Untangling Innovation – Part III (strategies)
[This article was simultaneously posted on LinkedIn February 17, 2015]
This is the third and final post in a series that is intended for scientists and engineers who’ve 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 first post positioned innovation initiatives as a logical follow up to management initiatives for quality and productivity, and provided precise definitions for what is meant here by innovation and product—with new product opportunity discovery the usual goal of innovation initiatives. The second post covered representative processapproaches to innovation and new product discover—things like the Stage Gate® process, design thinking etc. These fell into three broad categories: discipline based, customer centric, and statistics based/metric approaches.
This post aims to make the point that understanding, and building approaches around, three fundamental strategies for innovation and new product discovery makes for better outcomes.
New Product Discovery – Strategic Approaches
Instead of focusing on a specific approach—be it setting hurdles and maintaining checklists, or using ethnographic tools, to name two—a strategic approach looks more at the origins of the ideas for innovation and new products and works to find the approach that best suits that origin. From this viewpoint, there are two obvious origins that define a spectrum of strategies: technology push, and market pull. In technology push, the idea is driven by the goal of taking some particular basic knowledge and/or technology, using it to create value for users, and bringing that to market.
Conversely, in market pull, the idea is driven by the goal of meeting some particular market need, finding the technology to meet it, and bringing that to market. Where technology push is (often, but not necessarily correctly) a very linear process, Market pull needs to be very iterative, as market needs do not necessarily always match company strategy and capabilities.
In between these extremes is a hybrid approach that aims to find opportunities for new products via market adjacencies. In this approach, the technology is borrowed from an existing market, and used to develop products in a similar, but distinct market.
Together these three broad categories then define the strategic approaches to innovation and new product opportunity discovery.
Technology Push. Technology push occurs when an engineer or scientist conceives of a possible customer need, invents a solution, and then attempts to commercialize that invention. This approach often earns, deservedly, a bad reputation but there are ways (and good reasons) to make this approach work.
The primary challenges here are that the development of the technology may not be tied to a credible market and user need; the development effort tends to focus on improving the performance of the invention; issues in adoption are not carefully considered; and only the most obvious business models are considered. The fundamental issue in this is a poor understanding of actual customer needs and decision making processes.
Technology push can work when it is targeted to the right application and if it is combined with an awareness of the issues and a plan to overcome them. When it does work, it can be one of the best (and only) ways to bring radically new technologies to market.
It should be noted that there are two existing circumstances where technology push intrinsically overcomes these challenges. These are lead user innovation (see Eric von Hippel of MIT’s Sloan School) where, because the innovator is genuinely representative of the target market, it is well known, and situations where the target market is very well known to the R&D personnel for other reasons. The archetypical example of the latter situation is drug development. When these two circumstances do not apply, it is harder to overcome the challenges, and that is the origin of the bad reputation for technology push.
However, but with the proper approach—one that specifically recognizes and addresses the challenges—technology push can work even without lead user innovation or well-known application needs.
There are 6 general steps to properly adapting and aiming a technology push effort: deconstruct the technology to identify all the jobs it can do—maybe the most valuable one is not the originally intended job; line these up with the jobs actually needed (doing market research, perhaps VOC work, in the process); assess the fit between the job capabilities and needs; asses the likely value creation; determine how to deliver that value; and, finally, think through business models and approaches to the market.
The approach outlined above takes a linear technology push approach and adds to it the iterative steps needed to insure that the technology is properly lined up against a compelling market need, where it can succeed, in a way that can be made repeatable, scalable, and profitable. Not all ideas will make it through this process, but in many cases this methodology can turn a bare technology into an innovation and successful product.
Market Pull. This approach often earns, deservedly, a good reputation but there areways to improve this approach.
The main challenges in this approach were highlighted in the discussion of process-focused approaches that fall within this area (see the prior post in this series).
- Care is needed to discover hidden, or unvoiced, needs that get beyond standard customer calls for ‘faster, better, cheaper’.
- The process needs to be rigorous, but flexible enough to keep customers engaged, and not lead them to run and hide from clip-board wielding survey takers.
- It needs to include an assessment of the value of a solution to an important need.
