Untangling Innovation – Part II (Approaches)
[This article was simultaneously posted on LinkedIn February 3, 2015]
This post is the second in a series that are intended for scientists and engineers who have primarily been focused on their technical subject matter, and have not had a chance to explore management and innovation very much. If that is you, and you have recently encountered management initiatives aimed at fostering innovation, stimulating new product discovery, or encouraging you to be more entrepreneurial, then read on.
The prior post positioned innovation initiatives as a logical follow-up to management initiatives for quality and productivity, and provided precise definitions for innovation and product—the latter because new product opportunity discovery is the usual goal of innovation initiatives. It went on to identify ways that innovations can be categorized, including whether they are disruptive or sustaining. A later post will make the point that understanding, and building approaches around, three fundamental strategies for innovation and new product discovery makes for better outcomes. But, first, this post will build upon the definitions in the prior post to create for technologists a lexicon of the process based approaches to innovation and new product opportunity discovery. The goal is to help technologists recognize what is going on within the initiatives they may encounter.
New Product Discovery – Process Approaches
Commonly encountered processes for developing innovations and discovering new product opportunities are generally not strategy driven. Instead, they tend to reflect one of three possible process goals: bringing more discipline and organization to the process of new product discovery, attuning the process more closely to customer needs, or incorporating more quantitative measurements of customer needs.
There are more than this, but six of the better known process approaches to new product discovery are shown below. Many technologists will have encountered one or more of these, and each of these six approaches are summarized below.
Stage-Gate®. This approach was developed in the 80’s by Robert Cooper, and has been covered in multiple editions of his book Winning at New Products. It is telling that this book was subtitled, “Accelerating the Process from Idea to Launch,” in its third edition while it’s fourth edition is now subtitled, “Creating Value through Innovation.” This reflects the fact that its origins lie with process discipline for taking an idea—however it was created—to market. Over time, Cooper’s approach has begun to incorporate many of the other ideas that will be discussed in the next post, but it began as a process discipline. Stage-Gate processes are the origin of the ideas of setting requirements (checklists) that must be met for projects to pass from one phase (stage) to the next and of conducting formal gate reviews to assess the readiness of a project to proceed to the next stage. A typical diagram of this process, borrowed from the latest edition of Winning at New Products is shown below.
It should be noted in passing that the iterative check-ins with customers or users were not originally part of the stage gate process, and were added over time as their importance came to be appreciated; this reflects the need to incorporate market pullstrategies that will be discussed in the next post.
Design Thinking. While most technologists have been exposed to Stage-Gate processes, design thinking can be less familiar. This approach is championed by the contract design firm IDEO. Design thinking aims to integrate function with aesthetics, so that (for instance) ventilation openings in a computer system do not detract from its overall visual appeal, or to organize touch screens in ways that are intuitive to users. To do this, firms like IDEO bring together highly multifunctional teams comprising artists, sculptors, marketers, designers, ergonomics experts and engineers of all types. While there is obviously much more to it than this, the teams generally first go through a highly divergent exercise aimed at generating many ideas, and follow that with an (often proprietary) convergent process that rigorously down-selects and executes on the selected ideas. While this sort of process is unlikely to be helpful for commoditized B2B products where performance to specification and cost are both paramount, it can yield unique products that delight users in other areas by combining form and function.
As of December 2014, the Wikipedia article on Design Thinking outlines the process as shown here.
Voice of the Customer. VOC approaches also reflect market pull strategies, to be discussed in the next post. These approaches can be very powerful, and recognize that if you want to develop a product that will do a job for a customer, then it is important to talk to the customer to learn about the jobs that need to be done (see the prior post on the relationship between customer jobs and products). VOC approaches, and particularly the quantitative QFD approach to be discussed below, have been incorporated into productivity initiatives like Six Sigma. ISO-9000 (a quality initiative) requirements also dictate that customer specifications be gathered, and adhered to during production.
Practices for gathering VOC input vary, and there are multiple sources, consultancies, and methodologies available. At the heart of most VOC approaches are structured, often scripted, interviews with existing or prospective customers. An experienced interviewer can often make very good progress with this approach, but it does require practice. Rote approaches with rigid scripts and long lists of specific questions can be counter-productive. It can also be challenging to get past the obvious customer needs of, “faster, better, cheaper.”
