Whilst invention is concerned with the creation of good ideas, innovation involves both the creation of ideas and the transformation of these into economically viable, market focused products and services. Rapid Innovation is the art of delivering new products and services in less time, at less cost and with fewer ‘post implementation’ problems.
Rapid Innovation combines three key concepts;
· Getting to grips with what is going on in the marketplace, what customers really want (and not just what you think they need) and understanding the competition.
· The adoption of ‘Concurrent Design’ concepts to eliminate barriers between teams and avoid sequential development.
· The use Rapid Prototyping tools that can quickly create prototypes of products, or simulate new services to help iron out problems and issues.
Innovation is about doing things differently and is therefore fundamentally different to improvement which is concerned with doing the same things ‘better’. This paper explores how organisations can successfully and rapidly introduce viable new products and services.
Top Five Innovation Anchors
The ability of an organisation to successfully innovate can have many benefits. These include cost efficiencies, market leadership, brand development and many more. However, there are anchors that slow down the ability of an organisation to innovate effectively. These anchors can result in lost market share, excessive development costs, unexpected operational problems or damage to the organisation’s brand. The five most important innovation anchors are described below.
Innovation Anchor 1: Failing to understand the market
It is quite easy to generate one hundred ideas before breakfast but……
· Only one in one hundred ideas will result in a product or service that is viable.
· Only one in one hundred of the viable products and services developed will be market leaders.
A process is therefore needed to sort out those ideas that are viable from those that aren’t. Viable products and services are those that meet the stated or unstated needs of customers and therefore are capable of generating an economic return. The sorting process creates an ideas funnel where only viable ideas emerge.
The key to successfully identifying viable ideas is to understand the market place in which you operate. This means meeting with potential customers and discussing what they want and understanding what services or products you will be competing with. Unless you do this you run the risk of wasting a lot of time and a large amount of money.
Innovation Anchor 2: Failing to work collaboratively
One of the biggest problems that occur in the development process is that activities occur sequentially rather than concurrently. This creates a virtual waterfall where activities are ‘thrown over the wall’ from one team to the next in a cascade of activity. The fact that ‘downstream’ considerations are not being considered at each stage results in lots of rework. Teams have to return activities to an earlier stage to correct errors, delaying progress and significantly increasing cost.
Collaborative development, involving multi-disciplinary teams, is a key to the concept of Concurrent Design. Teams involving expertise from across the development pathway considering all aspects of the lifecycle of the product or service being worked on can more than halve the lead-time from concept to implementation and reduce operating problems by 80% or more.
Innovation Anchor 3: Failing to empower teams
Having established a development team there is a need to empower the teams to make decisions. Complex and poorly defined decision making processes contribute directly to increased lead-times. Empowering teams means defining how the boundaries they can work within and then allowing them to get on with it.
Innovation Anchor 4: Failing to provide effective sponsorship
Development teams will encounter a range of problems and issues. The budget allocated to the team will be under threat and in complex organisations the team will have to ‘shout’ for attention and management time. The purpose of sponsorship is to keep the profile of development teams high up the management agenda and to minimise the management burden placed on the teams themselves so that they remain focused on getting to market rather than completing reports.
Innovation Anchor 5: Failing to utilise technology effectively
Technology is an important aspect of development, whether you are developing a new type of product or a service. Of course, there is a need for email communications but the fifth innovation anchor is more concerned with the effective utilisation of technology to reduce time lost and to share knowledge, such as intranets, webinars and video conferencing. It is also concerned with the use of technology required to shorten the overall lead-time such as the use of simulation tools, rapid prototyping and pilot activities to finalise the design of the end product or service.
By failing to address all five innovation anchors your organisation is at risk of increasing lead-times for development by 300%, more than doubling the overall development costs and increasing the number of post-implementation changes that occur by more than five times that of a Rapid Innovation project that has addressed all five issues. The issue of post-implementation changes has a direct impact on the overall cost through the shadow of design that we will cover next.
The Shadow of Design
The Shadow of Design is a concept that explores the increasing cost of changes that occur in the development cycle as time progresses. It can be best understood through the following example;
· A change during the concept/specification stage may cost on £1 to make.
· To make the same change at the point that the team are actively engaged in designing the item or service, it will increase the cost to £10.
