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Ideation: your foundation for new product success
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Developing and growing new products and services is a core focus for innovation in many companies. Based on our experience with dozens of product and service innovations, as well as a survey of the literature, we have developed a simple but powerful framework for managing the product lifecycle comprising three broad phases: ideation, commercialization and evolution.
In this framework, ideation covers the stages from idea through funding; commercialization covers development through launch; and evolution covers life cycle management - evolving the product offering over time to maximize long term product profitability and value. In this article, we will explore ideation in more detail. Subsequent articles will cover commercialization and evolution.
In our model, ideation is a holistic process to generate, qualify and secure funding for new product and service ideas. This definition differs from the more common use of ideation to cover just the idea generation stage. We define it more broadly, as in our view moving from initial idea through to securing funding is an integrated sub-process that requires relatively little investment, and has a clear end-point – the decision to invest in a promising new product or service. Following that decision, commercialization begins, a phase with very different characteristics.
In many companies ideation is the most neglected and poorly performed phase. Many companies rush into product development based on a limited pool of ideas, with little understanding of real market potential. Conversely, some companies have begun exploring ways to expand the range and sources of innovative ideas, but do not have in place an effective system to select and focus on the best ideas.
At the same time, ideation is the phase where improvement often yields the biggest payoff. The difference between generating, selecting and focusing the best product ideas on the most attractive market opportunities, and coming up with fewer, average ideas and giving them no clear focus, is enormous. This difference is very real to many companies – in terms of capital invested, product time-to-market, sales growth and long term value created.
Building on the work of thought leaders like Henry Chesbrough, Robert Cooper, Scott Edgett, Rowan Gibson, Vijay Jolly and Peter Skarzynski, our ideation framework comprises six steps. It encompasses a systematic approach to generating ideas from diverse sources, and a risk-optimized methodology for moving viable ideas through to commercialization. The quality of the ideas, and the time, effort and risk involved, is relatively low to begin, and increases with each step. This ensures that you consider a wide range of options, but really focus on the small set of options with the greatest potential for your business. Note that, like all parts of our model, this is a generic framework that must be adjusted and tailored to each company’s specific needs.
Generate: |
Generate a rich set of ideas in key areas of innovation focus |
|---|---|
Identify: |
Identify ideas that fit your criteria for further exploration |
Explore: |
Explore each idea’s technical, market and financial potential |
Select: |
Select the highest potential ideas for in-depth analysis and planning |
Plan: |
Develop a comprehensive business plan and pitch decision makers / investors |
Approve: |
Secure approval and funding to proceed to commercialization |
Step 1: Generate
The first step of the ideation process is to determine your key strategic areas of focus for innovation, and to generate a rich set of ideas in those areas from both internal and external sources.
Develop an innovation strategy to guide your idea generation efforts. The process begins with defining and communicating your innovation strategy for your business. Your innovation strategy includes setting your qualitative and quantitative objectives, and the broad market and technology areas of focus, for your new product development efforts. These parameters must be broad enough to allow for breakthrough, out-of–the box ideas, yet give sufficient guidance to provide coherence to your idea generation efforts and avoid wasting resources. These guidelines form part of your assessment criteria in step 2.
Generate ideas from a wide range of internal and external sources. With the rapid spread of the concept of open innovation pioneered by companies such as Proctor & Gamble and Philips, leading companies now recognize the value and importance of generating a rich mix of new product ideas from both internal and external sources. Such an approach ensures you consider a wide range of perspectives and don’t get trapped in corporate blind spots. It also helps build a culture of innovation in your organization.
Source ideas internally both top-down and bottom-up. Internal sourcing should be a combination of a top-down directive and bottom-up, experimental methods such as:
- Setting up a website to promote, capture, sort and store ideas
- Allocating employee time to creative thinking – companies such as Google and 3M have maintained an innovative environment by doing so
- Creating brainstorming teams with distinct perspectives to shape raw ideas or explore new industries / markets
- Assigning individuals and teams to examine customer, competitor and technology trends in your and related industries
- Assigning teams to create alternate internally consistent future scenarios to explore options and ideas.
Source external ideas from a wide range of stakeholders. External sourcing of ideas is really about harnessing the collective knowledge of, or at best co-creating with, partners, customers, suppliers, vendors, and even competitors. This encompasses a wide spectrum of activities including:
- Working collaboratively with individual innovative customers
- Researching customer needs using “voice of the customer” tactics such as extended observation, in-depth interviews, focus groups or advisory panels
- Seeking ideas from outside partners and vendors
- Accessing the external technical community through innovation communities such as InnoCentive
- Seeking and rewarding submission of ideas from users, customers and other external parties
- Co-creating products with customer, partners or vendors from start-to-finish
- Utilizing large group, web-enabled models such as open source or crowd sourcing.
Step 2: Identify
Once you have generated a comprehensive range of ideas, the next step is review them to identify which ideas are worth exploring further.
Create a set of screening criteria. Using your innovation strategy parameters as well as other considerations, develop a set of criteria to use in evaluating and ranking each idea. These criteria may include strategic alignment with your priority core and emerging target markets and technologies, estimated level of investment and risk, ability to leverage core resources and competencies, and fit with company values and policies.
Use these criteria to assess and rank the ideas. Each idea should be quickly and objectively assessed against your evaluation criteria. Ideas that meet all criteria should be prioritized for further consideration, while those that do not must be either refined or scrapped.
Step 3: Explore
Once you have a prioritized list of ideas, the next step is to conduct a quick and relatively inexpensive preliminary assessment to explore the potential of each idea. Critical to this step is to conduct three, integrated assessments: market, technical and financial.
Market assessment. The market assessment comprises a first cut target market definition, and a high level analysis of the urgency of demand and likelihood of market acceptance, the possible current and future market size, and the current and emerging competitive landscape. It should also include a first cut assessment of go-to-market options. The goal is to explore whether there are obvious market reasons to either pursue the opportunity or drop it. This activity should primarily comprise online research, internal discussion, and interviews with a range of customers, partners, competitors, thought leaders and other market participants.
Technical assessment. The technical assessment focuses on the first cut product definition, and the high level feasibility, possible options, general timeframe and resource requirements, and potential risks and obstacles to develop and produce the product. Again, the goal is to explore whether there are any immediate reasons to pursue or drop the idea. Activity should comprise internal discussions as well as interviews with selected partners and vendors.
Financial assessment. The financial assessment should build on the market and technical assessment to create a preliminary, back-of-the-envelope financial model to test the idea’s fundamental economics and assumptions.
Step 4: Select
With the preliminary assessment completed for each prioritized idea, you are now in a position to select those ideas that appear to really have potential.
Develop a more in-depth checklist. This step involves developing a more sophisticated checklist and scoring model, building on the criteria developed in step 2.
Review and select the highest potential opportunities. Those ideas that promise the best short and long term potential should be selected for in-depth analysis and planning. The rest of the ideas should be either sent back to be refined, stored for possible future considerations, or dropped.