Customer Ethnography. This is another process approach that will fall within the market pull strategy area. In this case, instead of listening to what the customersays, the approach is to watch what the customer does and infer their underlying needs from that. This approach has key advantages in getting past the obvious, “faster, better, cheaper,” set of needs, and can discover needs that the customer themselves do not consciously recognize. Customers might, for instance, rely upon compromises or work-around solutions that they have adopted in the absence of better solutions and which they have come to accept as inevitable. Drawbacks of this process are that it usually requires very cooperative customers who will allow access to their personnel while working; it also usually requires trained ethnographers. These are expensive professionals who must spend significant amounts of time with customers. Sessions are often recorded (video and/or audio) and analyzed after the fact, which can increase the time requirement. Nevertheless this technique can work very well.
QFD. QFD is an initialism standing for Quality Function Deployment. This is one of many possible translations of the Japanese ideograms used to describe the process as it was conceived. It is more than this, but at its heart it is a method for gathering VOC input and converting it into quantitative input explicitly tied to engineering and design parameters. Like other VOC approaches, it requires cooperative customers. It is also a highly disciplined process that requires substantial training to execute properly. But, like other VOC efforts, Stage-Gate®, Design Thinking, and Customer Ethnography, it has a history of major successes.
One of the primary tools of QFD is the ‘house of quality’. Examined closely, it is clear that this is a formalism for combining and prioritizing categorized customer requirements and connecting them to engineering parameters so that engineering effort can be focused on quantified performance parameters that are most important in satisfying customer needs. As noted, this has been incorporated into Six Sigma, as this sort of input is obviously needed in order to ensure that a process output is well targeted on the desired (or, at least, targeted) outcome. It can, however, be a daunting process and it is best suited to engineering firms with a strongly process-oriented culture.
Conjoint Analysis. Conjoint analysis is another tool for converting qualitative customer input into quantitative data. This is typically a survey driven approach that requires a substantial cohort of relevant users to complete a survey that demands participants to select or make a series of trade-offs between various proposed features of a product. As with VOC and Ethnography, it generally requires access to cooperative customers. Like QFD, it is quantitative, and in this case employs statistical analysis of the survey results. Like ethnography, it is best to rely upon specialists with experience in the technique.
This approach is frequently used to prioritize features on consumer products; in these cases professional consumer products market research firms often employ paid consumer participants to complete the survey and/or participate in focus groups. This is a good way to gather fairly objective customer data, but it does require a relatively concrete view of the proposed product in advance, as customers cannot be expected to make valid trade-offs among hypothetical features of ill-defined products. As such, it is often used in work on sustaining innovations by consumer products firms.
The primary purpose of this discussion of processes approaches for new-product discovery was to identify for technologists examples of major approaches to new product discovery that have come into use. This, at the least, should help technologists understand the intent of these types of programs when they encounter them. In addition, the brief survey here—keeping the background on product and innovation in mind—enables some comparisons of the various processes to be made.
Stage-Gate processes, for instance, are highly disciplined and to the extent that the latest incarnations are used and address these issues, will take into account customer input, explicit customer needs, pay at least some attention to the relative value of the solution that is being considered, and provide some input on how to come up with ideas for products in the first place. But, there is little or no provision within the Stage-Gate approach—unless those using the process add this themselves—for discovering hidden or implicit user needs, or making findings quantitative. Meanwhile, ordinary VOC work clearly uses customer input, identifies explicit needs, and allows for some concept discovery (i.e. from the customer), yet provides no formal tools for discovering implicit needs, quantifying needs, maintaining process discipline, or assessing the relative importance of needs. In other words, each of these processes has great value, but none is really complete in itself.
It is the thesis here that recognizing and/or adopting one of three basic strategies for structured innovation and new product discovery is a stronger approach than simply (as too often happens) bolting on another work process within a business. The next post in this series will take a look at these strategies: market pull, technology push, and market adjacency (which is a hybrid).[For a more complete discussion of this topic, see the whitepaper on this topic, Untangling Innovation.]