High-potential innovation ideas are critical to high innovation performance in companies. Better ideas drive superior financial returns such as revenue and profitability. Better ideas for innovation also delight customers, enable first-mover advantage and build a positive reputation in the market.
Innovation means new and valuable offering that will be appreciated by a customer and for which they are willing to keep paying you money. Typically, Products, Processes, Services or some other Solution.
However, while selecting these promising ideas to fill or refill your innovation pipeline is important, it can be hard to do well. How to prioritise innovation ideas and how to evaluate innovation ideas is a key routine in innovation management.
Common Mistakes
By addressing the problems of idea selection head-on you can create more successful returns for innovation projects.
Research by The Institute for Manufacturing at Cambridge University[1] reveals best practices used by companies from large firms to SMEs and also non-commercial organizations.
By taking an objective approach to selecting ideas you can be more strategic about the portfolio and be in more control of the uncertainty that comes with managing your front-end innovation activity.
These are some of the common challenges faced by innovation portfolio leaders,
- The way the company select early-stage innovation ideas or projects is unclear or mixes multiple approaches making the decision basis mixed and unclear. Also, different selection criteria are needed for different organisations, different stages of development and different types of projects.
- Related to the first point, in the very early stages, applying financial measures too soon or too heavily can kill what are promising ideas. This means the future value of the firm is subdued and interestingly, managers don’t believe these financial projections anyway!
- Innovation projects are uncertain by nature. Sometimes they can become the personal mission of influential characters in the company. While this might be a sign of engagement, it can bring a lack of objectivity. A forceful personality means the wrong ideas are selected: it is the best ideas that should win.
Innovation projects are usually part of a portfolio of innovation projects and selecting the right portfolio is a strategic concern. Because this is strategic, suitably senior management needs to be integral to decision-making.
So, several things can go wrong in your selection but what are the potential wins where you are?
| The Problem | The Win | Does The Problem apply where you are? |
| Ideas for innovative solutions go too far in development and draw too many resources. This Zombie Ideas also induces an opportunity cost[2] for the organisation. | Select more, better innovative solutions to focus your precious resources and improve Return on Innovation Investment (ROII). | |
| No one wants to give their energy to bad projects. They create a reputational problem for the company and potentially for you. | The company becomes a respected innovator and you get to reap your rewards through increased trust and promotion. | |
| Innovation is by its nature, uncertain. More a numbers game[3] how can you increase the odds of success? | Clarify the areas of uncertainty for an innovative idea you need to work on. | |
| Without direct attention from senior management, the portfolio of innovative projects can quickly become “unbalanced” creating lumpy future profits. | Build a better portfolio of innovative ideas and enjoy more consistent future profits. | |
| Ideas can be inappropriately biased to the short-term denying the firm radical growth options. | Be more radical and generate outperformance growth. | |
| Innovation projects need stakeholder buy-in, but poor projects can work against achieving that on a sustainable basis. | Make better decisions to improve the buy-in and trust of your stakeholders. |
Creating an effective approach to selecting ideas for your innovative new product, service, solution project ideas, you will bring sharpness, efficiency and effectiveness. It will help you make decisions about where to invest your precious development resources.
There are three essential steps in a good selection process,
- Generate a list of innovation solutions to a customer problem. Typically an ideation process would be used to make this list. A solution should solve a specific problem that a customer would be willing to pay money for or give value in some other way.
- Identify the most important factors that describe the potential benefit and the ability to launch the idea to the market. Typically these factors are selected before generating the innovation solutions, for example as part of a strategic roadmapping process or idea management
- Use the selection factors and select high-potential ideas for further development. Using a simple graphical 2 x 2 matrix display the results and chose where to invest some initial resources to develop the ideas further.
There are refinements to this process in how information about the ideas is presented and the degree of granularity of each selection factor.
The gains from selecting better innovation ideas
The gains to be made in selecting better more robust innovation ideas are quite profound.
- Faster decision-making: reducing the endless and tiring debate
- Kill the Zombies: release creative energy to work on more of the right things
- Faster identification of the levers of uncertainty
- Better Return on Innovation Investment and effective use of resources
[1] Scoring Methods for Prioritizing and Selecting Innovation Projects, Mitchell, Phaal and Athanassopoulou, (2014), 2014 Proceedings of PICMET ’14: Infrastructure and Service Integration.
[2] Opportunity cost is the loss of potential future return from the second-best unselected project. In other words, it is the opportunity (potential return) that will not be realized when one project is selected over another.
[3] 3000 raw ideas equals 1 commercial success!, Stevens and Burley (1997), Research Technology Management, Vol 40, Issue 3
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Rob Munro is an innovation strategist and consultant focussing on improving innovation results for organisations. Please contact me at rob.munro@innovation-success.com to discuss ways to bring greater effectiveness to your innovation processes.
Read more about my service to organisations for Innovation Planning in improving innovation results.