Developing an Innovation Process that Works

Transcription

1 Developing an Innovation Process that Works Emma Palmacci Ph.D., VP, Research Services, Nerac Louis Donne Director, Research, Group4 Innovation can just happen, serendipity can birth an innovative idea. However, great innovators have developed processes to make innovation routine rather than accidental. Companies have shown the value of establishing an innovation management practice which combines internal and external ideas, as well as internal and external paths to market. A wide-range of different innovation sources are available to companies that want to increase the competitive advantage of their products, each source with its own compromise of strengths and weakness. Discussed here is an approach developed jointly by Group 4 and Nerac that integrates several sources in such a way that the strengths of each are additive while the weaknesses are cancelled out. Sources to Fuel Innovation Nerac and Group 4 have identified ten sources for fueling innovation: The Ten Sources of Corporate Innovation (Fig 1) Technology scouting Corporate venturing Mergers and acquisitions Joint ventures and alliances Innovation networks Licensing Supplierdriven University affiliations Internal R&D Corporate Innovation Exploratory Consumer Research (VOC) One of the most popular means for fueling innovation is through internal Research & Development (R&D), and rightly so. It makes sense for a company to rely on its own experience and marketing savvy to innovate. After all, who knows a company s products better than the company itself? That said, a firm that uses only internal sources of information risks losing objectivity and a competitive edge, especially if

2 Developing an Innovation Process that Works 2 the competition is taking advantage of external sources. In research they conducted, Robert Cooper and Scott Edgett, leaders in the field of product development and innovation, found that external innovation sources provide insight not available through the use of R&D alone. Of particular value among external sources were qualitative voice-of-the-customer (VOC) techniques such as independently conducted ethnographies and focus groups, as well open innovation techniques that include technical scouting and creative patent structure analysis. You don t have to originate the research to profit from it. The following abstract from the MIT Sloan Management Review s article on Chesbrough s,the Era of Open Innovation summarizes this point well: Today, in many industries, the logic that supports an internally oriented, centralized approach to research and development (R&D) has become obsolete. Useful knowledge has become widespread and ideas must be used with alacrity. Such factors create a new logic of open innovation that embraces external ideas and knowledge in conjunction with internal R&D. Firms that can harness outside ideas to advance their own businesses while leveraging their internal ideas will likely thrive in this new era of open innovation. Idea Management is not an internally-focused innovation management practice; it incorporates all aspects of innovation, including open innovation or going outside your company for R&D, ideas or technology. Understanding the Customer Need: How Your Customers Drive Innovation An important part of the Innovation Process is starting with a solid foundation of understanding your customers needs and wants. Companies might use an external partner for VOC research, or to connect with the project s Community of Interest (COI), including internal stakeholders, the end user, channel representatives and industry experts, to map out the state of the category and identify white space for product development. Such insights can come from a variety of qualitative and quantitative approaches; the selection of the best approach is driven by carefully establishing your research objectives. Group 4 s approach to VOC research explores the consumer experience in order to: Understand behaviors and their associated and underlying emotions Identify rituals and patterns of use Discover unmet needs and desires. We strive to understand how the end-user conceptualizes the product functionality and the meaning of it in their lives. Let s say your company has identified an opportunity area that s consistent with its strategy and based in VOC consumer insight, but NOW requires a technology that doesn t currently reside in-house. How do you introduce potential technology solutions for this opportunity? Internal R&D or look outside the company?