· If the change does not occur until prototyping is underway then the overall cost increases to £100.
· If the changes occurs even later during the pre-implementation and testing phase the cost increases to £1,000.
· Finally, if the change is not implemented until after the service or product is ‘released’ then the costs increases again to £10,000.
Poorly organised development processes that do not adopt the principles of Rapid Innovation will incur five times more changes in pre and post implementation stages than Rapid Innovation projects.
Different Types of Innovation
Innovation is the generation and exploitation of ideas for the benefits of customers and the organisation alike. However, we should recognise that there are different types of innovation that organisations engage in. We should also recognise that there is a difference between an innovation that is ‘new to our world’ from ones that are ‘new to our organisation’. For example, you might develop a new service that your organisation has never done before but which is common around the world.
There are two groups of innovative activities.
1. Continuity Innovation- those that do not fundamentally change the market. These are further subdivided into Evolutionary and Revolutionary Innovations
2. Disruptive Innovation- these are innovations that create a new market or so change an existing market as to make it unviable for those competitors operating within it.
We will now explore both of these in more detail.
Innovation Type 1: Continuity Innovation
These are innovations that do not fundamentally change a market and instead evolve existing markets through products and services that offer better value to customers and the organisation itself. Organisations already in the market compete against each other’s continuity innovations. There are two types of Continuity Innovation; Evolutionary & Revolutionary.
This type of innovation provides incremental developments in existing products and services. They are typically innovations that are expected by customers, for example faster computers, better fuel injectors or customer services that were previously only operated Monday to Friday but which have been extended to 24/7.
Most innovation activities are focused on evolutionary changes, often driven by a mix of cost efficiency targets, market shifts or the development of new technologies.
Also referred to as ‘Discontinuous Innovation’ these are unexpected innovations that do not fundamentally change the market in the short to medium term. For example, the introduction of the first automobiles did not fundamentally change the market for people selling horse drawn carriages because the new automobiles were so expensive that they could only be afforded by a small percentage of the population. Another example is the introduction of sealed double glazed windows to replace ‘secondary double glazing’ and single glazed windows. The introduction of the new type of window offered people the option to buy the more expensive, but more efficient, windows or to stick with the lower cost single glazing windows. It was only slowly over time that the market changed to the extent that no new houses are built without double glazing in the developed world.
Innovation Type 2: Disruptive Innovation
These are innovations that create a new market by applying completely new values or technology which ultimately overtakes an existing market.
We have already mentioned that the introduction of the first automobiles was a revolutionary innovation as the market for horse drawn vehicles did not change substantially. Later, with the introduction of mass produced cars (such as the Ford Model T), the market changed radically and quickly led to the demise of horse drawn vehicles. Therefore, the revolutionary innovation became a disruptive innovation over time.
Other examples of disruptive innovations that have occurred include the introduction of the UK National Health Service, the advent of digital photography (replacing film) and the ubiquitous USB Flash Drives that have replaced ‘floppy drives’.
Prior to World War One much of the ice used in Europe was shipped from Canada. Over the years, the ice-cutters had introduced a number of both innovations and improvements that had the effect of reducing costs. However, there was no way to compete with the introduction of the electric fridge/freezers that could create ice on demand. Irrespective of how many further innovations the ice-cutters applied to their process, the disruption caused by the introduction of the new technology fundamentally changed the market and prevented the existing players in the market (in this case the Canadian ice-cutters) from competing.
Disruptive innovations are normally new to the world and can rapidly create new markets. Since the disruptive introduction of the first fridge/freezer there have been innumerable further evolutionary and revolutionary innovations in that market but overall the market has not shifted.
Defining Rapid Innovation
Rapid Innovation is a term used to describe the rapid generation of ideas, development, testing and introduction of viable products and services. The aim of Rapid Innovation is to achieve the three ‘halves’;
· Halve the lead-time
· Halve the cost
· Halve the number of problems
In most cases the successful application of Rapid Innovation can achieve significantly more than the three halves suggest.
The Eight Aspects of Rapid Innovation
There are eight aspects of Rapid Innovation and these are summarised below;
· Senior Sponsor
· Cross Functional Teams
· Market/Customer Involvement
· Metrics for Success
· Consideration of the entire lifecycle
· An Integrated Plan
· Gateway Reviews
· Technology Mapping
We will describe each of these eight aspects below.
