How do you Source and Manage Ideas to Come up with the Best Innovation Opportunities for your Company?

By: Chuck Frey

The second major issue to be tackled by our distinguished panel of innovation practitioners is sourcing and managing ideas. This roundtable discussion contains a wealth of ideas for identifying and capitalizing on the best innovation opportunities.

1. How do you source and manage ideas to come up with the best innovation opportunities for your company?

In our company, an internal corporate business unit, reporting to the CTO, acted as an internal Venture Capital fund.  Ideas/concepts were submitted to this group, with a champion assigned to develop the idea for technical relevance and market feasibility.  Business cases were developed and reviewed initially by senior management for technical relevance, and if it passed muster, by other senior managers for market assessment and funding. In parallel, developing ideas that could impact an existing business unit in the near term were the responsibility of that business unit to develop.

— Marc Chason, Motorola Labs

Ideas are sourced basically from our employees, our  600,000+ consultants and our extended network of suppliers (academia, raw materials, ingredients, packaging, services).

Opportunities are evaluated against both our values, vision and beliefs and our understanding of potential market opportunities in a systematic process, inspired by our strategic planning and led by our innovation area.

— Victor Fernandes, Natura

There are many methods and sources for idea generation that we look at, including workshops and ideation events, online submissions, scouts and talking to customers. Also, key-customer events can be used to discuss their requirements, problems and wish-lists, beyond the typical sales presentations. This entirely depends on the sort of relationship that has been developed with the customer. We involve them as our partners. Our sales teams also provide input on a regular basis and give voice to their customers’ needs. We encourage formal “voice of the customer” exercises, which are more precisely targeted.

— Dr. Makarand “Chips” Chipalkatti, Osram Sylvania

One of the most important things is to realize that ideas don’t come “on demand.”  Business people have been conditioned to come together, put a problem on the table, generate ideas, and make decisions.  However I find it’s best to let things percolate.  I like to share a problem without any discussion of the solution and let people think about it and, most importantly, sleep on it.  I find that discussing the problem for 15 minutes a day every day for a week generates more ideas and better solutions than coming together for an hour to “pound it out.”  We talk a lot of paradoxes these days and, well, here’s another:  Time.  We often think of time as the enemy. We think that speed = advantage.  However, I find that when it comes to new idea generation and developing and vetting those ideas, time can also be our best friend.

— David Silverstein, Breakthrough Management Group

We, and our leading clients, typically task large cross sections of our organizations to constantly be on the lookout for new ideas and emerging or disruptive trends in our business environment.  Teams or individuals are then in place who are specifically accountable for sourcing and managing emerging ideas in their targeted fields of endeavor — some of which are not yet businesses.  These teams are responsible for multi-sourcing ideas and for bucketing them into categories like:

• “Just do it”
• “Watch It”
• “Not for us” or “No way”
• “Build and integrate them into our platform investments’
• “Put it forward as part of a new ventures investment proposition or candidate,” or
• “Put it into our pipeline on new offerings and product development.”

— Ron Jonash, The Monitor Group

It all starts with the consumer.  A strong new idea must be grounded in understanding the needs, wants and beliefs of the consumer – whether known or unarticulated.  Once we know our consumer and their perspective, we have a good foundation upon which to build a platform for idea generation.

— Troy Geesaman, Laga

Sourcing ideas for Imaginatik has three components: leadership, culture and process:

Leadership: The company’s leaders need to be open to ideas, inside and outside the firm. The leaders need to invest time to develop and articulate a clear strategy, and make it clear that the leadership team is interested in and will execute ideas that fit and further the strategy. Within each function of the organization, the leader plays a key role in creating an environment of trust, openness, and curiosity for ideas, be they breakthroughs or, more often, incremental improvements in the day job.

Culture: A firm is made of people and these people’s attitudes and behaviors make up its culture, with heavy influence, benign or otherwise, from leaders. We have tried to maintain and extend the entrepreneurial culture that existed when Imaginatik was created, and which supported the firm during tough times. We have a tough hiring process to ensure that we hire the right type of person, and then quickly train them in the way things are done in the firm. We encourage idea sharing and problem sharing. We value diversity of opinions – after all, we invented the Orchid Model, an innovation style tool that demonstrated that there are four important innovation styles.

