Monday, July 2, 2012

Innovation Execution


Innovation is (a) creating insightful ideas, (b) creating value out of it in new ways and (c) taking it to the market successfully. Creativity needs freedom while the process of value creation and taking it to the Market needs significant discipline of execution. The challenge is to balance these two apparently contradictory requirements - freedom and discipline. 

Older models based on the concept that the left hemisphere of the human brain handles organization and the right hemispheres handles creativity do not teach us (a) How to achieve excellence in both hemispheres simultaneously ? or (b) How to strike a balance between the two ? or (c) How to trigger either one of the hemispheres on demand ? 

I do not doubt the relative importance of either, rather I am interested in understanding how the left and right communicate with each other, how they can both work in synergy. If 
Innovation = Creativity x Execution -------------------------------- (1)
then how to maximize both ?Organizations and Individuals need to be good at both, slack in either one of these can pull the other down. 

 
Making Ideas Happen


Scott Belsky (Founder of Behance and Author of Making Ideas Happen) addresses this conflict and proposes the Action Method (begins with segregating various items into Actionable, Backburner and Reference). I would like to draw attention to two simple formulae that he uses:


Making Ideas Happen = (The Idea) + Organization & Execution + Forces of Community + Leadership Capability................... (2)


Impact = Creativity x Organization.......................... (3)




Managing Execution of Ideas


I have been following Phil McKinney's Killer Innovation Blog for the last  four years and I like his insights on effective execution of innovative ideas (also read his recent book - Beyond the Obvious). He proposes a Stage-Gate approach:



Key components of an innovation execution approach

  • Gated funding model
  • Gated milestone management

Gated Funding Model

  • Limit funding until key deliverables are met
  • Recognize that not all ideas will result in products.  Manage the budget to ensure there are ample funds to see the best ideas through the innovation pipeline

Gated Milestone Management

  • Setup gates that answer key questions/challenges in translating the idea to a product/service
  • I use four gates .. you should setup gates that make sense to your team/project/organization
      • Market Valuation (e.g. how many customers have the problem being solved?)
      • Customer Validation (e.g. Do customers agree that the solution address the problem?  Will they pay for the solution?  Does the business case justify the investment?)
      • Limited Trial/Test Market (e.g. Will the customer actually purchase the solution?  Does the business case/value chain hold up?)
      • Launch!
      • Read further at : http://philmckinney.com/archives/2008/04/podcast-execution-translating-ideas-to-innovation.html


Need for a flexible Stage-Gate Framework


I tried using a Stage-Gate process for incubating new ideas for emerging markets. I devoured all of  Cooper's work (http://www.stage-gate.com/knowledge.php) and used the conventional Stage-Gate Model.

I had very limited success in my early days as the framework was very rigid and asked very tough questions that killed promising ideas at an early stage. I focused on how to bring flexibility to the SG Framework so that the potential ideas that don't have the answers yet still survive the grilling at the Gates.  

My objective is to incubated new ideas till we obtain a convincing Proof of Concept (POC). The intention was to transit the ideas to the Business champions after POC. The ideas exit Gate 1 if it can satisfactorily ask the question - what is the specific unmet market need / business growth opportunity that the Idea addresses. The objective is to ensure (qualitatively) that the Idea is aligned to a need or an opportunity. Phil suggests asking questions like:

  • Market Valuation (e.g. how many customers have the problem being solved?)
  • Customer Validation (e.g. Do customers agree that the solution address the problem?  Will they pay for the solution?  Does the business case justify the investment?)
  • Limited Trial/Test Market (e.g. Will the customer actually purchase the solution?  Does the business case/value chain hold up?)

The Gate 2 exit criterion is - are we able to seriously quantify the size of the opportunity ? Here we have to quantify and bring precise numbers to the discussion. Phil's recommendation here is:

Make the criteria as objective as possible (e.g. Must have a total addressable market of $x with a sustainable margin of y%, etc.)

The Gate 3 exit criterion - is the POC convincing enough for the next quantum of investment ? What are the key assumptions that have been validated by the POC exercise. Does the Idea pass the IDEO Test - we ask the three basic questions:

  • Will the Customer desire for the Idea 
  • Is the Idea technically feasible, 
  • Is the implementation of Idea economically viable ?

and the two additional questions:

  • Will the Idea lead to a clear differentiation ?
  • Is the IP around the Idea protectable ?

Key Takeaway

Effective execution of Idea does not mean creating a water-tight stage-gate framework that ruthlessly kills the weak ideas. The  Idea  is not to filter out the less promising ideas but grow their potential by asking the right leading questions at an early stage,




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