In the face of deep economic turmoil, developing innovative ideas into usable, marketable products is particularly difficult to master. How do organizations identify the most promising ideas and translate them into successful products?

It wasn’t too long ago that the call for innovation as a primary tactic to drive the growth, performance and valuation of companies was becoming louder and clearer.

“We can maintain our competitive edge if we research and invest in methods to enhance and manage the process of innovation,” commented IMT reader Ron a little more than a year ago.

Yet, in the face of deep economic turmoil, the overused rhetoric of innovation is proving to be weak as a tactic, with innovation as a strategy — developing innovation into a usable, marketable product — being hindered by misuse, narrowness, incrementalism and failure to evolve. Now businesses find themselves acting on the old standby, the default answer to sagging business profits — slash labor costs — which companies are doing in full force.

Today the development of more innovative products is reported as the top business goal for product development by participants in Aberdeen Group’s 2008 Aberdeen Report: The State of the Market report (registration required).

Based on the feedback of more than 280 manufacturers in recent months, Aberdeen Group’s most recent research, published in last month’s The Innovator’s Toolbox, suggests the top pressure driving organizations to focus on developing innovative products is the need to satisfy market demand and to deliver the right product to market (62 percent), followed by time to market (39 percent).

Says last month’s report:

[G]etting the right product to market dwarfs concerns about product development cost or budget issues by more than two to one. This tells us that many companies are driven to embrace innovation in an effort to look outward, not inward — for business growth. Indeed, here we see that innovation is being viewed as a business driver, and as an effective means of addressing customer needs and market demand. However, timing counts, too. Bringing a product to market late, regardless of how well it fits the needs of the marketplace, can significantly impede an organization’s ability to capitalize on its innovation investment.

The top five pressures are rounded out by product capability issues, i.e., loss of differentiation (32 percent); product and technology development cost issues (25 percent); and development budget issues (16 percent).

Of course, developing innovation into a usable, marketable product is easier said than done. Exactly how do organizations identify the most promising ideas and translate these ideas into successful products?

Based on the recent feedback of engineers, product development managers and directors, vice presidents and senior management, Aberdeen Group determined how “leading companies empower their innovators with tools and strategies that allow them to leverage ideas and knowledge to develop a steady stream of new and profitable products.”

“Not surprising is the importance assigned by manufacturers to use existing sources of knowledge, experience and expertise within the company more effectively and efficiently,” the report says. “Aligned with this strategy is the ability to leverage existing technologies, ideas and patents in the product development process.

“Both of these strategies relate specifically to an organization’s ability to capitalize on currently available sources of innovation — and to tap into its knowledge capture and reuse capabilities in order to create more innovative products,” Aberdeen continues.

Aberdeen’s September 2008 report, Getting the Process Right, uncovered a related theme: namely, that knowledge capture and reuse remains a key differentiator for best-in-class performers.

Examining the latest survey results, the research firm found that best-in-class performers shared several common characteristics, among them:

• Ideas and concepts are documented digitally, and specific environments have been created to foster idea generation;
• The process of selecting ideas or concepts for development is standardized, and ideas and concepts are quantitatively compared against goal-oriented criteria; and
• As a standard procedure, employees investigate and leverage existing knowledge (relevant technologies, ideas and/or patents) in their product development efforts.

The January report recommends companies do the following to achieve best-in-class performance:

• Employ idea/innovation management solutions to capture, track and evaluate ideas and concepts;
• Tap into the ideas of employees as well as customers and other sources external to the organization to fuel ongoing innovation; and
• Empower innovators with intelligent search and retrieval tools to access existing sources of knowledge and to augment expertise with virtual sources of knowledge.

Best-in-class performers stand apart from laggards in delivering on innovation via their perspective regarding both how innovation occurs and how innovation can be fostered.

“Whether they originate from internal or external sources, the ability to successful capitalize on new concepts hinges on an organization’s ability to capture and identify the value of these concepts,” the report states. “[I]t takes more than a great idea to innovate, but that’s where the process starts.”

As Aberdeen notes, “companies face a range of internally rooted challenges that obstruct their ability to develop and execute on delivery of innovative product concepts.” Among these challenges: freeing up employees from current responsibilities to innovate (60 percent); shortening product development schedules (43 percent); and getting innovators to focus on solving the right problems (42 percent).

The difference between laggards and best-in-class innovators: people and payback. Successfully innovative organizations free up employees from other job responsibilities to devote time to: 1) creating new innovative products and 2) coming up with some means of effectively calculating return on investment (ROI) from their innovation investment.

These are the areas organizations wrestle with most. Successful companies recognize the value of innovation and are focused on finding ways to carve out more time for employees to innovate. Simultaneously, they are ahead of their peers in terms of looking at innovation from the perspective of gaining a quantifiable ROI.

Rather than expound on platitudes focused on the importance of creative thinkers and innovative products, these are some ideas to prove it.

See also

5 Ideas for Leading through the Downturn

Does Expertise Clog the Creative Mind?

Innovate Through the Downturn

Patterns of Innovation: Matters of Size and Style

They Shoot Good Ideas, Don’t They?

Clever Ideas for Creative Thinking

Cultivate Corporate Creativity

Resources

The Innovator’s Toolbox
by Amy Rowell
Aberdeen Group, January 2009

2008 Aberdeen Report: The State of the Market
Aberdeen Group, March 2008

Getting the Process Right: A Fresh Look at PLM and Product Development
by Amy Rowell
Aberdeen Group, September 2008

“Innovation” is Dead. Herald The Birth of “Transformation” as The Key Concept for 2009.
by Bruce Nussbaum
Nussbaum On Design (BusinessWeek Design Blog), Dec. 31, 2008