Innovating into the Future
by Jeffrey Phillips
There's an interesting and difficult conundrum associated with innovation based on the calendars and timeframes of most organizations. While many organizations want innovation, they are not able to innovate beyond their "headlights", which to me means the span of time into the future they are willing to investigate.
Most businesses operate in approximately three timeframes: the quarter, the annual plan, and timeframes beyond one year out. These timeframes are dictated by the financial markets, not by any specific ebb and flow of business, and these time frames don't align to or account for the interworkings of the organizations. The first timeframe, 90 days, is dictated especially to publicly traded firms. However, any firm of any size will frankly tell you that little can be changed in a quarter. The next time frame is the fiscal year, which is dictated again by the financial community.
Note that neither of these timeframes has anything to do with the internal workings or operations of the business, especially when it comes to innovation. If we are honest with ourselves, we'll be willing to admit there are at least three phases of innovation and new product development: idea generation and selection, new product development and commercialization and launch. In most organizations new product development and commercialization will rarely take less than 18 months to two years. Adding in the timeframe to identify opportunities and generate ideas, it's easy to see that an idea generated today in most firms won't be commercialized in less than 2 to 2.5 years.
This is where the concept of innovating beyond the headlights comes into play. If we have an idea to product or service lifecycle of 2 to 2.5 years, then we need a planning cycle and an investigation cycle of at least that length, if not more. If the business is not identifying opportunities 3 to 5 years in the future and has a idea to product lifecycle of 2 to 2.5 years, then it's almost impossible for the firm to ever create a truly disruptive product, since it's development time is longer than its runway. It's not as if we compete in a market that has no other insightful, aggressive competitors and new entrants. Consumers aren't simply going to wait for your firm to unveil products and services that have already been launched by competitors.
No, innovators need to identify opportunities that are further into the future, and that will cause consternation by many of the individuals tied to the quarterly plan or the yearly plan. Innovators need to push their visions at least three to five years into the future to identify emerging opportunities or needs, and begin to develop products and services to meet those needs. Given the elapsed time to bring a new product to market, even a three year planning horizon is probably too short.
Forecasting opportunities that are less than two years into the future doesn't account for the internal development processes or the ability of competitors or disrupters to enter the market. Even incremental innovation is timeconsuming, so we may as well swing for the fences on a regular basis.
If these postulates hold true, then there are two conclusions. First, we need to make our idea to product or service launch process more compact and more efficient, so that we can identify opportunities and launch new products and services faster. In addition, we need to extend our trend spotting and scenario planning further into the future, to understand opportunities and provide enough runway so that we can create compelling and unique offerings and solutions as the market becomes aware of the needs.
Jeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation teams, processes and capabilities. Jeffrey is the author of "Make us more Innovative", and innovateonpurpose.blogspot.com.
There's an interesting and difficult conundrum associated with innovation based on the calendars and timeframes of most organizations. While many organizations want innovation, they are not able to innovate beyond their "headlights", which to me means the span of time into the future they are willing to investigate.Most businesses operate in approximately three timeframes: the quarter, the annual plan, and timeframes beyond one year out. These timeframes are dictated by the financial markets, not by any specific ebb and flow of business, and these time frames don't align to or account for the interworkings of the organizations. The first timeframe, 90 days, is dictated especially to publicly traded firms. However, any firm of any size will frankly tell you that little can be changed in a quarter. The next time frame is the fiscal year, which is dictated again by the financial community.
Note that neither of these timeframes has anything to do with the internal workings or operations of the business, especially when it comes to innovation. If we are honest with ourselves, we'll be willing to admit there are at least three phases of innovation and new product development: idea generation and selection, new product development and commercialization and launch. In most organizations new product development and commercialization will rarely take less than 18 months to two years. Adding in the timeframe to identify opportunities and generate ideas, it's easy to see that an idea generated today in most firms won't be commercialized in less than 2 to 2.5 years.
This is where the concept of innovating beyond the headlights comes into play. If we have an idea to product or service lifecycle of 2 to 2.5 years, then we need a planning cycle and an investigation cycle of at least that length, if not more. If the business is not identifying opportunities 3 to 5 years in the future and has a idea to product lifecycle of 2 to 2.5 years, then it's almost impossible for the firm to ever create a truly disruptive product, since it's development time is longer than its runway. It's not as if we compete in a market that has no other insightful, aggressive competitors and new entrants. Consumers aren't simply going to wait for your firm to unveil products and services that have already been launched by competitors.
No, innovators need to identify opportunities that are further into the future, and that will cause consternation by many of the individuals tied to the quarterly plan or the yearly plan. Innovators need to push their visions at least three to five years into the future to identify emerging opportunities or needs, and begin to develop products and services to meet those needs. Given the elapsed time to bring a new product to market, even a three year planning horizon is probably too short.
Forecasting opportunities that are less than two years into the future doesn't account for the internal development processes or the ability of competitors or disrupters to enter the market. Even incremental innovation is timeconsuming, so we may as well swing for the fences on a regular basis.
If these postulates hold true, then there are two conclusions. First, we need to make our idea to product or service launch process more compact and more efficient, so that we can identify opportunities and launch new products and services faster. In addition, we need to extend our trend spotting and scenario planning further into the future, to understand opportunities and provide enough runway so that we can create compelling and unique offerings and solutions as the market becomes aware of the needs.
Jeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation teams, processes and capabilities. Jeffrey is the author of "Make us more Innovative", and innovateonpurpose.blogspot.com.Labels: Innovation, Jeffrey Phillips, Strategy
posted by Blogging Innovation at 12:01 AM
1 Comments:
Hello Jeffrey,
Nice piece about the innovation cycle. It reflects a fundamental flaw of the usual corporate operations: the exclusive use of short term financial planning calendar to measure a company worthiness.
This comes, of course, by the fact that the investors are only concerned with their personal short term gains and who do not care about the future of the companies they invest in.
This kind of thinking makes manufacturers multiply their lines of product, differentiated by few features, in order to appear to be innovating. This is true for the phone industry, the computer, the automobile, the printer and so on.
This waste driven by the belief that only novelty drives the consumer, is not beneficial for the company in the long term. What's wrong about streamlining the production line to make the best products possible and then keeping them on the market?
Then resources could be reallocated to long term development of truly innovative products. Is a confused consumer, not to talk of confused sales reps, that necessary?
Notice that is precisely what Steve Jobs has been doing since his return to Apple and brought about the turn-around that makes that company the fastest growing computer company in the world that is now closed to take Microsoft first place in real value, and that in a period of recession and slow economic growth…
Claude Filimenti
macmaitre@me.com
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