Overcoming the Obstacles to Innovation

SATM Roundtable Meeting

July 12, 2005

Lawrence Gastwirt

Stevens Alliance for Technology Management

Stevens Institute of Technology

2005 SATM Theme: Turning Innovation into a Powerful Business Strategy

February: Exploration of Innovation Principles and Processes

April: Leadership for Innovation May Conference: Innovation as an Ongoing

Strategy Today: Overcoming the Obstacles to

Innovation September 20 Roundtable – topic to be

selected at today’s meeting

Innovation

The creation of value through the implementation of new ideas

Innovation embraces: 1. Idea generation and enrichment2. Idea collection and preliminary assessment3. Specific opportunity identification and prioritization4. Refinement and development of specific opportunities

• Embraces detailed analysis of business cases

5. Prototype testing and refinement6. Successful market introduction/implementation

Potential barriers to innovation can arise throughout the process, and can differ in impact by stage

Potential barriers can also differ in impact, depending on type of innovation activity

Lower-risk innovation activities:A. Improvement of internal operations, e.g.

More efficient operational processes More effective customer service Streamlined interfaces with suppliers and customers

B. Incremental extensions of current products & services

Higher-risk innovation activities:

C. Introduction of products new to the company

D. Introduction of radically new products and platforms

Today’s Agenda

An examination of the potential obstacles to innovation, proceeding from idea conception through to successful introduction, and considering the riskiness of the innovation

A discussion of approaches for overcoming the obstacles, pulling together learnings of earlier meetings and relevant studies

A discussion of SATM Sponsor experiences

1. Barriers to generation and enrichment of ideas

Unclear (or absent) innovation strategy Low or misguided leadership expectations Slow/arbitrary feedback to idea generators Lack of entrepreneurial climate Low “Inquisitive”, “Advocative”, and “Goal-

Directed” behavioral dimensions (SATM Innovation Model)

Overcoming barriers to generation and enrichment of ideas

Adopt and effectively communicate a clear innovation strategy* Establish innovation guidelines and goals: business areas,

quantitative screening criteria…. Establish resource guidelines

Instill innovation “norms”, e.g.: Innovation is lifeblood of business and everyone’s job Ideas can come from anywhere There are no “bad” ideas

Apply practices associated with highly innovative organizations by SATM Innovation Study

Particularly those associated with strategic drivers, leadership, and support systems

*Strongly correlated with innovation outcomes in Koen/IRI survey

SATM Innovation StudyOrganizational Practices: Strategic Drivers

Highly innovative organizations: Regard innovation as fundamental to growth Define a strategic framework to support new

ideas and ventures Link technology to business objectives Focus on defined technology areas Emphasize external customer needs

throughout the innovation cycle

SATM Innovation Study Organizational Practices: Leadership

Highly innovative organizations: Build innovation strategies into organizational

plans and strategies Provide a strong link between technology

and business objectives Establish measurable performance goals for

innovation Solicit and support new ideas from all Demonstrate a commitment to long-term

technologies Coach and develop innovation champions

and sponsors

SATM Innovation Study Organizational Practices: Support Systems for Idea Generation

Highly innovative organizations: Offer various forums to exchange ideas

among organizations Provide special funding for new ideas Conduct formal idea generation sessions

with customers and lead users Maintain centralized database of ideas to

support on-going innovation activities Commit resources to follow up on new ideas Establish formal “front-end” processes for

selecting new ideas for development

Idea Mining (from Steve Wiet, 2005 SATM Conference)

Jobs-Based Consumer Research Trend Analysis & Market Segmentation Existing Ideas Expert Panels Emerging Technologies Technology Brokering Internal Brainstorming Fallen Angels

2. Barriers to collection and preliminary assessment of ideas

Unclear idea collection process Where do new ideas “go”? Who assesses? What are assessment criteria? What is nature of feedback to originators?

Insufficient knowledge of markets and trends “Not invented here” syndrome Low “Collaborative” behavioral dimension

Overcoming barriers to collection and preliminary assessment of ideas

Install or renovate formal idea collection process – and use it!

Maintain market knowledge function Apply practices to enhance “Collaborative”

behavioral dimension

3. Barriers to identification and prioritization of specific opportunities

Fragmented/Inadequate resources Especially for large opportunities

Inability to weed out less-promising opportunities

Insufficient knowledge of markets and trends

Overcoming barriers to identification and prioritization of specific opportunities

Commit resources* Especially aimed at enhancing market

knowledge and developing preliminary business cases Applies especially to lower risk activities A,B,C

Develop specific screening criteria and apply prioritization process to kill poorer projects Applies especially to lower risk activities A,B,C

*Strongly correlated with innovation outcomes in Koen/IRI survey

4. Barriers to refinement and development of specific opportunities

Insufficient dedicated resources Inability to weed out less-promising

opportunities Insufficient knowledge of markets and trends

Overcoming barriers to refinement and development of specific opportunities

Commit dedicated resources “Opportunity Attack Teams” (Koen) to rapidly

develop actionable plans for large opportunities Preponderance of resources full time*

