Research of current practices among today’s manufacturing companies has identified a number of critical points where innovation processes typically break down. The consequences of those failures are amplified for companies faced with the complexities of managing innovation resources and outcomes on a global scale.
Principal causes of shortfall in innovation performance include:
- Poor linkage between idea generation and product development
Generating product ideas without creating a way for the best of them to pass reliably into the developmental pipeline is a waste of time, resources, and potentially, important opportunities. Conversely, creating an efficient product development process with no provision for stimulating and developing ideas to seamlessly feed it is futile. Increasingly, top innovators are discovering that by integrating their ideation and product development processes they can eliminate “dead zones” where promising ideas are otherwise lost, thereby bolstering business-generating product development throughput.
- Ineffective, ‘siloed’ portfolio management
Today it is normal for companies to review product-development portfolios. However, it is unusual for companies to conduct portfolio analyses that integrate all of the critical data required to make hard decisions at the portfolio level. To do requires complete resource planning data, plus access to both portfolio of active initiatives and candidate future initiatives. As a result, portfolio reviews typically consist of simple assessments of risk and status across collections of projects. Such discussions are useful from a risk management standpoint but they are a missed opportunity—too often, low-value projects are not eliminated from the portfolio, starving higher-value initiatives from the resources they require to move to market with speed.
- Weak alignment between innovation strategy and R&D operational activity
Studies show that less than 85% of corporate innovation initiatives are completed. A key cause: a disconnect between the organization’s innovation strategies and day-to-day R&D activity. While operational performance numbers are given monthly visibility, strategic initiatives often flounder in obscurity. The most successful innovators now combine monthly reviews of operational results with equally thorough examination of progress on strategic initiatives. This integrated approach will soon be the norm.
So what does integrated innovation look like? It requires organizations to re-think their innovation lifecycle. Instead of the traditional focus on stage and gate process, it requires a broader view that also encompasses innovation planning, idea/concept development, and portfolio optimization.
In each part of this cycle, there are different questions that must be answered effectively to ensure maximum innovation performance. For a firm to operate on all cylinders across this lifecycle it requires integrated processes to ensure:
- Full consideration of all potential strategies required to deliver on its growth goals, and visibility of where there are gaps between those strategies and its current portfolio of investments;
- The front-end of innovation is conducted in such a way that it brings together all of the people that can contribute to the best possible idea or concept. Increasingly this requires global collaboration, and breaks down organizational barriers so people can develop ideas regardless of their organizational or geographical location.
- Gated processes are closely integrated to the front-end of innovation, and conducted in such a manner to ensure that initiatives receive the right level of scrutiny as required by their level of risk or complexity.
- Portfolio review processes include all of the data required to support real decision-making. This requires accurate resource planning data that helps business leaders to see where is their true “waterline” to determine which initiatives will receive resources – and which ones won’t.