Culture also extends to interaction with clients and partners. We have been fortunate (by design) to encourage strong connections with our clients, using user groups and other mechanisms. We therefore have built the company from its earliest days with openness in mind, and in spirit, and in deed.

Process: Leadership and culture by themselves do not deliver results. One needs a process to handle problems, ideas, opportunities and executed projects. We use a variety of tools internally to support our ideation needs. Of course, we use Idea Central, our own software product. Interestingly, its use has waxed and waned over the years. It experienced a resurgence in 2007 as we grew as a firm, and devoted more formal attention to our innovation process. An example would be the “Big Fluffy Wish List,” a means for our development team to solicit feature ideas from our staff.

We have integrated idea capture into our business systems. Many of our internal applications, built in-house, include a flag for “this document contains ideas.”

We are also expanding our open innovation processes. We have a new environment, OpenWorld.Imaginatik.com, which will be a focal point for ideation within our customer community. We will also shortly deploy community sites dedicated to Imaginatik.

— Mark Turrell, Imaginatik

Lexus has a motto, “The Pursuit of Perfection.” It used to be, “The Passionate Pursuit of Perfection.”  Since in reality perfection is never attained, every employee knows that it is their job to continually find new ways to produce a better product. It is the leader’s job to inspire everyone, every day, to find new ways of pleasing their customers.

I like small group meetings every morning for a few minutes to challenge each other to do better, and at the end of the day to meet again for a few minutes to review their accomplishments and the problems found. It is this sharing of ideas that leads to the development of innovation.

It is best to let every employee manage their own ideas and take ownership to get them implemented.

— Norman Bodek, PCS Inc.

Our Analysis Our panelist were in unison that at the root of a big opportunity is the identification of a significant unmet need or problem .  This unmet need or problem has be meaningful for the market and solvable by the company as explained by Norman Bodek with the Lexus example of the Pursuit for Perfection.  This is Step 1 for innovation.  Our panelists were clear that identification of problems and needs using workshops with a few smart people was not sufficient but also listening to and observing customer, suppliers and employees working at the external interfaces of the company and further complemented by monitoring market and technology trends and benchmarking competitors. Step 2 of the process is to source solutions for the unmet need or problem from everywhere and to give time to identify the best solution.  Here the panelist were again clear that the best solutions were perhaps outside the company with the suppliers, customers,  partners and in adjacent industries.  Equally important was the emphasis by David Silverstein to not rush to the first solution but to incubate both the problem and the solution. Step 3 required some part of the organization to take ownership of the idea and provide the right funding to take it forward.  Marc Chason gave the example of a corporate venturing arm to review ideas that did not fit within business units.  Ron Jonash suggests bucketing these ideas into understandable categories and distributing them to the right area.   In general, these ideas need a home where they are fairly assessed or they will be killed. — Chuck Frey/Hitendra Patel

2. Where can new ideas be sourced from?

Within the company, ideation was made the responsibility of all members of the organization so that ideas could arise from many sources.  As a result, numerous avenues were pursued to source new ideas.  Several of the more formal ones included:

• Staff attendance and participation in industry conferences would provide awareness of new technology breakthroughs and new market opportunities.
• “Advanced Inventing” sessions would produce new ideas and concepts in nascent fields.
• Participation in standards bodies would yield outlines for future industry and market directions
• Participation in government program reviews (e.g., DARPA, NSF, etc.) as well as following government funded program solicitations (e.g. DARPA, NIST, etc.) would identify new opportunity spaces.

— Marc Chason, Motorola Labs

Ideas can be sourced everywhere, from the traditional and “organized” ways (technical congresses, seminars, lectures, store checks, trade shows, idea sessions or workshops, consumer panels) to the most effective, in my opinion: observing and sometimes talking to users during the usage of current products or prototypes.

Acute observation and an “open mind” approach while interacting with people in real situations is the best source of new ideas.

— Victor Fernandes, Natura

Like the famous candy commercial, your chocolate isn’t going to fall into someone’s peanut butter unless you somehow have a chance to interact.

