Article: Innovation: Hunt, Do Not Fish! -- January 2009
January 1, 2009
The “open innovation” protocol, recently adopted by a number of large companies in the U.S. (primarily those in the food and beverage industry), is very much akin to going fishing: the fish take the initiative in deciding whether or not to nibble on the bait, while the fisherman just waits and hopes for the best. The fisherman, hoping to land some rainbow trout, lands a lot of inedible carp along the way and throws them back.
So it is with open innovation, in which independent inventors take the initiative in deciding whether or not to approach any given manufacturer with a new product idea that, in their sole judgment, ought to be “just right” for that company. At best, the company may acquire a few ideas that way, which represent merely incremental additions to their current product lines…and they will surely have to reject a lot of “carp.”
In contrast, any company seeking innovative new product ideas can establish its own ideal target for future product lines and define how far afield from its current products it would venture. That way, the company itself takes initiative in seeking out great new product ideas in fertile hunting grounds—using a proper focus and the right ammunition. Surely it will bag a number of keepers: innovative new product concepts that meet their growth objectives. This article will describe an alternative to “going fishing,” offering tips on how to focus selected groups on the task of generating viable new product ideas.
What is the Ideal Product?
For starters, manufacturers should not disclose the identity of their company to any outside sources of ideas. Better yet, simply stipulate the desired characteristics of the ideal new product line for the company in the future. (The company’s executives can well do this, without even knowing of any specific product that might fill the bill.)
Therefore, the very first step should be to convene an internal meeting with the leaders of the applicable functions within the organization or business unit and ask them, together, to delineate the attributes of an acceptable next-generation product line for the company. This should be done in terms of the firm’s objectives and its development, production and marketing capabilities. Out of that meeting, the leader will then be in a position to formulate a concise statement from this list of "success criteria" and set that as the target for inventors who may wish to submit an idea or a product to the company for consideration. (NineSigma Inc. is an example of a web-based firm that does a good job of that, on behalf of their clients.)
Welcoming ideas from just “anybody out there” is predicated on the assumption that proposals will describe existing inventions at some stage or other in their present development--anything from the just-conceived idea to a fully-developed, tested, proven and patented product. In any case, the inventor is peddling, rather than the company going shopping. With some good fortune, a company can get lucky and be presented with an existing new product currently "looking for a home" that might be a dramatic departure, yet fit its current future business growth strategy.
If not, then the alternative is for the company to select a particular group of experts to generate new inventions aimed at their particular specifications (i.e., the company’s success criteria). Any company can follow these steps, which will result in a much higher hit-rate of potential breakthrough new product ideas from outsiders.
Rather than holding an open house, at which anyone in the world can contribute wild ideas (a random crapshoot), the company’s executives should determine which seven or eight fields might represent fruit-ful hunting grounds. Then, they can invite selected experts, who possess experience-based knowledge in each of those fields, to participate in an ideation session designed to invent (“jointly and severally”) the company’s next breakthrough new product…on the spot!
One example is a Euro-pean confectionery manufacturer looking into the future, in order to identify emerging opportunities for the development of dramatic new product lines. A diverse group of experts was drawn together to participate in a structured ideation session. (See sidebar “Experts: Eclectic and High Level.”)
Generating Ideal New Product Ideas
In preparation for such an expert group ideation session, three things need to be done:
1. Forward a briefing document to the experts (drawing from the success criteria and pointing the way forward), enabling them to cogitate a bit ahead of time.
2. Pay them in advance (handsomely), just before the ideation session begins.
3. Require execution of both a conventional, non-disclosure agreement and the assignment of rights to any potential proprietary data that may be generated.
In conducting the ideation session itself, these three things should be done:
1. Arrange for a skilled facilitator to conduct the session off-premises, so as not to reveal the firm’s identity (and without the participation by its own executives, who are likely to be prejudiced and quick to judge).
2. Use proven “creative techniques” to stimulate and foster the desired concepts.
3. Electronically record the entire session, so nothing gets lost in translation.
Following the session, to organize the potential opportunities and new product ideas produced, the facilitator should further define the fuzzier ideas (through additional research, as necessary) and then collate all the concepts into 10-12 categories. Each idea should then be presented in logical sequence to the company’s original cross-functional team, which established the success criteria in the first place.
It is essential to overcome the predispositions of the members of the “home team” to damn any outsiders’ suggestions (the “not-invented-here” factor). “The human mind treats a new idea the same way that the body treats a strange protein: it rejects it,” according to Nobel laureate scientist Peter Medeware. Companies can obtain buy-in from all stakeholders, making the company’s cross-functional team a part of the innovation process as well (rather than just part of the screening process). Bringing them together for two meetings, in succession, can do this. Make clear that the exclusive objective of the first meeting is to build on the outsiders’ “imperfect” ideas and to refine and perfect them by trying to push them toward the success criteria, if at all possible. As Thomas Stewart, editor of Harvard Business Review, has aptly asserted, “The best business thinkers...keep all the possibilities in mind, rejecting none. They are not trying to choose among alternatives; they are trying to come up with an idea that combines several elements...into something better than anything that was proposed.”
The follow-up meeting is to be devoted to the joint evaluation of all concepts (some of which the executives may well have improved, or perhaps even invented, during the previous meeting) for their potential to meet the success criteria. Those are, after all, the agreed benchmarks for selection of the best possibilities. This group-consensus-evaluation process is, necessarily, a best guess or “hip-shot” on everyone's part. At this point, nobody knows for sure whether or not the apparently most-promising concepts will be right for the market and the firm’s production capabilities, as that has yet to be determined. But now, there are the “finalists.”
The Final Outcome
It is not unreasonable to expect some 100 concepts produced by the outside experts’ ideation session. From those, perhaps 20 concepts will survive the company’s inside experts’ evaluation; four candidates will prove valid; and then one breakthrough new product can be developed and launched! That is Pareto’s 80/20 principle, all the way. The percentage of the initial ideas that are ultimately funded should be anticipated to be very small. Quality is a function of quantity; if one starts with a proliferation of good possibilities, then one will lose most of them (all the bad ones). Never mind trying to measure the metrics of any of those processes that may have led to the company’s most recent new product success…and, especially, do not look back 10 or 20 years ago. The next one will always be completely different.
The basic procedure described here has delivered successful breakthrough new products for leading companies in virtually every industry in the U.S. and the U.K. over the years. The list includes a diversity of products. Following this approach will develop new business for a supplier of any product, including food and beverages!