How to build and manage your innovation funnel
Unfortunately, product innovation is suffering and R&D productivity is low. Disruptive innovation is less common in large, established corporate businesses, however, it is common in smaller startups. That’s why startups are beneficial for the evolution of your innovation process. In order to develop your new measures, the question you should be asking yourself is: how can I improve my innovation results? The trick is to understand how to build and manage your innovation funnel. As you know, continuous innovation is crucial to corporate growth, but the only way to successfully launch innovative products and services is to properly manage your funnel. The innovation process doesn’t only revolve around creating new ideas but also improving existing goods and resources, creating entirely new advances such as new products, cost reductions, competence improvement, new business models and many other aspects as well. Creating new and exciting inventions is a demanding and unpredictable process. That is why innovation management is considered an art.
Let’s build your innovation funnel
Building your innovation funnel begins with strategic thinking. In this way, you can be sure that your outputs of innovation are fully aligned with your strategic objective. No matter how many resources are available to you, the goal is to increase the overall value of the organization. Therefore, the final aim is to create a strategic advantage in the marketplace, which adds value to your objective.
This is where the support of the management team or executives comes into play. Below you will see that product innovation management consists of these following steps:
- Strategic thinking
The most important practice used to build and manage your innovation funnel is your calendar or strategic plan. Are you utilizing your time to reach your objectives/statistics? Are you looking at enough concepts? Are you efficiently filtering your concepts and ideas? If you are only focusing on one concept, you are ignoring your funnel, and if you stop managing it or funding it, your future success will be limited.
Convergent decision making
The innovation funnel (innovation pipeline) is a method used for the conceptualization of an idea to reality, optimizing the output of a company’s R&D organization. It continuously evaluates ideas over an extended period of time, checking their viability through a process of filters, gates and rules and can be illustrated as a converging funnel. At each step of the ideation process, new concepts either pass through the filters and gates, or they fail to advance because they don’t meet the criteria required.
In a first-rate phase gate innovation process, the gate review acts as the filter, and your timetable impacts the flow. This part of the process is essential for the filtration of ideas that don’t meet criteria, and at the same time, convergent decision-making filters the ideas at different stages, preserving options and reducing risks. At every step, the weakest option gets eliminated and the others continue developing. In order to successfully utilize convergent decision-making, you must have a good ideation process, define the major criteria, address the easy-to-test criteria first, eliminate only the weak options, capture knowledge created, allow the filters to do their job, understand the timing of the final decision and create synergy between all the stakeholders.
It is possible that your innovation funnel is completely empty because you are focusing all of your attention on one product. However, you need to deliver more than just a one hit wonder. So what is missing? Not only should you focus on new inventions but also on your current projects in order to build and manage your innovation funnel. That is why the flow of your funnel is important. You can’t ignore the big picture. You have to keep the funnel full. You have to continuously look for new ideas (not just the current task) for your company’s revenue and margin growth. So how can we create an optimal funnel flow and breakdown the flow of the funnel?
For example, if your aim is to create one successful product per year, you could use the following guideline:
- Find 10 ideas per month
- Cut those down to 11 qualified ideas (1 per month)
- Begin product development on 3 to 4 of those ideas (1 per quarter)
- Launch 1 to 2 of the products
- Obtain 1 successful product
As you can see, you need 10 concepts per month, just to get down to one great invention per year. In addition, it is important not to neglect an idea in the middle of the funnel, because this will produce bad results. If innovation ideas go through the funnel neglected, they won’t turn out well. You have to reevaluate ideas to keep the numbers down, because dozens of them in development isn’t the right way to go. You should be cutting them down to 3 or 4, using active resources to develop them.
Some important question to ask yourself when analyzing the flow of your funnel are: how often do you examine your innovation funnel to verify that you are producing a regular flow of the next best products? And how often do you redefine it to meet market opportunities and the objectives of your business?
Dents, kinks or clogs
Even if you’ve had success with your funnel in the past—dents, kinks or clogs can develop over time. That is why periodic reevaluation and benchmarking can help you keep innovation flowing. Here are several steps to keep in mind when developing your innovation funnel:
- Set a target for each phase
- Verify the use of time and resources used in each stage
- Measure, track and adjust targets along the way to meet your objectives
- Maintain regular audits (# of concepts, # of qualified ideas, idea failure rate and measure of success)
Nevertheless, striving for new innovation can actually hinder corporate profitability if you are not attentive to the constant flow of the funnel. The key goal is to bring about an abundant number of ideas and concepts relevant to your business in order to facilitate new growth, and you should start by analyzing and planning around your budget, staffing resources and your organization’s ability it assimilate new products and ideas.
Questions to ask yourself
Are you pursuing the right innovation targets? Do you have the right tools to support innovation? How can you make the innovation process easier foreveryone? Are you using internal and external resources?
When analyzing the results you have achieved, do you have the right projects in your project funnel? What is in your strategic innovation portfolio?
If you can respond to these questions, you will be able to start effectively managing your innovation funnel.
Given the complexity of the management of the innovation funnel, it is important to understand the present trends in innovation. Our infographic gives you the possibility to explore this topic further.