Managing Your Innovation Gap

by Drew Boyd

Once you have a systematic and routine way to innovate, you are confronted with a new problem - how to decide how much innovation is enough. For many, this is an odd question. If innovation is essential for survival and growth, most people would want all the innovation they can get. But that is oversimplifying. Too much innovation can overload the system, confuse the organization, and lead to ideation fatigue. So how much is enough?

Here is a useful analysis that can tell you how many ideas are needed to reach your specific growth targets called "Mapping the Innovation Gap."

The steps are:

1. Determine your revenue goals in each year over a specific time horizon. Base this on your firm's strategic planning time horizon (usually 3 to 10 years depending on the industry). Use the actual revenue targets from your company's business plan.


2. Break these annual revenue targets down over a mix of products, new and existing, in each year. Some firms call this a revenue cascade or revenue waterfall. It shows for each year how much of the revenue comes from existing products and how much comes from new products.


3. Estimate your Innovation Yield (number of new ideas needed to produce one new product). This varies by industry and by company depending on factors such as level of investment, core competencies, and access to technology. Various think tanks and consultancies have estimates such as the curve pictured above.


4. Estimate your typical idea-to-launch Lead Time (how much time it takes to develop and launch a product once it is conceived). As with the Innovation Yield, this will vary. Take a look at past product development experience and determine an average time (in years).


5. Plot the number of new ideas needed in each year to produce the necessary new products in subsequent years. Take the number of new products needed in a specific year and divide it by the Innovation Yield. Then plot this number back in time by the amount of Lead Time to develop ideas.

What you end up with is the number of new ideas that need to be generated each year to have a realistic chance of achieving future revenue growth targets. It can be a sobering number depending on how aggressive your targets are. With this number, a general manager can then task the team to "schedule" innovation, and then hold them accountable for generating the necessary number of ideas.


Bottom Line: To grow, companies need a systematic innovation method, and it needs to be applied systematically.


Download "Mapping the Innovation Gap" here.

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Drew Boyd is Director of Marketing Mastery for Johnson & Johnson (Ethicon Endo-Surgery division). He is also Visiting Assistant Professor of Marketing and Innovation at the University of Cincinnati and Executive Director of the MS-Marketing program. Follow him at www.innovationinpractice.com and at http://twitter.com/drewboyd

Design Driven Innovation

by Jeffrey Phillips

I was pondering recently why it can be so hard for a large firm to innovate successfully. Too often it seems we are trying to graft an innovation capability or process on top of existing teams and workflows. While these grafted processes can work effectively for a short time, while the white hot focus of management is felt, often these grafted processes wither and die if not constantly renewed and refreshed. Then it hit me. I'd just finished reading and reviewing "Design Driven Innovation" by Roberto Verganti. His thesis is that innovation should be driven, even led, by design. Innovation efforts often feel grafted on because the organization is working as it was designed to.

Many of my larger clients are Fortune 1000 firms that have well defined business teams and processes. After a round of Total Quality Management, Six Sigma and Lean in the 80s and 90s, these processes and workflows are well documented and highly efficient. Add to the fact that many firms have grown without adding headcount, and the processes are maxed out in terms of throughput and efficiency. There's little more work that can be added. Now, attempt to introduce a concept or process that requires change, risk, failure and uncertainty, that seeks to "hit a home run" when all the other processes seek to hit consistent singles and doubles and never make an error (sorry about the baseball analogy). Not only does innovation violate the "designed" process, it adds new work that conflicts with existing standards and norms. Innovation efforts, in most cases, are added to a fully engaged workforce in opposition to existing standards and processes.

So, if many firms have difficulty innovating because of existing expectations and designed processes, is the opposite also true? Do firms that innovate successfully have well designed innovation programs that are part of the fabric of how they work? In general the answer is "yes" with the caveat that every innovator has its own methods and approaches. Apple, for example, innovates from the top down in a very structured process informed by user design and experience. WL Gore, on the other hand, innovates from the bottom up and from specific capabilities or technologies. P&G, as a third example, has shifted from a completely internal R&D organization to one that receives 50% of its ideas from outside. Talk about a significant change of design and process! Each of these firms is innovative, and each has a defined, designed process for innovation success, and each process or design is different.

What's important to realize is that innovation can be designed into your organization, into the processes and expectations of the employees. Rather than "graft" on an innovation process, if your team seeks consistent innovation over time, seek to design in the innovation capability. Your innovation methods and process and how it impacts your organization can and will be unique to your firm. There are no "best practices" yet, and quite possibly there won't be, as innovation means so many different things to so many different firms and people.

Rather than fight the existing systems to innovate, why not consider designing the innovation processes and methods into the structure of how the business works?

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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.

Innovation - Automated

"To avoid the fate of alchemists, it is time we asked where we stand. Now, before we invest more time and money on the information-processing level, we should ask whether the protocols of human subjects and the programs so far produced suggest that computer language is appropriate for analyzing human behavior: Is an exhaustive analysis of human reason into rule-governed operations on discrete, determinate, context-free elements possible? Is an approximation to this goal of artificial reason even probable? The answer to both these questions appears to be, No."

Hubert L. Dreyfus
"What Computers Can't Do: The Limits of Artificial Intelligence"


This chilling conclusion about the fate of artificial intelligence seems to put an end to the idea that we can automate innovation. Since this book was first published in 1972, not much has changed, and the field of artificial intelligence seems to be in decline.

For a machine to innovate, it would need to:

1. Take a product or service and break it into its component parts


2. Take a product or service and identify its attributes (color, weight, etc.)


3. Apply a template of innovation to manipulate the product or service and change it into some abstract form


4. Take the abstract form and find a way for humans to benefit from it

I like the odds of a machine being able to do the first two steps. Imagine a computer that had the ability to "Google" a product or service to create a component list. Try it yourself. Search Google for "components of a garage door." You should be able to find several websites from which a component and attribute list could be developed. There are lots of Web resources available to machines to derive lists such as patent filings, engineering specifications, instruction manuals, etc.

At Step Three, a computer could be programmed to spit out new embodiments of the original product that have been altered by templates. For example, it could apply a template like Division to the garage door. It could create a matrix of internal and external attributes and spit out potential dependencies between them using Attribute Dependency.

Step Four is where machines struggle. How would a computer take an abstract "solution" and work backwards to find novel and beneficial aspects of it? What level of intelligence would it need to search the total human experience and match that solution to an unsolved problem of the human species? Is it possible? Not according to Dreyfus.

What if the machine could come close enough in Step Four? Imagine a machine that could suggest some reasonably good guesses where to take the pre-inventive form to create a new product or service. Invention Machine's Goldfire, for example, pulls together information from multiple sources and leads people to find ideas. It does the preparatory work, but you have to do the rest. It does preparatory work, by the way, better than humans. It gives humans an edge in innovating.

Humans are safe from machines taking over innovation. But they are not safe from themselves. Maybe we are approaching this the wrong way. Instead of trying to make computers more human-like, perhaps we should focus on making humans more computer-like, more logical and systematic when innovating. How can we help humans overcome their humanness to innovate more effectively? By perfecting the use of innovation tools and processes in a disciplined, rigorous way. That is a legitimate path to automated innovation.

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Drew Boyd is Director of Marketing Mastery for Johnson & Johnson (Ethicon Endo-Surgery division). He is also Visiting Assistant Professor of Marketing and Innovation at the University of Cincinnati and Executive Director of the MS-Marketing program. Follow him at www.innovationinpractice.com and at http://twitter.com/drewboyd