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Generating high potential new product and service ideas: a practical guide
In a previous article (Ideation: your foundation for new product success), we presented an ideation framework that covers the end-to-end process of generating, qualifying, and securing approval for new product and service ideas. In this article, we delve deeper into the front-end of this framework: idea generation. This article presents a practical approach to generating high potential new product and service ideas for companies driven by innovation and new technologies.
Many companies, both new ventures and established corporations, do not place sufficient importance on front-end idea generation. They get caught up in an initial concept, and do not take time to explore the wealth of knowledge, insight, and ideas both inside and outside their organizations. As a result, their thinking is limited, they begin making investments in sub-optimal ideas, and soon they are trapped into trying to make an average idea generate above average returns.
The impact of this is profound – the vast majority of a company’s total lifetime investment in developing, launching and growing a product or service is built on the initial foundation laid in the idea generation phase. If the company moves forward with sub-optimal ideas, it will consume vastly more time, money and other resources, take much longer to secure market traction and have to manage much higher risks than it otherwise would have,
By contrast, successful repeat innovators focus on maximizing the idea pipeline. They work diligently to identify as many new product and service ideas as possible from a full range of internal and external sources. They then manage these ideas like any pipeline, applying quick but effective screening criteria to identify the very best ideas. In this way, these companies are developing a hidden, but very real and powerful, competitive advantage over their less insightful competitors.
As detailed below, a best practice approach to idea generation comprises three elements:
- Developing an innovation strategy
- Generating ideas internally
- Generating ideas externally
Developing an innovation strategy
The first element is to define and communicate your innovation strategy for your business. Your innovation strategy sets the direction and parameters to guide your idea generation efforts. These should allow for breakthrough, out-of–the box ideas, yet give sufficient guidance to provide coherence to your idea generation efforts and avoid wasting resources.
Define innovation objectives – the first step is to define qualitative and quantitative goals for your innovation efforts. Qualitative goals may include the role you want innovation to play as part of your overall business strategy. Quantitative goals may include the number of new product and service innovations you want to generate in a specific time period, or the percentage of sales you want to generate from new products. These objectives both give guidance to your innovation efforts, and can contribute to your motivation and reward processes.
Define market focus – a second component of your innovation strategy is your broad market focus. Your market focus should be based on your core competences and long term strategy as a company. Are you B2C or B2B? If B2C, which household income and demographic characteristics? If B2B, which industries, size of organization and decision makers are within your scope? What is your geographic focus? New product ideas can quickly be evaluated to ascertain whether they fit your current and future market focus.
Define technology focus – a third primary component of your innovation strategy is your current and future technology focus. As with market focus, your technology focus should also be based on your company’s core competences and long term strategy. Which areas of technology fall within your scope currently? How should this change over the next few years? This too provides an important guide to which new product and service ideas are in or out of scope.
Evaluate your product roadmap – fourth, consider your current product roadmap, and your current mix of existing offering improvements, new products or services, and new platforms or businesses. In light of your latest market and competitor analysis, does your roadmap need adjusting? Where is innovation most needed to do so? Gaps in your roadmap provide direction for your idea generation efforts.
Summarize and communicate your innovation strategy – finally, prepare a summary of your innovation strategy for both internal and external communication. While naturally you should not reveal competitively valuable information to the wrong people, it is important to share these guidelines with the appropriate stakeholders. By focusing your idea generation efforts in this way, you will significantly improve the quantity of useful ideas generated and reduce wasted time and effort.
Generating ideas internally
With a clear innovation strategy in place to guide your idea generation activities, turn next to generating ideas internally. There are many tactics you can use to do so, we present seven below.
Like with most new initiatives, it normally makes sense to build your internal idea generation process in a phased way, starting simply and adding sophistication over time. As an example, table 1 comprises three phases. Phase one encompasses relatively quick, simple and easy activities, phase two adds more complex activities, and phase three represents systematic, deep engagement. Note this table is illustrative, not prescriptive. In practice, you will need to experiment to determine which approaches work best for you organization.
Table 1: Internal idea generation options
Phase one |
Phase two |
Phase three |
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Brainstorming teams – the quickest and simplest way to get started is to hold brainstorming sessions with selected employees to examine trends, explore new markets or industries, solve problems, and address specific topics. It is very important that these teams are comprised of diverse people with respect to function, background, seniority level, and demographics. The directive given to these teams should be clear, but should allow for some “blue sky” thinking. The team size should be large so that enough distinct perspectives are brought to the table and so that it can perform the necessary cognitive legwork, but small enough where everyone can participate and the team is not bogged down by its size. We have found the ideal team size to be between five and ten.
Market and scenario analysis – assign individuals and / or teams to research and analyze more formally the key customer, competitor and technology trends in your industry. This may include conducting similar analyses in related industries. Based on this analysis, develop a range of internally consistent scenarios on what the future of your industry may look like. What are customers likely to want or need? How are competitors likely to respond? What new competitors will enter? What new technologies will become available? Based on these trends, what new product and service ideas come to mind?
Solicitation of ideas – make a formal announcement to employees that you want to actively invite new product and service ideas. Set the ground rules and strategic objectives, and then create a simple web-enabled database tool to enable easy submission, sorting and storing of ideas. In subsequent iterations, the tool could be modified to allow for interaction to further define ideas or perhaps allow employees to provide collaborative feedback. Motivate your people to submit ideas by offering recognition and other rewards for good ideas, and monetary compensation if an employee’s idea is successfully commercialized.
Peer networks – allow employees to self-select into groups to address specific market and product areas. Require a coordinator / leader for each peer group, and assign a senior executive to serve as a mentor to each peer group, holding periodic review sessions and providing advice and visibility within the broader organization. Adopt one of the common social media tools to facilitate peer group discussion and collaboration. Although participation is voluntary, provide career and other rewards for peer group participation. Ensure the groups self-regulate and replace uncommitted members.
Corporate events or challenge – hold specific innovation challenges that can span several days or weeks. These events can be virtual or live gatherings and involve a clearly defined challenge to creatively generate ideas.
Internal idea incubator – set up a dedicated department to coordinate idea generation and other elements of ideation and commercialization. Such an incubator may be part of an R&D department or a corporate venturing group.
Creative time allocation – allow your employees to devote a portion (usually between 10 and 20%) of their time to work on generating ideas of their choice. Although this is an expensive option, companies such as Google have seen many products ideas hatched because their employees are more motivated to work on ideas they find interesting and in which they have a sense of ownership.