The Anatomy of Innovation

Everybody wants to innovate or drive innovation, however, it seems very difficult for us to come to a common definition or set of terms when describing it. Innovation is not a thing, it is a process, and typically people describe abstract processes differently and use terminology that comes from other activities. In this post, I want to create a framework for innovation terminology to help people new to the topic understand how these terms relate to each other.

To start with let me be clear what I am NOT trying to do:

  • I am not trying to define a universal set of terms that people should use as communicating about innovation needs to be tailored to your industry and audience.
  • I am also not going to try to define innovation itself, many more articular and brilliant people have done that. A great place to start is Jeff Dances post of  WHAT IS INNOVATION? 30+ DEFINITIONS LEAD TO ONE FRESH SUMMARY. I like his conclusion of it being something “Fresh that creates value”.

As there are many different types of innovation I do want to provide some model to describe the range of types before we define the innovation process framework. A good starting point for the main three types of innovation Disruptive, Incremental, and Sustaining can be found in an HBR.org article by Greg Satell. These innovation types are not fixed but points on a scale.  In the proposed model below we can think of innovation as a spectrum with a sliding scale of properties. Each end of the spectrum has different values for each of the three key properties; Resources (Investment), Time and Return on Investment (ROI).

Innovation Spectrum

All innovation types have some common principles, you invest resources (money and people) and over time you get some return on your money. The spectrum of innovation, above, shows that the more resources you invest the longer it takes and generally (but not always) the higher the return when successful. Therefore sustaining innovation is to the left of the spectrum as the level of effort is lower and typically the return is seen very quickly but limited (like a new feature on a product). Disruptive innovation would be to the right of the spectrum as it takes significantly more time but yields a greater return (a completely new way of doing something). Incremental Innovation like product refinement could be seen somewhere in the middle (think of a new type of an existing product).  This model applies to both Product or Process Innovation. A single Idea can move up and down the spectrum over time. It is this dynamic ability that needs to be taken into account when we define the innovation process framework. These rough property scales are not always correct and everybody wants to find the magic combination that breaks this model. In doing so they would spend very little and get a big return in a short amount of time. I am not saying those innovative ideas don’t exist, but like unicorns, they are very rare!

Now we have a common view of the types of innovation and their properties lets look at the innovation process and define the framework. All innovation regardless the type have some very fundamental parts. The big question is how many stages and steps? Every Innovation funnel diagram I have seen seems to have a different number of stages and names. So I have come up with a very simple 3 stage framework from which we can map all the other activities and steps into. I have picked 3 as I think everybody can remember three stages and we observe fundamentally different skills and resources needed for each of these 3 stages. They are:

  1. Ideation – Finding and selecting the idea.
  2. Incubation – Refining the Idea.
  3. Industrialization – Monetizing the idea at scale.

We can treat them as the macro innovation process, within each of these three stages are a number of more detailed micro process steps. Depending on the exact type of innovation you may only require a subset of these micro process steps.

The transition between each phase is not clear cut in any innovation program and in many cases, great ideas can move through these stages and steps many times. So in defining your process, you must accommodate the promotion of ideas and the ability to move an idea back to an earlier stage as they move up and down the innovation spectrum.

Below I have provided a more detailed definition of each macro stage and then listed some typical micro steps that can occur in each one. I do not have every term used but I hope enough to provide you with a reference framework of what typically happens in the three main stages.

Innovation Framework

Ideation

Sometimes called idea generation or discovery the main function of this phase of the innovation process is the collection of ideas from various sources. This normally takes significantly more time and effort than people expect and without very good management and design can render the rest of your innovation program pointless. Some of the micro-steps undertaken at this stage are:

  • Idea Generation and Mobilization – This is helping people discover new ideas
  • Innovation Challenges – an event to drive idea collection for a specific topic
  • Innovation Hackathons – Like a challenge but focused on getting an idea prototype
  • Idea Definition – Capturing the important properties of the idea
  • Idea Selection/Advocacy – Finding ideas that align with your goals

Incubation

This phase of the innovation process can vary significantly depending on the type of idea and innovation that you are trying to achieve. Typically this takes the raw idea through a number of iterative test and trials to refine the final offer. It is especially important when looking to drive disruptive innovation, which by its nature is normally unpopular with the rest of the organization and does not easily fit into the existing business operational model or the organization. Micro-steps within this stage are:

  • Experimentation – The testing of the idea and its assumptions as a whole
  • A-B Testing – comparison tests to help select the best combination of features
  • Proof of Concept or Trials – Testing prototypes with customers
  • Business Model Generation – defining the expected approach to bring value
  • Planing – the initial approach to take you into industrialization

Industrialization

The primary purpose of any innovation process is to make a new idea commercially viable to a set of customers. Within incubation, you may have a small number of customers using a new service or product. To be able to really drive revenue from your idea there is significant hardening required for a repeatable and predictable offer that customers get value from and generates a profit for you. This phase takes the refined idea and like the factories of the industrialized age helps you scale up the idea. Micro-steps within this stage are:

  • Commercialization – Transforming how an idea is delivered to ensure quality
  • Diffusion or Implementation – Ensuring that everybody understands the new idea
  • Product Launch – Making the idea available to a wide set of customers
  • Product Life Cycle Management – Managing the idea from launch to withdrawal
  • Measure ROI – Validate that the approach and adjust the framework

Innovation Funnels

I mentioned briefly the Innovation Funnel diagram, you will find many pictures of these refining idea funnels via internet searches, I have created versions myself as well. Although they do convey the process of reducing the number of potential ideas to a sub-set for investment, they always seem to portray that ideas that do not make the next stage are thrown away. Some ideas will be discarded, but it is a dangerous approach to managing ideas. The reason I say that is that it is very likely that you will want to adjust the focus and selection criteria of your innovation process as the company changes and grows. It is beneficial to keep a pool of good ideas which to can return to and re-evaluate depending on the current objectives and company strategy.

I also think that the majority of these innovation funnels only focus on the first two stages described above and do not help you in the industrialization of an idea. This key step is typically hosted within the existing product units, unfortunately, this leads to many good ideas being forced into existing delivery models that then either restrict the return on investment or ultimately kill the idea before any success can be achieved. I would urge anybody looking to create an innovation process within their company to extend the scope of responsibility for the launch of the idea before handing it the existing organizational groups.

Summary

There are a number of great people or companies that have defined their 3 I’s of Innovation  (Edison Awards, Innovation Excellence – Rob Spencer and Geneca to name just three)  however the point of this post is not which term or numbers of stages/steps are correct but to help you pick the best combination for your program. I hope that this post will help you create a framework to drive your innovation program. Terminology is critical in helping manage change as any innovation program that works forces a significant amount of change in an organization. Therefore having common terms that you use will help you gather people around new ways of working. Enjoy picking the terms that are the most effective for you.

Please share with me the steps that you use in the comments or on social media. If you would like to keep informed of my next post please sign up for my blog email notification.

© Peter Briscoe 2018

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