1

Innovation Process – OPIM 651

~500 opportunities identified by individuals

~50 opportunities developed

by individuals

~25 concepts developed by

teams of 2

multivote

Darwinator system

~13 companies prototyped by

teams of 4

simulated capital market

0-2 ventures launched

multivote

~250 opportunities submitted by individuals

Individual screening and

preferences

2

Shape of the Funnel “Yield” / “Filter Ratio” by Phase

(Approximate values; From multiple sources.)

3

Innovation Process Relative to Phase-Gate New Product Process

4

Modifying the Funnel

“taking more draws from the opportunity distribution”

“delaying picking a winner until more uncertainty is resolved”

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

0 50 100 150 200 250 300 350 400 450 500

Number of Ideas Generated

Exp

ecte

d V

alu

e o

f M

ax R

atin

g

5

6

Uncertainty and InvestmentQ

ua

lity

of

op

po

rtu

nity

Distribution of universe of all opportunities

realizationof value

LaunchConcept Development

Prototype

7

8

Capacity and Bottleneck Management

Essentially all key ideas from capacity/bottleneck management in operations apply to innovation processes: Bottleneck resource is typically resource with highest (yield-adjusted) cost of capacity. Low cost resources should typically not be capacity constraints. Projects/opportunities/work is released to the system at the bottleneck rate. Strategic use of buffers to trade off flow time and capacity utilization.

9

American Idol uses both flow and batch screens

• 10,000+ candidates

• Flow screening applied early

• Batch screening applied later

Batch screen helps pick the “best” winner, but:• Lumpy demand for process steps and/or• Extended flow time through process

Batch versus Flow Screening

10

Spiral vs. Waterfall Process

11

12

Business Development Relative to Existing NPI Process

Existing “Phase-Gate” Process

What are the criteria for release to development?• Business case.• Rank on Innovation Return Curve.

What are the different flavors of development organization?1. Autonomous team.2. Heavyweight project structure.3. Lightweight project structure (status quo)

When are opportunities released to development?• Hybrid batch/flow screening.• “Hot” opportunities released when ready.• Others released in planning cycles.

Where do opportunities originate?• Active, structured exploration led by BD org.

• “Pull” from innovation strategy.• Passive collection from various sources.• Active solicitation by BD org.

What are phases for early-stage opportunities?• Raw idea (text, single ppt)• Validated opportunity• Solution concept• Real, Win, Worth analysis• Prototype?Are these phases the same for every opportunity?

How are opportunities moved along?• In early phases, many opportunities handled by the same BD

team.• Later, a BD leader assigned, with part-time x-fn team drawn from

larger org. Aim to include some who would be on NPI team.

New “Business Development” Process

How is BD process budgeted?

Governance• Who decides/approves each round of selection?

13

Solution Novelty

Ma

rke

t N

ov

elt

y

new to worldin use by us new to us

serv

ed

by

us

ne

w t

o u

sn

ew

to

wo

rld

Horizon I

Horizon II

Horizon III

In what ways does approach vary by type of opportunity?

14

Levels of Innovation Process Management

1. We can describe the phases in our innovation process.

2. We know the current state of the process.

• Flow rates at each phase.

• Opportunities in progress at each phase.

3. We have analyzed and deliberately chosen our key process parameters.

• Number of opportunities considered for each launch.

• Aggressiveness of filter ratios by phase.

• Capacity of each phase.

4. We have deliberately considered and made process strategy choices.

• Organizational structure.

• Make-buy and partnering decisions by phase.

• Level of capacity flexibility.

• Batch vs. flow by phase.

5. We engage in deliberate process improvement projects.