3 Developing an Innovation Process that Works 3 The following Scotts Miracle-Gro Company case study depicts such a scenario, highlighting a good example of merging VOC, as just described, with open innovation: Case Study: Miracle-Gro Gro-ables Seed Pods* * 2014 IDSA/IDEA Award Winner Group 4, Inc collaborated with the Scotts Miracle-Gro Company to develop a breakthrough product for the edible gardening market, Miracle-Gro Gro-ables Seed Pods. Miracle-Gro Gro-ables Seed Pods make growing from seed fool-proof, with the exact combination of nutrients, enriched soil and seed packed into every easy-to-plant pod. A project team from Group 4 and the Scotts Miracle-Gro Company conducted extensive research with gardeners and non-gardeners that provided valuable input to idea generation and design direction. As a result, Gro-ables Seed Pods were specifically developed to create an ideal growing environment through a uniquely designed pod that contains: Superior quality seed placed at the proper depth All natural growing material to protect and release moisture to the seed Premium Miracle-Gro plant food to deliver continuous nutrition to the seed Early prototyping with the most promising candidates gave Scotts another chance to obtain customer feedback. Fail fast and fail early works when developing cutting edge products as they are fundamentally similar to the start-up mentality. During subsequent prototype development and screening, consumers consistently expressed delight at the developing product form, which to them was indicative of something entirely new and different and believable. The Scotts Miracle-Gro Company had to decide which elements and ideas for product development would come from internal R&D versus external, open innovation sourcing. The final design, which combines both, was built upon a tapered acorn shape for easy handling and intuitive planting in a biodegradable, sanitized and sturdy pod material.

4 Developing an Innovation Process that Works 4 Discover the Most Promising Opportunities The availability of information in the 21 st century has both enabled open innovation technology scouting and hindered it. It is no longer an issue to find information, now the challenge is to find the right information. Without the right tools and expertise to sort and analyze the large wealth of data and intelligence, it is an overwhelming task. Prior to engaging in idea discovery, it s important to set up the metrics and qualifications that are desired, based on the voice of the customer as discussed above. Aimlessly reviewing new technologies will serve to lengthen the innovation cycle needlessly; planning is critical. A few areas that companies need to establish prior to project initiation: What components of the technology can be developed in-house and what will need to be sourced from outside the organization? What existing partnerships could be leveraged to improve innovation success? Identify the key characteristics the solution needs to have. Identify the deal breakers. These should strongly tie back into the voice of the customer discovered in the prior stage. Establish the vetting process. Establish appropriate filters based on the key characteristics desired. Create an idea management process. Catalog and prioritize as opportunities are discovered. The reason for using open innovation s technology scouting methodology is to identify a disruptive technology that can be exploited to change and control a particular market. An example of this strategic innovation would be the ipod, which completely changed the consumer market for digital music consumption. As was mentioned earlier, technology scouting is also used to identify new technical developments that can incrementally expand product pipelines or create greater process efficiencies. Both types of technology advancements are critical for success. But the question is how is technology scouting best done? External submissions of ideas and external idea contests have been used to source new ideas with mixed success. While this process is good at generating large numbers of potential opportunities, it also ties up valuable time reviewing and sorting through the numerous submissions, many of which are widely inappropriate for the corporation s goals. More successful approaches utilize external scientific experts, patent data, and relationships with vendors and partners to generate meaningful ideas and surface key technologies. While it is imperative to cast a wide net, an unfiltered process will waste valuable time. Nerac has found the most common techniques corporations use for uncovering external ideas include conducting competitive intelligence (including mining patenting efforts), attending relevant conferences and tradeshows, leveraging academic connections, and exploiting their network of experts and innovators.

5 Developing an Innovation Process that Works 5 Client Case The Product Development Manager at a mattress manufacturer was looking for opportunities in new materials for mattress cushions. The company was working on their new product development plans for the upcoming year and needed an assessment of the possible development targets. Approach: The Nerac team analyzed the patent landscape by type of polymer suitable for their application and provided a breakdown of the level of patenting and development stage for each. Client Benefit: The client was able to use the Nerac analysis to plan their research development for potential new materials targets, including potential licensing candidates and identifying areas of patent infringement concerns. When Nerac is faced with looking for a potential solution for a client development problem, we start by first defining the characteristics the solution needs to have in order to be successful. Once we have a clear direction, patent information is our first stop as they are often a wealth of information regarding cutting-edge technologies. Mining a patent landscape can be a valuable approach to technology scouting. The landscape describes the patent situation for a specific technology in a given country/region or even globally. In practical terms, a patent landscape may be utilized for any of the following reasons: To identify the major drivers of technology To understand IP activity patterns, innovation trends, collaborations To assess product/technology life-cycle stages For business due diligence (especially when entering a new space) For competitive intelligence monitoring (who is active in the field?, what designs/methods/apparatus are being protected?) To identify and screen potential merger, acquisition and joint venture partners A patent landscape may be a stand-alone piece of work with its own objectives, or it may be part of a larger technology scouting effort to identify and evaluate potentially relevant and interesting technologies and/or inventors. High-level trends combined with access to specific patents of interest are key features of the patent data mining within a landscape.