I have always said, “There are more smart people outside of these offices than inside.”  Ideas can come from anywhere, so you need to be interacting with others who are inventive.  Read about industries other than your own.  Have discussions with groups that have unusual backgrounds.  Show others what you do, but leave out 25% of how you do it.  Then find another way to finish a delivery to a customer.  The only place I shy away from for innovative ideas is asking for customer feedback.  In the best case, you’ll get process/service improvement ideas.  In the worst case you may end up convinced that a small issue is something big and you throw resources after the “squeaky wheel.”

— Jonathan Rowe, Gene Express, Inc.

New ideas can come from anywhere and most often come from the least likely of places.  Where they don’t come from is “the old guard.”  To generate new ideas I find it’s important to involve as many outside sources as possible. Now, that doesn’t necessarily mean people, but drawing people from outside is certainly one strategy.  I also find it can come from reading different things (for example, I find myself reading as many nature and science magazines today as business magazines).  It can come from travel and observation.  But one way or another, we need to introduce new sources of information which means getting our minds out of the conference room and into the rest of the world one way or another.

— David Silverstein, Breakthrough Management Group

• Listening to our lead customers and early adopters,
• Listening to our own diverse staff and businesses,
• Carefully monitoring newer and more disruptive entrants in or near our markets,
• Staying at the cutting edge of technology application and design most relevant to our core value propositions,
• Being active participants and observers at the frontiers of our business,
• Actively partnering and investing in new ventures and innovative businesses in or near our space,
• Rapid experimentation in the marketplace and observing impacts and implications for customer purchase and use.

— Ron Jonash, The Monitor Group

Candidly, ideas can truly come from anywhere.  Ideally, they come from the lips of your consumers, but often great ideas are sparked by observing consumer behavior and identifying the voids that are present, or by replacing and/or replicating existing behavior with a simpler solution.  Breakthrough ideas also come from the science and technology sector, where solutions are born for problems or challenges that don’t even exist yet.

— Troy Geesaman, Laga

Ideas can be sourced from absolutely everywhere. Interestingly this means “people” and “sources of inspiration.” Some people have ideas all the time, others when sparked with a particular challenge. Some sources of inspiration, say reading a new business book, spark fascinating business development ideas in one person, and draw a blank with another.

New ideas can also be sourced from old ideas. Imaginatik has gone through good times and bad times. In a bad time, in a small company, a $1,000 idea could be impossible to implement. In good times, you might be looking for exactly that type of idea. In most firms, they wantonly disregard the past, preferring to focus on the acquisition of new ideas and concepts. This is a profound mistake. Often the best ideas already exist: you need to remember to go look.

— Mark Turrell, Imaginatik

Successful ideas can and will come from all workers if their leaders only ask. Too often, managers are telling employees what to do instead of challenging them and asking them and listening to those ideas.

— Norman Bodek, PCS Inc.

Obviously, ideas can come from anywhere; however, that does NOT mean that people should actively seek ideas anywhere, much less everywhere. “Open innovation” has provided one of the most powerful new approaches to generating new opportunities we’ve witnessed over the past 50 years, but I’ve seen some frankly sloppy discourse regarding how companies should look for concepts so broadly that we dilute our attention and miss the real gems.

While many people think they understand Open Innovation as sourcing ideas and opportunities from outside the company, succeeding on an ongoing basis requires a lot more than just searching externally.  A friend, an innovation colleague, Larry Huston, one of the pioneers of open innovation who helped build P&G’s Connect + Develop program, offered the following advice during a panel we shared:  “If you go out looking for anything, you’ll find nothing.  If you go out looking for something specific, you’ll find more than you ever expected.”

People only see what they’re looking for. Cognitive science suggests this to be true (and true as well for other animals).  In this respect, Louis Pasteur’s well-known dictum, “Chance favors the prepared mind,” says more about how to source the best opportunities than specifically where you’re looking.  The way I operationalize this for myself, my team and my clients is to:

1. Require anything important for which we are looking to be clearly defined in writing. Where possible, I state things in the form of a question. You’d be surprised how much more successful you and your entire team will be when you’ve mastered the art of knowing for what you are looking.

2.  Identify and cultivate networks with people in strategically-selected knowledge areas.  Be deliberate about it.  Some of these areas might be obvious (e.g., food ingredients researchers for consumer package good companies), but some of them might be non-obvious (e.g., emerging sensing technologies for furniture companies).  If you always look in the same places, you’re likely to find the same answers.

