How healthy is your company’s innovation pipeline? Is it already operating at peak performance, helping you pump out a torrent of new growth opportunities across product, market, and industry spaces? Or would it be fairer to say that there is still room for improvement?
If so, allow me to suggest five design rules for enlarging and enhancing your innovation pipeline. The first three of these rules are about enlarging the pipeline—building a high-yield process that increases the sheer volume of ideas from across the organization and beyond. The last two design rules are about enhancing the pipeline by improving the quality of those ideas, rather than just the quantity.
So let me start with my first design rule, which is to involve many minds across your own organization – and beyond it – in your search for new growth opportunities. What companies seldom seem to recognize is that one of the best ways to get more ideas into the innovation pipeline is to ask for them. An organization that understands this principle is Best Buy, North America’s leading consumer electronics retailer. The company has a systematic and highly disciplined program of bottom-up innovation called the Customer Centric Cycle that is open to every employee.
A great way to get hundreds or even thousands of employees involved in the process of sharing insights and thinking up new ideas is to use the power of the Net. IBM, for example, often uses the Internet for online innovation “jamming” sessions. On certain occasions, the company invites tens of thousands of IBM employees from around the world to take part in a global, open-source ideation exercise.
Another thing you can do is to recognize the enormous potential for innovation that exists outside your organization – across your extended network of customers, suppliers, and partners. As many other companies have done over last decade or so, you can put mechanisms in place that allow you to employ some form of “open innovation.” Simply ask all your constituencies – customers, suppliers, dealers, strategic partners, research institutes, contract labs, third party developers, consultants, universities, independent entrepreneurs – for their ideas, and watch your innovation yield go through the roof.
Google is a company that knows how to engage zealous volunteers from outside the organization. In its annual Code Jam competition, Google gives developers from around the world the chance to work on its toughest software problems. Cash prizes are modest – the real incentive for contestants is the chance to see their code incorporated into Google’s ubiquitous search engine.
My second design rule is this: sow enough seeds. Recognize that innovation is largely a numbers game – it takes a lot of acorns to grow a single oak tree. Typically, it requires something like a thousand ideas to find a hundred with enough commercial promise to merit a small-scale experiment. From those one hundred experiments, only ten projects will be judged worthy of pursuing seriously with a substantial financial commitment, and of those, only one or two will turn out to be unqualified successes. In other words, your innovation pipeline has to have a large number of ideas coming in at the front end in order to yield an adequate number of successes at the back end.
Google’s founders – Larry Page and Sergey Brin – seem to intuitively grasp this arithmetic of innovation. They know that to find those few ideas that may have the transformational power to impact the destiny of their company, their people must first dream up thousands. Their goal is to constantly create new “Googlettes” – novel business ideas, services, and software applications that may start small but that one day may grow into significant sources of revenue. Staff are permitted to spend a percentage of their time on whatever interests them. This gives them the freedom to create a lot of new ideas and then to experiment with those ideas to see whether they go somewhere – which is what led to many of the Google services we now use every day.
There is simply no way around it: your chance of finding the next big opportunity is largely a function of how many seeds you sow and how many new things you try.
My third design rule is to widen the front end of your innovation pipeline by opening it to a broad range of innovation opportunities – not just new products, new technologies, and “cool” design. Again, if you want to be confident of producing meaningful earnings at the back end of the innovation pipeline, you need to ensure that your company doesn’t constrain the flow of new ideas entering at the front end.
Some companies unwittingly do this by defining innovation too narrowly, limiting their innovation efforts to the search for nifty new product ideas or disruptive new technologies. While there is nothing wrong with these types of innovation per se – indeed, they can be highly lucrative – it is important to understand that they are not the only types of innovation that can help your company drive growth and strategic renewal.
In order to steer clear of this “innovation myopia,” try to widen the front end of your innovation pipeline so that it becomes open to a whole range of different innovation opportunities – from product and technology innovation to service innovation, process innovation, marketing strategy innovation, customer experience innovation, cost innovation, management innovation, business model innovation, all the way through to industry architecture innovation.
Simply put, the broader and less constrained you make your search for innovation opportunities, the more chance you will have of discovering potential avenues for inventing new value.
Applying these first three design rules – (1) involving many minds, (2) sowing enough seeds and (3) widening the front end – can take your organization a long way toward creating an innovation-friendly culture, which means that your chances of spawning the kind of ideas that generate dramatic new wealth are going to be much, much higher.
My final two design rules are about improving the quality of ideas your organization produces, as opposed to merely the quantity.
With that goal in mind, the fourth rule is to increase the combinations. Radical business innovations are almost always the product of “creative collision” – that is, they are based on a combination of insights from different categories, such as unexamined industry orthodoxies, unexploited trends, underutilized resources, and unmet customer needs. So try to look for ideas that have disruptive potential by “crashing” various types of insights against each other to see whether the combination opens up new opportunities for innovation.
Whirlpool, the appliance giant, offers a good example. The company crashed an emerging trend (more and more single-person households), with an industry orthodoxy (dishwashers are usually big family-sized boxes), with an unmet customer need (household appliances designed for single people), and saw the opportunity for a mini, high-speed dishwasher that could be integrated on one side of a double-tub sink.
My fifth design rule is to ideate around specific themes. One of the concerns that managers often have about the ideation process is that if they open it up and go too wide, the company will end up “boiling the ocean,” and the ideas that are generated will be all over the map. Their fear is that people will waste time, energy, and resources by going off in all kinds of crazy directions, potentially taking the company into a lot of areas it knows nothing about. The solution I would offer you is to create “aiming points” for innovation by focusing your ideation efforts on clearly defined corporate challenges, customer problems, or industry issues.
Examples would be one financial service firm’s objective to “own retirement” or McDonald’s strategic goals to “move into coffee” and “recapture breakfast.” In some cases, the aiming point might be a broad product platform, such as P&G’s “oral care.” In other cases, it might be a customer-focused issue, such as an electronic retailer’s push to make its stores more “female friendly.” One leading company generates a list every year, within each business unit, of what it sees as the ten most important customer problems the organization should be trying to solve.
As a rule of thumb, your aiming points should be broad enough to invite contributions from across the firm – and beyond – yet specific enough to channel your organization’s innovation efforts and investments so that you are not going “full speed ahead in all directions”.
Paying attention to these last two rules – increasing the combinations and ideating around specific themes – will help you produce bold, unconventional ideas that are of far higher quality and strategic value to your company than the ones you usually get from tired, more traditional ideation methods – brainstorming, creative thinking games, online suggestion boxes, and so forth. That’s because the ideas will be solidly grounded in real industry orthodoxies, real trends, real resources in your organization (or in potential partner companies) that could be leveraged in new ways, and real customer needs that have so far been overlooked or ignored. And they will be fully consistent with your corporate strategy and competitive situation, rather than simply snatched out of the air.
By applying all five design rules for enlarging and enhancing your innovation pipeline, you can significantly improve your company’s capacity for generating a continual flow of wealth-creating new products, services, strategies, and businesses for the future.
Rowan Gibson is widely recognized as one of the world’s leading experts on enterprise innovation. He is co-author of the bestseller “Innovation to the Core” and a much in-demand public speaker around the globe. On Twitter he is @RowanGibson.