6 Developing an Innovation Process that Works 6 Figure 2: A Nerac Patent Dataset, with Columns J-T describing the technologies cited Figure 3: High-level competitive information from Patent Landscape Depending on the nature of the problem to be solved, once the patent data has been reviewed, our next effort may be focused on university and other research organizations, conferences, and foreign research entities. These discoveries should all be evaluated against the metrics and characteristics established earlier, to avoid gathering large amounts of irrelevant or less than useful information. Examining adjacent industries for adaptable technologies is a key point of a good technology scouting effort for open innovation. Wireless technologies from telecommunications are infiltrating medical devices and smart clothing. MEMS sensors evolved from semiconductor fabrication and are now finding application in oil and gas deep well drilling. We find that the most successful innovation projects involve tapping on experts and resources from a wide-array of industries and technologies. We suggest not limiting the research to just the industry that s most obvious.

7 Developing an Innovation Process that Works 7 Selecting the Best Candidates The hard work begins once a technology scout has found a set of promising opportunities that may address their internal R&D needs. Now the technology has to be vetted and evaluated. Questions to ask at this stage: How do the opportunities rate against the metrics established for the project? If the screening process is applied, can you establish the high potential and low potential opportunities in order to prioritize efforts? What is the cost of development for each opportunity? What is the timeline of development for each? Do other technologies have to be developed in order to create the final product? Who is the inventor? What is known about their ability to work collaboratively with outside firms? Would they sell the technology outright? What is known about competitor activities with each opportunity? Are they looking at similar technologies? Are there any patent infringement issues with any of the opportunities? Client Case Issue: A global beverage company decided to develop world-wide line extensions using functional ingredients with potential health claims. Approach: Nerac developed a process to screen thousands of potential ingredients down to a set commercially-viable ones based on: -Safety/efficacy status -Regulatory status and allowable claims by country -IP encumbrances -Ingredient availability (licensing, purchase rights, etc) Client Benefit: The client s time and cost for decision making, product development and launch were significantly reduced enabling rapid market entry. Summary It is important for companies to carefully consider all of the potential sources of innovation (Fig 1) when deciding how to allocate their resources. While internal R&D is usually the starting point for investment in innovation, it shouldn t be the end point, too.

8 Developing an Innovation Process that Works 8 In the end, a technology scouting open innovation program is a risky thing. Even properly executed, considering all the tips above, a program might take years to produce a blockbuster innovation. However, Nerac and Group 4 s work with our clients suggests that following these suggestions will substantially improve a company s chances of success in innovating new, novel products for the market through technology scouting. Outside firms and vendors can help establish the VOC and unmet needs, and help find and vet opportunities can be utilized to ensure a robust process, unhindered by companies internal resource limitation. The very nature of an open innovation paradigm is to bring outside talents and skills to augment a company s strengths, so it is a natural fit for scouts to reach out to research firms with certain expertise in the above steps to assist in the process. About Nerac Nerac Inc. is a global research and advisory firm for companies developing innovative products and technologies. Nerac provides expert insights that equip clients with the knowledge to develop or refine a technology, explore market growth opportunities, evaluate intellectual property strategies and respond to regulatory changes. Nerac serves approximately 20,000 users worldwide and answers over 5,000 research questions each year. Nerac has a long, successful consulting history in a wide-range of industries with a strong focus in the areas of pharmaceutical, food and nutraceuticals, medical device, engineering, energy and advanced materials. About Group 4 Group 4 is a highly regarded strategic research and design firm devoted to creating and enhancing global brand experiences through research driven product, packaging and merchandising design. Our 42+ years of problem solving experience for some of the world s best known brands together with our unique set of capabilities provides us the means to engage with and learn from the target market and develop meaningful products, packaging and merchandising solutions that exceed expectations and win the day no matter the challenge.