How do you make the fuzzy front end of innovation less confused?
Within the domain of product development, all things that are done for the actual production / construction of a new service or product are called the 'fuzzy front end'. 'Fuzzy' means incoherent or confused. I think the word 'muddled' is used to indicate that the process that has led to the point where actual production can start is often unstructured. The process is not clear and every project seems to have a life of its own.
So, how do we make the fuzzy front end less messy? This can be done by following the next three steps.
- Determine a clear innovation strategy
- Determine a clear process
- Try to stick to process and strategy
1. Determine a clear innovation strategy
Where would your company be without a strategy? Even if it is not on paper, I assume the company was founded with a certain vision, something that you want to achieve in the long term. The same goes for innovation. If you don't align the development of new products and business innovation with your long-term strategy, then you are sure to waste money on irrelevant things. You should formulate a clear answer to the following questions:
How much innovation is needed?
This partly depends on what type of company you have, but do you want to be the first on the market or do you want to follow quickly? The first to hit the market normally achieves the highest market share, but the fast follower often has a lower cost. The answer to this question depends on how fast the market is developing, market size, entry barriers, intensity of competition, etc.
What balance in innovation is needed?
There are three types of innovation: incremental innovation, true innovation and radical innovation. With incremental innovation you improve your product or introduce slightly different variations. Real innovation involves completely different products and radical innovation develops new products or business models for unknown markets. The problem with incremental innovation is that at some point, the life cycle of a particular product ends. If you don't have anything new on the market or in the pipeline, then you have a problem.
The best innovators devote more of their innovation budget to real and radical innovation, especially in the areas of products, services, technology and business models. They are also aware that this requires separate funding that does not compete with operational funding needs.
Portfolio Management is a structured process to properly manage a portfolio of new development projects.
What do we focus on in innovation?
Focus is always important, especially in innovation it is important to provide frameworks so that everyone has direction. This is generally described in a Product Innovation Charter. A product innovation charter stipulates:
- Focus: on technology, customer, products or a combination? Which market are we targeting?
- Long term goals
- Guidelines with regard to the degree of innovativeness
- Limits, if applicable
2. Determine a clear process
Many people think that innovation is a creative, unstructured process in which a brilliant person (think Steve Jobs) comes up with the perfect solution to solve problems for millions of potential customers. This is not reality.
It has been proven that the chances of successful innovation increase significantly when using a structured approach. We call this a product development process. In general, this process consists of the phases idea generation, concept generation, concept validation, realization & validation and launch. The steps up to and including concept review are also referred to as the 'fuzzy frontend' of innovation.
1. Idea generation
In this phase strategy is translated into innovation. For example, if a bank has named 'digital payments in cryptocurrencies' as a strategic focus area, the following things could be done.
- Extensive market research to learn as much as possible about both digital payments and cryptocurrencies.
- Market and competition analysis
This is the starting point, you identify the trends and lay a foundation for idea generation. Now you are going to tap into the knowledge inside and outside your organization. Think of brainstorming sessions, organizing ideas competitions, talking to customers, suppliers, customer journey mapping sessions, the list is endless.
2. Concept generation
The result of idea generation is a long list of ideas. Obviously, not all ideas are equally good, and you don't have enough resources (money, time, personnel) to do them all. That's why you need a good process to separate the wheat from the chaff. All ideas have to pass through a so-called 'idea screening gate', after which, based on clear criteria, it is determined whether they proceed to the next phase or not. A scorecard can help identify the better ideas. For example, you can score on the following aspects:
- Strategic relevance
- Product and competitive advantage
- Market attractiveness
- Utilizing core competencies
- Technical feasibility
- Financial return
3. Concept validation
Now that you have a worthwhile concept, it's time to validate it. You must distinguish between the type of innovation. If it is an incremental innovation, then you already know the market and solution well and you can test it in the usual way, with a business case and plan. If it is quite innovative, do not start building immediately. The Lean Startup methodology developed by Eric Ries and Steve Blank is a good starting point. They developed the build-measure-learn loop, which is now also turned into a learn-measure-build loop.
You must first establish your most risky assumption, learn whether this assumption is true for real - yes, real! - customers, determine how you will measure that and only then deliver (build), from which you will learn again.
In this phase 'building' can mean a demo website, landing page, light prototype, it doesn't have to be 'real' yet. As long as you can determine whether you are on the right track. Only when you have validated that you meet the market needs, you can move on to the next phase. That is, if you survive the 'concept screening gate', where all concepts that made it through in this phase are again assessed against the same criteria as in the next phase. After this you go to the 'development phase', which falls outside the scope of this article.
Try to stick to your process and strategy
The process and strategy are there to help you. Don't pour them into concrete, don't make it a paper tiger. The process itself is already flexible, which means that you sometimes go back and forth in the process. A portfolio strategy helps you stop bad products in a timely manner, but if a project has a score of 59% with a threshold of 60%, you can still talk about it and perhaps reconsider.
An idea may lie outside the scope of your innovation strategy, but if it is a super idea, you will find an angle to fit it into the strategy, or to adjust the scope. The point is that you think about it and talk about it. But a product development process should be a funnel, which means that some projects survive at the expense of others. Your chance of success has increased significantly by saying goodbye to less promising projects and focusing on the winners. And the fuzzy front end of innovation has become less messy!