Events and
publications
June 23, 2010
Business model innovation
8.00 – 9.00 am
University of San Diego
July 23, 2010
Free
webinar: Agile Strategy for New Ventures
An introduction to applying the principles of agile strategy to maximize new
venture success.
| Join our innovation community |
 |
Generating high potential new product and service ideas: a practical guide
-continued
Generating ideas externally
In addition to generating ideas internally, it is critical to look externally for new product and service ideas. While this has long been done by successful innovators, it remains relatively rare – the “not invented here” syndrome is seductive and difficult to overcome. However, as popularized by Henry Chesbrough’s seminal work Open Innovation, it is vitally important. Companies that source ideas externally as well as internally perform far better on every key innovation metric.
Sourcing ideas externally is much more complex than internally, because there are many external groups of stakeholders who may offer insights of value. As such, as illustrated in table 2, we recommend a two dimensional phased approach. Begin with a first phase that focuses on a limited number of tactics with a few key stakeholder groups. Over time, add more sophisticated tactics, and add additional stakeholder groups. By phase three, you will be sourcing ideas using a wide range of tactics from a full range of external stakeholders.
Table 2: External idea generation options
Stakeholder |
Phase one |
Phase two |
Phase three |
Customers / |
|
|
|
Channel partners |
|
|
|
Competitors |
|
|
|
Influencers (analysts, media, industry associations, academia) |
|
|
|
Complementors (related start-ups, adjacent industries) |
None |
|
|
General public |
None |
None |
|
Interviews / individual collaboration – you can begin quickly and easily this by reaching out and speaking with people. Many customers, partners and influencers will willingly share their thoughts if you only ask them. While a discussion guide can be helpful, these interviews should be fairly unstructured to allow for rich conversations and idea generation.
Focus and brainstorming groups – assembling small focus groups can also be a relatively easy tactic. Usually eight to twelve participants, these sessions need a skilled moderator that leads the discussion and helps participants walk through problems and explore possible solutions.
Monitoring blogs – with the emergence of blogs as a mainstream medium, it is wise to keep track of the blogosphere in your space, particularly comments and ideas from customers, competitors and influencers.
Online research – with essentially infinite information online about every known subject, a central element of external idea sourcing is of course extensive online research. Key targets will include relevant companies, university research, media, patent applications, and industry association events.
Advisory board or panel – create an advisory board or panel of customers, partners or influencers. These groups should be kept small, represent a cross-section of opinion and avoid exposing competitive sensitivities. Advisory boards should meet on a semi-regular basis and be enabled by web-based technologies. To keep the group focused, your organization should supply them with specific issues for discussion, but also allow the group to self-regulate and brainstorm freely.
Customer experience mapping – mapping the customer experience is an important tactic. While this methodology can involve varying degrees of sophistication, the essence is to document how your customers perceive your company and its offerings throughout the purchase, use and support cycle.
Non-customer analysis – it is important to consider the ideas of non-customers. Their feedback as to why they did not select your product, and their suggested improvements, can be more valuable that your satisfied customers.
Reverse engineering – this well known tactic involves buying and analyzing competitive products to understand the thinking and engineering behind them. Based on this analysis, generate new product and service ideas.
Intermediaries – these entities include brokers, agents, venture and innovation capitalist and provide a company with raw or market-ready ideas.
Licensing – other companies can be a source of ideas, and frequently they are open to licensing them. Large corporations also monetize their patents by allowing companies to locate them online.
Strategic investment – this involves identifying and investing in start-ups to secure and build upon their ideas.
Co-creation – at the end of the external innovation spectrum is joint development of product ideas. In this methodology, customers, partners, complementors or even competitors share in idea generation and product development.
Enthusiast community – setting up an enthusiast community is a large undertaking, but can allow your users to interact naturally and suggest valuable improvements. While it can be difficult for companies to create these communities, they can also leverage third-party sites where users congregate and interact.