Kill poorer projects earlier Conduct comprehensive market and

technology analyses Define more detailed business cases,

reflecting risk appropriately*Strongly correlated with innovation outcomes in work by Koen and others

Risk Management (from Peter Koen, 2005 SATM Conference)

Portfolio methodologies based on multiple factors of: Technical Success Probability Commercial Success Probability Reward Strategic Fit Strategic Leverage NOT JUST FINANCIAL JUSTIFICATION

Technology Stage Gate for High Risk Projects

The prime imperative for high risk projects in the Front End is

NOT picking the winners, but killing the losers early.

5. Barriers to prototype testing and refinement

Over-tweaking before customer testing Especially for radically new products and

platforms

Selecting the wrong lead customers

Overcoming barriers to prototype testing and refinement

Quick trials, refinements, and re-iterations (“Lickety-split” improvisation, per Lynn

and Reilly) Research to understand potential markets

and identify lead customers

6. Barriers to successful market introduction/implementation

Poor understanding of customers and markets

Poor understanding of the competition Poor introduction planning

Overcoming barriers to successful market introduction/implementation

Carry out quality processes to perform the up-front activities

Maintain competitive intelligence function Create deeper consumer knowledge (Wiet)

Improved collaboration with customers, lead users

Overcoming barriers to “Blockbuster” innovations (after Lynn and Reilly)

Intimate involvement by senior management Clear, stable, specific goals (“Project pillars”) “Lickety-split” improvisation Effective information exchange Effective collaboration focusing on goals

SATM Innovation Study: Other Organizational Practices that Overcome Barriers to Innovation

In addition to those practices identified earlier under strategic drivers, leadership, and support systems for idea generation, the SATM Innovation Model identifies a number of other practices of highly innovative companies, in the areas of:

employee selection employee development reward & recognition systems multifunctional structures

SATM Innovation Study Organizational Practices: Employee Selection

Highly innovative organizations recruit:

scientists & engineers with extensive applied experience

graduates from top-tier universities people regarded as “leaders in the field”

SATM Innovation Study Organizational Practices: Employee Development

Highly innovative organizations: Provide training on key roles required for

successful innovation, e.g. project management, champions, cross-functional teaming, etc.

Train managers in managing the innovation process

Base career development on innovation-related performance

Encourage involvement in outside professional associations

SATM Innovation Study Organizational Practices: Rewards & Recognition

Highly innovative organizations: Encourage working on one’s ideas Link compensation to innovation

performance Link compensation to team-related

performance Have formal recognition programs for both

individual and team innovation Incorporate innovation-related objectives into

employee appraisal programs

SATM Innovation Study Organizational Practices: Multifunctional Structures

Innovative organizations: Do not use multi-functional teams more than low

innovators But do:

Give teams the freedom to decide how to best accomplish the job

Encourage substantial interaction between R&D and other key functions

Involve external customers early in the innovation process

Have formal systems to share technologies across organizations

Encourage teams to use formal product development processes

Back-up Information

Elements of an Innovation Strategy(from Tony Le Storti, 2005 SATM Conference)

Market/Competitive Intelligence Desired Market Impact Competencies and Capabilities Invention/Discovery Portfolio

SATM Innovation ModelStevens Alliance for Technology Management

History

CULTURE

BEHAVIOR

INNOVATION

STRATEGYORGANIZATIONAL

PRACTICES

Individuals in innovative organizations manifest a number of critical behaviors

Organizations foster cultures that propagate these behaviors

History, organizational practices, and strategy create and modify culture

Management must apply as a system ©

SATM Innovation Model

Identifies the critical behaviors manifested by employees of highly innovative companies

Identifies the managerial and organizational practices that encourage these innovation-producing behaviors

Individual Behaviors—Inquisitive

Individuals in innovative organizations: search purposefully for useful new ideas search for and incorporate diverse points of

view seek information from expert outside

sources experiment with new ways of working search for new approaches to solve

problems probe persistently for additional information

Individual Behaviors—Advocative

Individuals in innovative organizations: encourage new ideas from others pursue ideas, despite risks champion new ideas use “failures” to develop new ideas seek suggestions of others to generate ideas challenge the status quo in pursuit of new

ideas

Individual Behaviors—Goal-Directed

Individuals in innovative organizations: work toward specific technological goals

and objectives guide their work with both technological

and business objectives in mind create action plans and timetables to

ensure goal attainment monitor progress to ensure achievement

of technology and business goals

Individual Behaviors—Collaborative

Individuals in innovative organizations: facilitate and encourage informal

relationships across organizations encourage constructive conflict downplay status differences collaborate with associates outside their

organization and outside the company exchange information openly give and receive constructive criticism