3.  Leave lots of room for serendipity.  Seek and ye shall find… but you never know what you might find.

Articulating what you’re looking for, cultivating strategically selected knowledge networks and leaving room for serendipity should be part of every corporate innovation program.  What these mean in your context is up to you to define.  You’ll find that when you do, you’ll be ahead of most people.

— Robert C. Wolcott, Northwestern University

Our Analysis The panel supported the conventional wisdom that the best sources for innovation were mainly outside of the company. They supported tactics such as observing the customer (not only listening), looking at adjacent industries, and having diverse inputs. However, Jonathan Rowe warns us not to listen too closely to customer feedback since it may drive a company to incrementalism, while Rob Wolcott reminds us to be focused even as we look outside. Troy Geesman highlights that there are other source for innovation besides the customer such as technology. Recall that cell phones would not have come to world had we listened to the customers who were unwilling to carry a “brick” in their pocket and pay a dollar-per-minute compared to the ubiquitous 25 cent pay phone. Rob Wolcott surmises that even after identifying a clear problem and building the best networks to solve the problem that you must leave space for serendipity. Lastly, Ron Jonash reminds us to experiment in the market to test and generate new ideas and also to keep a close eye new entrants as alternate but true and tried sources of innovation. — Chuck Frey/Hitendra Patel

3. How do you capture the voice of the customer or customer need?

Listen to the customer via commissioned marketing studies.  In parallel, produce prototypes and work with the customer to understand how the product will be used, how it satisfies the customers’ needs and jointly assess its commercial opportunity.

— Marc Chason, Motorola Labs

A combination of traditional methodology (customer research, panels) and user observation, in both structured and non-structured ways. Key actions are user observation and conversation.

— Victor Fernandes, Natura

If you are not watching what the customer does before (s)he takes delivery of your item/service, at the time of transaction and then afterwards what they do with the item, you will never understand the voice/need of the customer.  Don’t ask, watch.

Did anyone ever say, “Darn, if this folding road map could only talk to me, I’d be so much better off?”  How many times did you actually ever use a road map in your car?  Well, someone watched people and realized for that small percentage of time you need a map, you can’t drive and read it.  Now everyone has a GPS (to go to the mall).  Customers were watched when the idea for combining a cell phone + camera + music player + PDA came about.  We all carried them at one time, and someone inventive realized it was a tremendous pain.  Even the shape and utility of carry-on luggage has changed because we were watched as we awkwardly bumped them down the airplane aisle.

— Jonathan Rowe, Gene Express, Inc.

The worst way: asking the customer. A good way: being the customer.  The
ultimate way:  becoming the customer of the future.

— David Silverstein, Breakthrough Management Group

By watching (and even recording and videotaping) purchase and use behavior associated with our offerings or others aimed at addressing the needs we are focused on — particularly of the trend setters and early adopters but also of the most needy.

— Ron Jonash, The Monitor Group

Nothing replaces face-to-face interaction with consumers.  Ethnography or shopnography (shopping with your consumer) are common ways to live alongside your consumer and capture their thoughts and your own observations of their behavior.

— Troy Geesaman, Laga

Imaginatik uses several methods. For customers, we have regular Implementation Manager calls set up with key individuals in our clients to capture their needs and feed them back to our development, sales and consulting teams. We also have a process for routing e-mail requests, whether they are from support calls or prospect requests, into our development list.

User communities are very important for us. We started our first Imaginatik User Group in 2003 – the last major one in May 2007 took place at Fenway Park (home of the World Series winning Red Sox baseball team) with over 100 participants. In 2008, we are launching a number of Internet communities to support a growing client base, and an enthusiastic group of supporters who want to be more deeply engaged in our firm.

— Mark Turrell, Imaginatik

Once again, you ask the customer about your product and service and ask them for ideas on how to improve. They will tell you. Just listen to them and never defend your company or your product.

— Norman Bodek, PCS Inc.

Our Analysis Observing the customer and observing the right type of customer were the two main themes that we saw in the answers by our panelists. Watching your customers use your product and observing where their “pain points” area is the common theme here. Other forms of customer interaction — such as conversations, user groups and forums) were viewed to have some value but are losing favor to ethnography. There was also the emphasis on observing “needy” customers, customers of the future, lead customers. Clearly, some sort of segmentation needs to happen to identify customers that represent the future needs of the larger group. — Chuck Frey/Hitendra Patel

4. How do you evaluate ideas quickly and efficiently in order to improve your chances of success?

We operate under the philosophy that if a small number of ideas prove valuable, then more ideas are required to obtain a greater number of useful ideas.  This is neither a quick nor efficient process.

