By Bill Weber
In our last two posts, we described why it is that you can’t engineer disruption and how to distinguish Sustaining, Breakthrough and Disruptive Innovations. Given that iP2Biz partners with large companies to help them develop and execute their innovation agendas, the natural question is, “If you can’t engineer Disruption (and Breakthrough Innovation is hard), why even bother?” It’s a good question with a simple answer: if you run your company as you always have and learn to harness the power of Front End Innovation, you can dramatically increase the odds of capturing both Breakthrough and Disruptive Innovations.
Before we get into a discussion of FEI, it’s important to first understand the context in which an innovation comes to market. Having cool technology is important, but it’s never enough because products exist only within industries and markets. What customer problem are you going to solve? What is the size of the market? How fast is it growing? Who are your competitors? What are their competing solutions? How is yours better? Your answers to questions like these describe the environment your innovation will live in, and if that environment is not at the intersection of Technologies, Industries and Markets (TIM), you need to move on to a new idea. Because the TIM intersection is where the money is.
With that out of the way, we can talk about FEI. Taking a quick look at your Formal (Stage Gate) Process will set the scene. The Formal Process is specifically designed to get Sustaining Innovations to market efficiently. These are the innovations driven by customer demand and market intelligence that you must make to keep the market share you already have. Because Sustaining Innovations are incremental improvements to existing products in the markets you know best, you have a complete understanding of TIM. This allows you to calculate an ROI and move forward with confidence; there is little uncertainty in launching a Sustaining Innovation.
Breakthrough and Disruptive Innovations, on the other hand, arise from a different process: Front End Innovation. By definition, you lack a complete understanding of TIM for proposed Breakthrough and Disruptive Innovations: they are new ideas for new products that may be aimed at new markets or industries, and the uncertainty surrounding them is high. So is the risk. FEI is the essential work that must occur to evaluate these ideas, discard the raft of bad ones, dig deeper into the promising ones and—when you really understand the TIM intersection—develop a business plan.
If you find yourself in a situation where you have a great idea but you don’t have a complete understanding of TIM, don’t try to push the project through your Formal Process. It won’t work. Innovation projects inserted in the Formal Process with a low understanding of TIM will almost always fail because the uncertainty surrounding their ROI will cause the organization to (appropriately) starve them of resources in favor of projects with a higher probability of success. This is why large companies generally do Sustaining Innovation well but struggle with Breakthrough and Disruptive Innovations: the “certainty of success” level of FEI projects falls well below the tolerance threshold of the Formal Process.
This, then, is the goal of FEI: reduce uncertainty enough that your company’s immune-system response to untested ideas will not attack and destroy potentially lucrative Breakthroughs. Through the FEI process, you develop a complete understanding of TIM, and this—in turn—allows you to make rational predictions about its possibility of successful commercialization. So how does FEI work?
FEI is an iterative, three-step process: Envision → Investigate → Decide. The Envision phase is simply the birth of an innovation idea. The Investigation phase is where you develop your understanding of TIM for the proposed innovation, rapidly discarding ideas that analysis shows will not be successful. The ideas that make it through to the Decision stage are supported by a newly-developed, complete understanding of TIM achieved rapidly and at minimal expense; translational R&D work on these ideas is money well-spent. More on what we mean by “translational R&D” in a later post, but, for now, know that it is still in the Front End rather than your traditional R&D process.
Unfortunately, FEI is not quite as easy as the preceding paragraph makes it seem. Even if your team understands FEI, existing staffing levels were designed to support the important demands of the Formal Process, and team members don’t have the time or resources to attack innovation ideas that don’t follow the same rules. But there is a solution: existing team members (in the form of ad-hoc teams) can do the job if they get outside assistance from FEI experts to augment their understanding of TIM for proposed breakthrough ideas. Who are the FEI experts? Well . . . we are.
So don’t let anybody tell you that to make your company innovative you have to change your culture, change your processes and change your organization. You don’t. All you need to do is take your existing team, your existing processes and add FEI discipline. You will immediately gain the ability to rapidly and efficiently sort the innovation wheat from the innovation chaff and make investments in the ideas that lead to growth.