While companies recognize that innovation is a key element in maintaining competitive advantage and developing their operations, many still cannot convert their projects into products and services. In fact, putting new initiatives into action is not a simple process because it goes beyond the financial barrier of each company and includes social, political, cultural factors, beyond the company's knowledge limit.
Innovation barriers occur between the initial discovery process and the marketing and/or implementation process. This happens because companies do not have a defined process to create ideas and convert them into opportunities. Result: They are unable to create compelling cases to develop an adoption and implementation plan.
The purpose of this book is to serve as a guide to create and implement innovation projects. It will be divided into three parts: How to convert ideas into opportunities; How to create compelling cases; How to create an adoption and implementation plan.
1. How to convert ideas into opportunities
Define the idea
A well-defined idea should be specific to four main points:
- who is the target customer (internal or external);
- what benefit it delivers to the target customer;
- what return brings to the company;
- strategic objectives it helps to achieve.
This simple structure helps filter and group ideas, avoiding wasting time with those that prove irrelevant or not aligned with the company's objectives. This filtering is very important because too many ideas pollute the decision-making process and waste company resources. And, contrary to what many people think, established companies usually have a whirlwind of ideas, but, precisely for the lack of this structure, they can hardly make these ideas turn into a business opportunity.
Here is suggestion of structure for the collection of ideas.
- Idea title Description
- Strategic objective that the idea supports
- Initiative that the idea supports
- Target users
- How the product/service would be used
- What would be the benefits for the user (Performance, Cost Reduction, New Capabilities, Competitive/Strategic Advantage)
- What innovation does the idea present in relation to what the company has today
Modern and innovative companies have the ability to listen to all elements of the business process, such as users, customers, suppliers, partners and employees, who are in the day-to-day operation and can think of solutions or point out the greatest pains of the business. These people are especially good at fostering ideas for Horizon 1 innovation (read Innovation Horizons chapter if you are not familiar with the term).
There are many examples of companies that rely on this decentralised format of generating ideas to foster innovation. Amazon, Visa, General Eletric, HP, DuPont, LinkedIn are some of them. Those at the forefront of these companies can get a good perspective on problems and opportunities. Another example is google founders Larry Page and Sergey Brin, who stated in their IPO letter in 2004 that their employees would receive support to devote 20% of their time to innovations that could benefit the company.
Partnerships with startups doubles Procter & Gamble's innovation initiatives
One company that performs very well partnerships with startups is Procter & Gamble, which has been doing this since 2006. The company's former CEO, A. G. Lafley, says, "The do-it-yourself alternative is a model that will certainly lead the company to reduced returns in its initiatives."
Lafley believes that a company alone will not be able to compete with the pool of ideas from entrepreneurs around the world. Therefore, he argued that the combination of open innovation platforms with R&D laboratories and other business areas were responsible for generating profitable projects, with ideas that most likely did not emerge from its production chain.
Following this initiative, the former CEO says that productivity at Procter & Gamble's R&D lab grew 60% and the success of its innovation initiatives doubled in size, while the cost of innovation has dropped significantly. In 2006, the company launched 100 products - all created from some integration with startups.
To foster ideas across all other Innovation Horizons, more and more innovative companies are looking for Open Innovation platforms to find startups relevant to their business.
Established companies typically divide their initiatives in this proportion:
- Horizon 1 (H1)=70%
- Horizon 2 (H2)=20%
- Horizon 3 (H3)=10%
In this moment of generating ideas, the phase we call intelligence for innovation comes into play. This stage has two main objectives: To evaluate technological trends and explore solutions to the company's strategic objectives; Analyze what competitors are doing in relation to startups.
The Innovation Intelligence platform helps at all these points. First, because it takes a few seconds for her to find the best startups in the world to solve business pains.
In addition, it helps to understand technology trends, what is the level of maturity of these technologies and where they are located. The platform also generates graphs that facilitate visualization and understanding of the insights obtained so that they can be communicated internally clearly. And to top it off, it's possible to track the behavior of the competition to understand what competitors are doing about Open Innovation, which startups they're investing in, which ones they're becoming customers with, or who they're partnering with. With this analysis, your company can prioritize its innovation initiatives more efficiently.
The Phase of Defining the idea ends with the intersection of the ideas collected with the insights obtained through intelligence for innovation.
With this, innovation ceases to be a process of guessing and becomes data-oriented, gathering insights from the business process chain with what is the most modern being done around the world.
All this occurs without the company neglecting competitors and without losing sight of its strategic objectives.
In the next phase we will figure out how to build profitable opportunities from these intersections.
Below is an infographic with a summary of what we covered in this chapter.