Ideas or concepts with near-term value are passed to the responsible business units for immediate actions.  Longer term projects are transferred to the R&D
labs for development of monitoring until they are deemed ready to move into a more active development phase.

— Marc Chason, Motorola Labs

Idea evaluation and prioritization are parts of our pipeline management methodology.

New product ideas (incremental, platform, breakthrough) are structured and evaluated by marketing, R&D, operations and financial as a new briefing.

Out of the box or blue sky ideas (mostly new product categories and commercial innovation) are evaluated by the senior administration in special sessions held quarterly.

In my opinion, the structure of the fuzzy front end is one of the most relevant areas in the innovation process, lots to learn here.

— Victor Fernandes, Natura

It’s important to have an agreed upon portfolio management system that can be standardized and used to compare innovation concepts.  A standing team should be in place that meets on a regular schedule to evaluate the concepts.  This team must be devoid of the shackles of bureaucracy and empowered to make decisions.  Feedback needs to come from this team to explain its decision so that the concepts not chosen can have the opportunity to be refined and resubmitted.

— Jonathan Rowe, Gene Express, Inc.

Idea management processes can be managed using online tools, or with dedicated meetings of expert groups to process groups of ideas. The objective is to rapidly cull the ideas submitted to a small but carefully screened number and take it to the next step of business analysis. Like rolling snow balls, other ideas stick to the core idea, adding strength and depth to the original idea and probably taking it further. The most persistent ideas are then subject to detailed business analyses that includes financial and strategic factors. The biggest challenge comes after steps one to five!

— Dr. Makarand “Chips” Chipalkatti, Osram Sylvania

It’s interesting… we talk a lot about how to get out of the box to identify new ideas, but then we tend to fall back in the box to evaluate them. I prefer to remain outside the box as much as possible, so I ask people outside my company for their opinions.  That can mean everyone from customers to people we’re recruiting, the guy on the street, or my 70 year old mother.  But if we apply old prioritization techniques to new ideas, what often happens is that we do a good job of coming up with new ideas, only to kill them before they materialize.

— David Silverstein, Breakthrough Management Group

Don’t evaluate ideas too soon or too individually as fragments.  Build ideas into more powerful concepts or platforms and evaluate individual ideas in the context of the larger platform or theme.

— Ron Jonash, The Monitor Group

You would think there’s a simple answer to that question, but no.  Of course, there are tried-and-true forms of consumer qualitative and quantitative research methods that help you benchmark the quality of the ideas versus others, but this testing has its limits.  If you’re developing breakthrough ideas that are far beyond the grasp or imagination of current consumer thinking, they likely will not test well with traditional methodologies and you will need to rely on your team’s experience, savvy, and instincts to determine whether your ideas have a true chance of success.

— Troy Geesaman, Laga

In our experience, ideas are only “good” in context. Some ideas have a strict time dependency (think “conference opportunity, must sign up by Friday”) whereas others can be actioned at almost any time based on conditions.

There are two aspects to this that I believe are important. One is leadership commitment to evaluate and put resources behind the top concepts. The second is more organic, and it covers the emergent behavior of ideas bubbling up through grassroots and being implemented – and shared – at the appropriate level. It is unrealistic for leaders to be on top of every opportunity. Indeed many opportunities are simply not valuable enough to merit leadership attention. So there should be a culture and process in place for these ideas to be implemented locally, with minimal friction.

— Mark Turrell, Imaginatik

I want every employee to identify and solve problems on their own; make those ideas visible – hang them up on a wall for all to see. Let the employee evaluate them. The big ideas will rise up for management to consider if there is a wider use.

— Norman Bodek, PCS Inc.

