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Article Excerpt
Innovation has nothing to do with how many R&D dollars you have...... it's not about money. It's about the people you have, how you're led, and how much you get it.--Steve Jobs
R&D culture can be the engine for sustained product innovation--a key driver of continual growth in many successful corporations. Today there is a general imperative to generate growth through innovation (1,2). This is evident from all the organizations, conferences, consultants and books focused on the subject (1,3,4). Even with these resources, however, many organizations still struggle to generate consistent results in new product development (NPD). Finding and implementing new opportunities is difficult and complex, yet, some organizations excel not just once, but on an on-going basis.
Because innovation means many different things to people, any in-depth discussion of the topic requires a definition of the term. In this case, discussion will be limited to product innovation, which is defined as commercializing products that produce customer and shareholder value through differentiated technology that is strategically aligned with the business. This product innovation model is illustrated in Figure 1.
Customer insight, business alignment, technology, and execution are at the core of building an effective innovation initiative. The R&D culture of innovation excellence is built on these elements plus risk tolerance and creative collaboration (virtual organizations). These elements form the acronym CREATIVE: Customer-focused, Risk-tolerant, Entrepreneurial, Aligned with strategy, Technology and scientific excellence, Innovative, Virtual organizations (or creative collaboration), Execution (or Excellence in project management) (5).
Many R&D organizations have excelled by successfully focusing on single factors, such as creativity, execution or customer focus. The CREATIVE R&D culture framework depicted in Figure 2 (6) has been originated and utilized by the author at various levels of R&D management in multiple industries. The application of this framework has generated sustained innovation, resulting most recently in significant and sustained improvement in new product sales over a five-year period. What follows is a detailed explanation of each CREATIVE element and tips for how to implement the holistic framework.
Customer Focus
We can believe that we know where the world should go. But unless we're in touch with our customers, our model of the world can diverge from reality.--Steve Ballmer
When R&D team members overcome isolation from customers and consumers they can gain profound insight into how their technologies can be incorporated into new products that bring value to customers. Without true customer insight, an invention is just that--an invention, not an innovation. There are many examples of outstanding technologies that failed in the marketplace, and of products that failed to even reach the marketplace, due to poor relevance to customer needs. Traditional R&D management and organizations have tended to seclude R&D professionals away from customers and have often been reluctant to push for customer contact. However, unless they are encouraged to see through the eyes of customers and end-users, R&D professionals are often unable to see practical applications for their technologies (7).
[FIGURE 1 OMITTED]
If the customer insight side of the innovation equation is ignored in favor of the R&D organization's excitement over a new technology, the department can end up with "a technology in search of a market." This occurs when R&D professionals "fall in love with" technologies for their own sake, as opposed to creating and developing technologies to meet customer needs. This can lead to a perception that the R&D organization is out of touch with the customers and the business needs of the organization.
R&D professionals should avoid the "build it and they will come" attitude. Although no one can dispute the value of visionaries, few R&D team members can afford the approach of Buckminster Fuller, who said, "I just invent, then wait until man comes around to needing what I've invented." A search of numerous R&D management books indicates that many of them offer little discussion of the customer. Writings on innovation and NPD, on the other hand, are filled with discussion of how to search for effective solutions through the eyes of the customer (8).
Customer needs can be divided between articulated, unarticulated (9) and future needs. Figure 3 illustrates how these needs are a part of the innovation model (6). Articulated needs are those that customers can recognize and easily describe, based on their current requirements and understanding of available technologies. These types of insights generally result in incremental or continuous innovation. Unarticulated needs are sometimes referred to as latent needs. R&D project team members must have unfiltered access to customers in order to identify unarticulated needs. Future needs are discerned through a deep understanding of how alternative futures create needs for new technologies. Unarticulated and future needs are often the source of discontinuous innovations or breakthrough opportunities.
It is important to take a balanced approach to the evaluation of customer insight. Excessive emphasis on articulated needs may tend to drive the organization toward too many incremental projects. On the other hand, excessive emphasis on unarticulated needs may drive the balance of projects toward too many high-risk, long-term projects. A balanced approach is needed to generate a diversified portfolio of projects appropriate for the corporation and the market.
[FIGURE 2 OMITTED]
Highly effective R&D organizations have close ties to customers philosophically and in practice. The first step in creating customer focus among the R&D team is simply to have R&D professionals directly observe customers in their own environment. This is where abstract, imagined customer needs can become concrete and real for the team. Observing customers' actual challenges allows team members the opportunity to extrapolate technological solutions for these problems.
The R&D team is ideally suited for discovering unarticulated needs. If the...
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