- It needs to include a way to objectively, and in a meaningfully quantitative way, prioritize the needs so that the most important need—for which relevant technology exists or can be found—is selected.
Conveniently, there is a methodology available for this in an ‘off the shelf’ package:New Product Blueprinting from Advanced Industrial Marketing.
There is too much to this process to go into it in any depth here, but this process does several important things. It uses:
- Initial market research to identify which part of an existing business’ market is most worth listening too for needs that might demand new products.
- Discovery interviews, carefully designed a next-generation VOC sessions, that uncover normally unvoiced market needs.
- Preference interviews that yield a quantitative assessment of the most important needs to pursue.
- Side-by-side testing of incumbent solutions to prioritized needs, understand competitive positioning and identify key performance metrics.
- An explicit exercise to determine if it is technically possible (with either in-house or external technology) to meet the identified needs, in a way that beats incumbent solutions.
Then, at this point, if and only if there is technical feasibility, the process moves to business case construction. Finally, if the business case is promising, the need compelling and well understood, and the technology available, then the project is recommended for development. This approach offers several key advantages to more conventional VOC approaches. Because it aims to identify needs that are only discovered by this sort of process, in intrinsically attractive markets, that are demonstrably accessible and profitable, it does a good job of positioning developers to deliver strong products well ahead of any competition.
It should be obvious that this is a type of stage and gate process, but if you compare the description above to that given previously for the Stage-Gate® process, it is clear that this methodology puts more effort into creating the correct idea in the first place.
Hybrid Approaches. These approaches (by definition) combine market pull with technology push. The results tend to be somewhat incremental, but are correspondingly likely to leverage capabilities that a business already possesses, thereby managing risk while still breaking out of an existing market. This approach is particularly suited to companies with very strong core technology, in mature markets growing no faster than GDP or, worse, declining.
Innovation Genesis LLC has a particularly strong approach using this strategy, known as the Opportunity Genesis framework.
Overall, this type of market adjacency framework typically encompasses:
- In-depth assessment of the business and technical capabilities of an existing enterprise (the landscape).
- Prioritization of that enterprise’s goals and needs for growth.
- Systematic market research to identify attractive candidate markets’ product opportunities (mining research).
- Screening and down-selection of the opportunities that best fit the enterprise’s capabilities and ambitions (convergence screening).
- Agreement on characteristics for assessing and scoring the down-selected candidate opportunities (opportunity arenas).
- In-depth market research, including thought leader and other open-ended interviewing, to score candidate opportunities against pre-agreed criteria (validation research)
- Final selection, with the project results forming the basis for an eventual business case (opportunity screening).
As with new product blueprinting, this is a form of stage and gate process. In this case, it is designed to generate validated concepts for development that are both (a) closely aligned with existing business capabilities and (b) incorporate valid market input. The primary difference between the more purely market pull approach in New Product Blueprinting and the hybrid approach of Opportunity Genesis is that while the latter deliberately takes the current business as a launching point, it also explicitly aims to somewhat break out existing markets for that business (e.g. to seek better growth prospects). Because it also necessarily involves taking an existing set of technical capabilities and applying them in a new market, it also has elements of Technology Push.
This series of posts has reviewed the origins of the current management focus on innovation, and reviewed many of the process-driven approaches that technologists will encounter. In this post, the idea has been nominated that there are threestrategies for new product discovery that should inform whatever approach is taken. With the nature of each strategy in mind it is then possible to find, or build, a methodology that is more complete than most of the bolt-on processes that have been popularized.
In summary these strategies include:
- Technology Push. Bringing new technologies to market in ways thatsuccessfully match ‘jobs’ a novel technology can do with those needed inattractive markets.
- Market Pull. Listening closely to the ‘Voice of the Customer’ (VOC) in ways that let a business discover unvoiced needs that are not widely known.
- Market Adjacency. A hybrid approach that leverages existing company competencies into new businesses within new, but ‘nearby’, markets.
Hopefully, this series of posts will help technologists whose technical duties and other responsibilities make it difficult for them to follow the management literature on innovation and new product discovery better appreciate key ideas on innovation and new product discovery.