Our Analysis There was a resistance amongst the panelist for quickly evaluating ideas because most ideas need development before evaluation or that a “wrong” prioritization criteria would kill a good idea. The analogy provided by Chips Makarand of the rolling snowball collecting idea fragments to build into a robust concept is in line with Ron Jonash’s thinking about evaluating concepts and not idea fragments. Troy Geesaman observes that truly out of the box ideas will be killed by what David Silverstein calls in-the-box criteria. Victor Fernandes suggests that ideas should first be bucketed by risk, investment or proximity to core business and than appropriately evaluated at the right area and level of the organization and using the appropriate criteria. — Chuck Frey/Hitendra Patel

5. How do you choose ideas which will generate revenue and provide a sustainable competitive advantage?

Use business case development coupled with a venture capital model.

— Marc Chason, Motorola Labs

Easy to evaluate and choose incremental or platform ideas, close to our core. Blue sky or out of the box idea evaluation is riskier, traditional business methodologies are not really appropriate, lots to learn and improve.

— Victor Fernandes, Natura

You can’t.  If someone has a way to do this correctly, all the time, I hope you get nominated for a Nobel Prize in Economics. In my experience, I worked on a product that was the fifth of its kind to market.  We were told it would have a hard time catching the leader and at best, it would return $300 million in peak sales.  That product sold more than $12 billion at its peak and became the largest selling item ever in its class.  From “me too” to “me alone.”

On the other hand, I was involved in an innovative product that was supposed to earn $1.5 billion in sales.  That product was pulled from the market due to a lack of sales.

The product that made huge financial returns did so because we simplified what our customers needed to know and provided them with support that made their decision-making easier.  The innovative product, though innovative, wasn’t superior in what it delivered and by the time it hit the market, the market didn’t really want it anymore.

The important part of the story is that with innovation comes failure.  Show me someone who never failed, and I’ll show you someone who never did anything new. So how do you hedge the bet? Ask yourself or your team if your innovation will:

• Solve a problem
• Be installed before the state of the art changes
• Will lead to more market opportunities (e.g., the Apple iPod led to a line of iPod support devices), and
• What services might come with it to keep the market yours.

— Jonathan Rowe, Gene Express, Inc.

By not betting the farm.  No one is that smart.  The few who have bet the farm and won think they are, but they’re not.  They’re just lucky.  You need to maintain a solid portfolio of ideas because the very nature of doing something new is the reality that we can’t predict its success.

— David Silverstein, Breakthrough Management Group

By bucketing ideas into categories such as those outlined in question two that are then subjected to an appropriate level of business case assessment — which for all categories includes at least:

• An assessment of both financial and non-financial risk and return (whether as a project, an option, an insurance policy or a monitoring and experimentation cost), and
• An assessment of the competitive impact accompanied by reverse engineering under different assumptions or scenarios of customer, partner, channel, and competitor behavior and what you would have to believe.

— Ron Jonash, The Monitor Group

Know your consumers and your competitive set.  First-mover advantage usually yields enormous dividends and is worth the pain and costs to achieve it.  Monitoring the pulse of your consumer and subsequently evolving innovation to meet or surpass their future expectations will help provide the sustainable competitive advantage.

— Troy Geesaman, Laga

First, start with a clear plan and set of objectives. Companies do need to be brutal – if an idea does not support the business, it should not be implemented.

Transparency is therefore important to communicate with staff the strategy, the tactics that are being followed and people’s role in supporting the strategy.

In general, we try to pursue either ideas that have larger-sized returns, or small ideas that support a pattern of behaviors that we believe will cumulatively lead to a bigger impact.

— Mark Turrell, Imaginatik

This is a manager’s job, isn’t it?  To do this, the manager has to support and inspire people to rise to the their greatness.  You observe, listen, support and encourage and then you praise and thank them for their ideas.

— Norman Bodek, PCS Inc.

Our Analysis No one is smart enough to pick winning ideas consistently, so you need to be open to the possibility of failure. Our panelists recommend having a portfolio of ideas on hand, including incremental innovations as well a game-changing ones (but don’t bet the farm on your game-changing ones!). — Chuck Frey/Hitendra Patel

In the next interview:

How do you connect innovation to business strategy and get the funding and senior management commitment to follow through on both short and long term innovation initiatives?

Feedback?

Please share your comments below, where we hope to create a lively discussion about the ideas and strategies outlined in this “virtual roundtable” interview.

Published by Chuck Frey, InnovationTools, and Hitendra Patel, The Center for Innovation Excellence & Leadership, Hult International School of Business