Category: leadership

Innovation Metrics Revisited

Since we last spoke about metrics in 2009, metrics have remained the critical factor in measuring innovation success. Metrics are used as key performance indicators–how much bang are you getting for your buck? Overall, everyone should assess the percent of sales revenue generated from new products commercialized within the last five years. Other metrics that measure milestone in the innovation process include number of ideas generated, number of ideation sessions, number of patents filed and issued, benckmarking innovation costs and efficiency versus competitors, and product costs versus product margins.

Companies need a structured, repeatable, and sustainable innovation process that is flexible and adaptable to the needs of the market audience.

Properties of Innovation Leaders

Somebody within the organization needs to initiate the innovation process. What are the characteristics of innovation leaders? They are often different, operate differently, and go about things differently than most others in the organization. Typically they are adaptive and serves as a catalysts to change others’ perspectives in the organization. Such innovation leaders tend to have people skills (“emotional IQ”), communication skills, and are masters at building consensus among stakeholders within the organization.

Developing a Network for Your Innovation Environment

An innovation network exists inside and outside your organization. Inside, certain individuals will characteristically have the traits necessary to form strong innovation teams. Outside your organization, the function is called open innovation, sourcing innvotive ideas, intellectual property, products, services, and processess to augment and leverage your internal resources.

To outsource your innovation efforts, your organization could seek resources in areas that complement your product or service portfolios. Opening a web portal for vendors to solicit your business whereby you decide your needs.

Mapping your innovation environment is the first step. Determine the products and/or services you need that complement those in your organization. As part of your map, look at the scope of the work in which your organization has been involved and develop a tragectory of where your organization is going. Then populate the map with potential vendors and partners your organization needs. Rank the partners and vendors based on your priorities. Once the innovation environmental map is developed and several in-sourcing and outsourcing tasks have been accomplished, evaluate their value in terms of performance, mutual benefit, complementary and respective core competencies, and respective needs and expectations.

Bridging the Gap Between Marketing and R&D

Ever wonder why the R&D function has trouble “sync-ing” with the Marketing department. Marketing should drive most innovation because marketing has the pulse of the consumer and a sense of consumer trends, and R&D can introduce new technologies that can justify some new product development. Just based on differences in timing alone, Marketing historically can develop product concepts faster than R&D can formulate them for commercialization. It isn’t surprising Marketing and R&D often act as separate silos.

In the bigger picture, Marketing and R&D each have responsibilities towards other parts of the whole corporate organization. For example, Marketing, with feedback from the sales force, has to inform the manufacturing function which products to make and R&D needs to formulate the products in a manner that enables the manufacturing function to make the products efficiently. So common responsibilities to other third-parties within the organization should provide them some common ground.

Sharing essential information between R&D and Marketing and understanding respective needs goes far to “de-silo” Marketing and R&D. For example, R&D will understand pricing and profitability,value identification and maximization, and differentiation and positioning, and Marketing will understand regulatory constraints, product quality, and processing and stability issues. This common understanding of separate needs will help provide syncrony between these functions.

Effective coordination is putatively viewed as a key success factor in competitiveness. For successful companies, new product development represents incremental sales of at least 10% or more depending on the product sector.

How come innovation make CEOs uncomfortable

Essentially, it’s fear. Fear of the uncertainty and unknown. What is the pay back, the ROI? Their bosses and shareholders need a defined path to future profits and sales.

Innovation is not an exact science, nor will it ever be. We can assemble the information about the consumer needs, develop and maintain the skill sets required to implement a development program, and manage the efforts according to Gantt charts toward product launch; however, it is the soft stuff, the art, the loss of control when instilling responsibility to others in the organization that truly enables innovation.

Jeffrey Phillips blogs on http://innovateonpurpose.com (January 4, 2011) that the Brownian motion of innovation that makes executive uncomfortable because it is easy to manage and control, requires a belief system, and risk taking that organizations are often willing to support or reward.

Facets of Innovation

Facets of Innovation

Leading to the Marketplace

Success looks like having an integrated, collaborative, accountable innovation process that leads to a diversified and full pipeline, as repeatable, sustainable, and with speed to concept.

There is a need to establish an approach and process to innovation. Success can also be attained with the presence of dedicated and focused resources including the need for a cross-functional core team. They provide oversight that culls all elements and identify areas and opportunities: marketing, R&D, packaging of consumer insights, claims landscapes, emerging science, previous conducted research/evidence/ideas, discovery/bioactives, health professional insights, global landscape, external marketplace/health trends.

Global Steps in Innovation

Many folks liken the process of innovation to a baseball diamond:

First base – Vision

Second base – Strategy

Third base – Ranking priorities

Home – Alignment of resources: people, places, services.

We need the relevant people who share a common understanding of the vision and the strategy, accept the validity of that direction, and have a passionate commitment to make it work. We also need senior executive leadership support, a comprehensive, adaptable communication plan, a contract for buy-in to goals & direction, a creative focus on the few highest priority initiatives, as well as a governance process for investment (priorities), aligned pay-for-performance metrics, group leadership development, values-based goals, milestones & metrics.

Innovation environments: Conflicts affect performance

Conflict is inevitable in environments in which more than one opinion is need to be successful. Managing conflict is a major component for optimizing innovation environments. Individuals attracted to engineering and the sciences are often not those who know how to cope easily with conflict and often seek to avoid confrontation. Moreover, when conflict occurs individual performance and that of the team are diminished. Two-thirds of perceived performance issues are actually conflict related rather than to actual performance or skills competencies. In the book Crucial Conversations, strategies and processes are presented to identify and resolve conflicts.  Rapid conflict resolution greatly speeds innovation.

Several other observations are notable regarding conflict resolution, performance and the nature of innovation: those that score highly on active constructive behaviors and perceptions of leadership are promotable, potential creativity among team members is ubiquitous, a moment, an attitude, or a belief. The most pertinent point: there is more than one right answer. Sometimes we stop at the first right answer and we need to break our pattern of instant focus by letting the idea percolate. One way: try reframing the idea, change the lens, and triangulate with market needs.

R&D Scenario Planning will Enable Adaptability

Scenario planning is not something done only in the executive suite or in the marketing department. R&D needs to conduct their own scenario planning based on executive and marketing counterparts. Consider resource constraints, adequate supply of scientists in the specialty disciplines that augment your core competencies, additional parameters that drive scenarios, global implications, and evolving regulatory environments when developing your scenarios. Using these considerations often facilitate developing your near- and long-term scenarios and make your R&D more adaptable to changes.

The Pace and Cadence of Innovation

The Pace and Cadence of Innovation

Surges can be anticipated

Surges can be anticipated

Let’s face it, innovation is not like a finely-tuned engine operating at optimum capacity all of the time. How do you anticipate the ebbs and flows that invariably crop up with the pace of innovation, let alone the workload (which is often independent of innovation)? How do handle the inevitable slow periods of innovation? How do you spark the team out of an innovation slump? What metrics beyond gut feel do you use to measure the current pace of innovation?

To start, let your team see the big picture, to remind and spark their intuitive skills and abilities. Seeing the big picture allows your team to make insights and set directions whereas everyday working events tend to keep their attention.