Extended observation / shadowing – this involves closely observing the user experience – how users go about their lives, the problems they encounter, and how they interact with your product or service. Many needs are unknown to the customer, and can only be discovered through in-depth observation. Because this is usually done in a native environment, your team can identify new areas of opportunities.
Acquisition – similar to strategic investment by taken to the next level, this involves identifying and acquiring companies for their ideas and technologies.
Technology transfer – universities and research institutes usually have an extensive intellectual property portfolio and are willing to license it. Usually these ideas are more technical in nature, but if your company can create a solid business case or couple them with other ideas, they can be a source of tremendous value.
Incubator program – companies such as Salesforce.com have pioneered creative programs to keep the pulse of related start up activity. These programs involve providing companies with resources such as technology platform, technical advice, or office space. Often this is done in exchange for equity; however, in other instances there is no equity exchanged. In the latter instances, the incubator allows the larger company to gain early insight into innovations that benefit their business or provide an avenue for acquisition.
Idea exchange – this is common when a company has generated an interesting idea that falls outside of its core business. In this case, it collaborates with another company and exchanges its idea with one from their portfolio.
Crowd and open sourcing – leveraging large, web-based innovation platforms or open-source technology to come up with ideas. Some companies have integrated crowd-sourcing into their business model to tap collective knowledge and creativity.
Initiative, forum, or promotion - to tap independent innovators, many companies allow for free-form submittal of ideas. Many of these programs reward selected product ideas by acquiring or licensing the solution.
Technical innovation community – several technical exchanges exist where a company can anonymously post their technical problems and the members of the community submit their proposed solutions. The rationale for using such a platform is the appeal of having a significantly larger number of people tackling your problems from potentially diverse angles.
The tactics and methodologies listed above, representing the thinking of innovation thought-leaders, are a menu of choices, not a rigid list. Design and continually refine your external idea generation programs using this framework and these tactics as inputs.
* * *
Generating high potential new product and service ideas is the critical foundation for successful innovation and new product development. In this article, we have presented a practical approach to help you build a best practice idea generation capability within your company.
* * *
Additional reading and resources
Chesbrough, Henry. Open Innovation: The New Imperative for Creating and Profiting from Technology.
A seminal and visionary work on open innovation. Chesbrough introduces the idea that companies must allow outside ideas to enter its walls. In addition to laying out a new paradigm and providing relevant case studies, the author stresses that companies must connect both internal and external innovation to create and capture value.
Cooper, Robert G. and Scott J Edgett. “Ideation for product innovation” PDMA Visions Magazine, March 2008.
An informative article based on a 2007 study, which had over 160 companies assess the effectiveness and popularity of 18 ideation methods. The resulting analysis presents a useful matrix plotting the effectiveness and popularity of these ideation methods.
Nambisan, Satish and Mohnabir Sawhney “A Buyer’s Guide to the Innovation Bazaar” Harvard Business Review, June 2007. (Subscription required)
Nambisan and Sawhney present an external sourcing continuum illustrating the sourcing processes and tradeoffs between raw ideas and market-ready products. The authors plot two sets of tradeoffs – risk / reach and speed / cost – which run inversely as one traverses the continuum. The midpoint of the continuum represents market-ready ideas. These ideas optimize the two sets of tradeoffs and can be sourced through novel intermediaries.
Skarzinski, Peter and Rowan Gibson. Innovation to the Core: A Blueprint for Transforming the Way Your Company Innovates.
Building on the ideas of strategist Gary Hamel, Innovation to the Core presents a holistic guide to instilling innovation into your corporate DNA. Particularly relevant to this month’s Insights, the authors not only advocate widening the innovation pipeline, but also stress the importance of enhancing the quality of ideas through innovative idea generation.About the authors
Michael Lurie is Founder and CEO and Dan Zagursky is a Manager with Blue Mine Group in San Diego, CA. Blue Mine Group is a strategy firm specializing in new product development, venture management, and corporate innovation.