance that things will be missed.

Metrics for Success

Metrics for the project should include time span, overall costs, implementation or unit costs, expected sales/activity volumes, and life cycle costs to a minimum. This needs to be determined in advance and any other constraints the team needs to work on are clearly articulated before they start.

Whole life cycle considerations

Products and services have an expected life cycle which consists of phases such as introduction, delivery, ramp-down and close-down. The start-up aspect will involve planning additional marketing activities and investments, while ramp-downs and close-downs may require you to consider everything from redundancy to recycling. It may seem odd to consider the end-of-life aspect early in development, but many changes and post-implementation costs occur because these issues have not been considered.

Integrated Package

The team should create and maintain an integrated plan that considers activities that need to occur sequentially and which can occur simultaneously. The goal of plan management is to get as many activities going on concurrently as possible and avoid as many tasks that need to be done sequentially. The plan should also cover the entire development cycle from initial concept to post implementation and will therefore be a ‘living document’ that evolves over time as more detail becomes available.

An effective integrated plan will consider;

· Market Analysis

· Sales & Marketing Activities

· Design development

· Quality Assurance & Testing

· Pre & Post Production/Implementation

· Risk management

· Project Closing Activities

Gate Review

A number of gateway reviews need to be planned as part of the overall plan. It should be chaired by a Senior Sponsor and the purpose is to review progress and ensure that the program is proceeding as planned. Typically a project will consist of a minimum of five gateways;

· Specification Agreement

· Finalization of Conceptual Design

· ‘Green Light’ pre-implementation

· Post ‘Green Light’ Implementation

· Program Closure

The criteria for each gateway, meaning tasks that must be completed by the gateway review date, must be pre-approved as part of the integrated plan.

Mapping Technology

The last of the eight aspects of Rapid Innovation is the concept of technology mapping. It is a task done early in development to identify specific technology issues that will affect overall development success and lead times. Implementation of this activity early on allows planning for technology procurement or outsourcing to be carried out in a timely manner. It also allows the team to identify technologies that can be used to reduce lead times and costs early on, thus enabling them to be planned into the development process.

Are You Ready For Fast Innovation?

There are several supporting factors that will support the implementation of the Rapid Innovation concept. One of the first and foremost is the need to recognize that the shift from sequential development and rapid innovation has a short-term cash flow impact in bringing the team together from initial development to working on innovation. Ultimately this will be achieved in a much shorter time span and lower overall costs but the short term impact can be problematic for some organizations.

Other factors that determine whether your Rapid Innovation adoption will be successful or not are as follows;

· A culture that supports collaborative work.

· An understanding of your market and the expected changes in it.

· The management team is ready to empower the team to develop products and services.

· Flexible structure that allows people to move easily between reporting lines.

Whatever the case, if your organization wants to reduce the costs and timescale involved in developing new products and services, then you need to consider how you can benefit from adopting Rapid Innovation.