Product innovation has been described as the way out of today’s difficult business environment. However, the rate of success of development projects, in particular white space and disruptive innovation projects, remains low.
This low success rate can be attributed in part to the erroneous application of methods designed for incremental innovation to projects with high levels of uncertainty. Common approaches to the management of innovation projects, like Waterfall or Stage-Gate, follow a linear approach that does not provide the flexibility needed for disruptive innovation to be successful.
It’s time for an innovation in innovation itself.
The key to success in disruptive innovation is the use of a strategy that reconciles opposite needs: flexibility and control. A framework of controlled iteration can provide the right level of flexibility while at the same time give management the information required for proper allocation of resources. It’s time for an innovation in innovation itself.
The need for effective approaches to the management of innovation projects led to the development of the Spiral System for disruptive innovation management. This method applies an iterative, agile approach to market and business development. Development projects are classified based on degree of uncertainty and managed along project tracks appropriate to the level of uncertainty. Finally, appropriate innovation tool sets are employed based on the best fit between information available and decision making needs.
The Spiral System offers a balanced, agile approach to innovation management. It preserves the metrics needed for measurement of project progress, but also provides the flexibility needed for high uncertainty innovation projects to succeed.
Recent examples such as Blockbuster, Borders, Kodak, Nokia and Blackberry show that innovation has become a matter of life and death for companies today. But innovation may be costly.
Dr. William Strauss of FutureMetrics has documented that the ratio of R&D needed per unit of GDP output has gone from 1:1 in the early 90’s to ~3:1 in 2009. This increase can be attributed to the fact that the rate of success of innovation projects, particularly radical or new market innovation projects rarely exceeds 20% and may be as low as 2.5%.
Referring to classical innovation management processes such as Stage Gate, Clayton Christensen, author of the book “The Innovator’s Dilemma”, has stated:
“The Stage-Gate system assumes that the proposed strategy is the right strategy; the problem is that except in the case of incremental innovations, the right strategy cannot be completely known in advance. The Stage-Gate system is not suited to the task of assessing innovations whose purpose is to build new growth businesses, but most companies continue to follow it simply because they see no alternative.”
Christensen’s observation reflects the need for new management approaches that increase the probability of success, but at the same time preserve the metrics required for measurement of progress and resource allocation. The challenge is then to reconcile a formal management framework with the flexibility that is needed for innovation to thrive.
To develop disruptive innovations, one round of voice of the customer is not enough to be the cornerstone of a project. This is because customers cannot say that they want what they do not know, and can only provide feedback on incremental modifications on what they do know. As the American industrialist Henry Ford famously said, “If I had asked people what they wanted, they would have said faster horses.”
The solution to this challenge consists of 3 parts:
The practical framework that incorporates these solutions is show in Figure 1 below
Time is the X axis, resources is the Y axis. Center = 0 for both, thus they both grow from the center. This is visual way to indicate that time and resources allocated should be low for level 1 projects and grow as more information is obtained and uncertainty is reduced.
The use of this framework offers the following advantages compared to traditional linear innovation management systems:
This framework for the management of innovation projects provides the flexibility needed for successful innovation projects in any industry and the metrics needed for proper measurement of progress and resource allocation. By utilizing this approach, managers insure that radical and disruptive innovation projects have a chance to prove their benefits and create the innovative products and services that companies need to remain competitive.
This method has been used to successfully introduce a disruptive innovation to the construction additives market in Europe. Compared to conventional innovation management approaches, this framework led to the switch from an incremental innovation goal to a disruptive innovation technology with an identified profit potential of 25 MM$/yr.
By Jose A. Briones
A short video that summarizes the Beyond Stage Gate framework for innovation
“Beyond Stage Gate” Framework Presentation
Stage-Gate® is a registered trademark from Stage-Gate International’s Product Development Institute Inc.
Dr. Jose A. Briones is currently the Director of Operations of SpyroTek Performance Solutions, a supplier of innovation management and support services. He holds several managerial and board and has 20 years of commercial and technical experience in the manufacturing and technology industries, holding positions in the areas of marketing, innovation, sales, engineering and R&D with Fortune 300 companies such as Celanese, Air Products and Reichhold.
Dr. Briones’ expertise and experience includes: Innovation Management, Product Development and Ideation, Business Model Assessments, Product Portfolio Value Analysis, Probabilistic Forecasting Decision Analysis and use of Social Media to achieve Social Change.