Operationalizing Product Innovation

One of the more interesting trends I have noticed
is the trend to try to “operationalize” innovation. I think that a
lot of companies are tired of investing in R&D with uncertain
retruns. By it’s nature, innovation is somewhat speculative. But we
are seeing companies start to adopt processes aimed at making
innovation more predictable and repeatable. Can product innovation,
product development, and engineering be operationalized like
manufacturing has been as it transformed from art and craftmanship
to a repeatable discipline?

Case in Point - Open
Innovation
Last year’s Product Innovation Summit
identified a number of companies focusing on new concepts like
“open innovation” to try to leverage 3rd parties for new products
and technologies. This year’s
Product Innovation Agenda 2010 report confirms this trend.
Not only are Best-in-Class more likely to be adoption techniques to
leverage knowledge and ingenuity in their own products, many
leading companies that haven’t yet tested these processes are
planning to adopt them between now and 2010. I will not claim to be
any kind of expert on these processes, I’ll leave that to people
like Henry Chesbrough, although we do have some additional research
planned on the topic for later this year. But I believe this is a
part of a larger trend.

Sourcing Innovation
The idea
of relying less exclusively on internal innovation is not a brand
new concept. Many pharmaceutical companies (and software companies)
for that matter, have begun the “wait and see” approach with new
technologies and new products. They may have their own products in
the mix, but on highly speculative areas they can either choose to
spend their millions in R&D money on ten speculative products -
resulting in anywhere form zero to (maybe) three hits. Or, they can
let smaller, entrepreneurial companies (with their venture capital
dollars) take the risk. True, they may have to spend more for the
winners. But the losers are free, because they lost someone else’s
money. And while the chances that they can afford three winners are
small, the chances that they end up with zero are, well, almost
zero.

Winning the Product Innovation
Ballgame
The ability to get predictable returns from the process are
comforting for a lot of executives and shareholders alike. Let the
VC companies take the risk, and let the leaders leverage the
victories of the winners. For baseball fans, most people love a
player that can hit predictable “on base” percentages instead of
the home run sluggers that strike out a lot. The home run sluggers
are fun to watch, but the on-base players consistently win ball
games.

That’s all I have for now. I look forward to your
comments, have you resolved to give open innovation a
try this year?