A senior sponsor, ideally at board level, should be allocated to champion the project. The sponsor should be responsible for chairing gateway reviews (see later) and for setting the metrics for success for the project. The sponsor should also represent the project at board level and be actively involved in helping resolve disputes between the team and others and promoting the product/service to the rest of the organisation.
Cross Functional Teams
At the heart of Rapid Innovation is the need for a cross-functional, co-located team. The team structure and operating practices should consist of;
· No more than 10 participants chosen to cover all the required skills for the project
· All volunteers
· Consistency in the process from start to end
· Full time for the majority, and ideally all, of the team
· Empowered to make decisions
· Managed by a single ‘development leader’
· Protected from unnecessary interruptions
For larger projects you may need to consider multiple cross-functional teams working together, with each ‘sub-team’ adhering to these parameters but with the added elements of frequent cross sub-team meetings, joint metrics between teams and with all teams reporting to one overall manager.
Clear analysis of the market and direct involvement of customers in the specification of new products and services is vital to Rapid Innovation. This may require NDAs (Non-Disclosure Agreements) to be arranged if a commercially sensitive issue may arise but without understanding of the customer’s needs there is a very high probability that things will be missed.
Metrics for Success
The metrics for the project should include timescales, overall spend, implementation or unit cost, expected volume of sales/activity and lifecycle costs as a minimum. These need to be specified up-front and any other constraints that the team need to work to clearly articulated before they start.
Consideration of the entire lifecycle
Products and services have expected lifecycles that consist of phases such as introduction, delivery, ramp-down and close-down. The start-up aspects will involve investment planning and additional marketing activities, whilst ramp-down and close-down may require you to consider everything from redundancies to recycling. It may seem odd to consider the end of life aspect at the very start of development but many post-implementation changes and costs occur because these issues have not been considered.
An Integrated Plan
The team should create and maintain an integrated plan that considers activities that both need to occur sequentially and those that can occur concurrently. The aim of managing the plan should be to get as much activity occurring concurrently and avoid as many tasks that need to occur sequentially. The plan should also cover the entire development cycle from initial concept through the post-implementation and will therefore be a ‘living document’ that evolves over time as more detail becomes available.
Effective integrated plans will consider;
· Market Analysis
· Sales & Marketing Activities
· Design & Development
· Quality Assurance & Testing
· Pre & Post Production/Implementation
· Risk Management
· Project Close Out Activities
A number of gateway reviews need to be planned as part of the overall plan. These should be chaired by the Senior Sponsor and the aim should be to review progress and ensure that the programme is on-track. Typically a project will consist of a minimum of five gateways;
· Agreement of Specification
· Finalisation of Conceptual Design
· Pre-Implementation ‘Green Light’
· Post Implementation ‘Green Light’
· Programme Close-Out
The criteria for each gateway, meaning the tasks that need to have been completed at the date of the gateway review, should be agreed in advance as part of the integrated plan.
The last of the eight aspects of Rapid Innovation is the concept of technology mapping. This is a task undertaken at the start of development to identify the specific technology issues that will affect the success and lead-time of the overall development. Undertaking this activity early on enables the planning of technology procurement or outsourcing to be undertaken in good time. This also allows the team to identify technologies that can be used to reduce lead-time and costs early on, thus allowing them to be planned into the development process.
Are You Ready For Rapid Innovation?
There are a number of enabling factors that will support the adoption of Rapid Innovation concepts. One of the first and most important is the need to acknowledge that switching from sequential development and rapid innovation has a short-term cash-flow impact in bringing together a team from the start of development to work on the innovation. Ultimately this will be resolved through much shorter timescales and lower overall costs but the short-term impact can be a problem for some organisations.
Other factors that determine whether or your adoption of Rapid Innovation will be successful or not are the following;
· A culture that supports collaborative working.
· An understanding of your market and the expected changes within it.
· A management team prepared to empower teams to develop products and services.
· A flexible structure that allows people to move easily between reporting lines.
Whatever the problems, if your an organisation looking to reduce the costs and timescales involved in developing new products and services then you need to consider how you can benefit from adopting Rapid Innovation.
Mark Eaton is Director of Operations at Amnis, a performance improvement consultancy. For more information visit the Amnis website at http://www.amnis.uk.com.
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