Achieving Success in the Fuzzy Front End Phase of Innovation

By: Henrik Florén / Johan Frishammar

Activities in the front end of the innovation process are often difficult to anticipate, overview and perform. Yet they are critical to successful outcomes of the innovation process. In light of a growing managerial interest in the front end, this article identifies key success factors for managing the front end, balancing acts which innovation managers need to address, as well as key contingencies affecting front end activities. Proficiency in the front end is indeed no easy task, but will have an enormous positive impact on performance for those firms that succeed.

Technically, new product development (NPD) projects often fail at the end of a development process. The foundations for failure, however, often seem to be established at the very beginning, often referred to as the “fuzzy front end”. Broadly speaking, the fuzzy front end is defined as the period between when an opportunity for a new product is first considered, and when the product idea is judged ready to enter “formal” development. Hence, the fuzzy front end starts with a firm having an idea for a new product, and ends with the firm deciding to launch a formal development project or, alternatively, decides not to launch such a project.

In comparison with the subsequent development phase, our understanding of the fuzzy front end is still limited. Relatively little is known about the key activities that constitute the fuzzy front end, how these activities can be managed, which actors that participate, as well as the time needed to complete this phase. Many firms also seem to have great difficulties managing the fuzzy front end in practice. In a sense this is not surprising. The fuzzy front end is a crossroads of complex information processing, tacit knowledge, conflicting organizational pressures, and considerable uncertainty and equivocality. In addition, this phase is also often ill-defined and characterized by ad-hoc decision-making in many firms. It is therefore important to identify success factors which allow managers, and their firms, to increase their proficiency in managing the fuzzy front end. This is the purpose of this short article.

Success factors for managing the fuzzy front end

In order to increase knowledge on how the fuzzy front end can be better managed, we conducted a large-scale survey of the empirical literature on the fuzzy front end. Our analysis of the existing research identified 17 success factors for managing the fuzzy front end. In sum, the extant literature on this topic highlights a variety of different factors critical to the completion of the front-end phase.

1. The presence of idea visionaries or product champions. Such persons contribute to firms struggle to overcome stability and inertia and thus secure the progress of an emerging product concept.
2. An adequate degree of formalization. Formalization promotes stability and reduces uncertainty. The fuzzy front end process should be explicit, widely known among members of the organization, characterized by clear decision-making responsibilities, and contain specific performance measures.
3. Idea refinement and adequate screening of ideas. Firms need mechanisms to separate good ideas from bad ones, and need also to screen ideas by means of both business and feasibility analysis.
4. Early customer involvement. Customers can help to enact clear project objectives, reduce uncertainty and equivocality, and also facilitate the evolution and evaluation of a product concept.
5. Internal cooperation among functions and departments. A new product concept must be able to “survive” criticism from different functional perspectives which necessitates functional cooperation in the evaluation and screening of ideas and concepts. Cooperation among functions and departments also creates legitimacy for a new concept and facilitates the subsequent development phase.
6. Information processing other than cross-functional integration and early customer involvement. Firms need to pay attention to product ideas of competitors in order to strategically position their emerging product concepts. They also need to pay attention to legally mandated issues in relation to their product concepts.
7. Senior management involvement. A pre-development team needs support from senior management to succeed, and senior management can also align individual activities which cut across functional boundaries.
8. Preliminary technology assessment. Technology assessment in the front end means asking whether the product can be developed, what technical solutions will be required, and at what cost. Firms need also to judge whether the product concept, once turned into a product, can be manufactured.
9. Alignment between NPD and strategy. New concepts must capitalize on the core competencies of their firms, and synergy among projects is important.
10. An early and well-defined product definition. Product concepts are representations of the goals for the development process. A product definition includes a product concept, but in addition provides information about target markets, customer needs, competitors, technology, resources, etc. A well-defined product definition facilitates the subsequent development phase.
11. Beneficial external cooperation with others actors. Many firms have a potential to benefit from a “value-chain perspective” during the fuzzy front end, e.g. through collaboration with suppliers. This factor is in line with the emerging literature on open innovation.
12. Learning from experience capabilities of the pre-project team. Pre-project team members need to identify critical areas and forecast their influence on project performance, i.e. through learning from experience.
13. Project priorities. The pre-project team need also to be able to make trade-offs among the competing virtues of scope (product functionality), scheduling (timing), and resources (cost). In addition, the team also need to use a priority criteria list, i.e. a rank ordering of key product features, should they be forced to disregard certain attributes due to e.g. cost concerns.
14. Project management and the presence of a project manager. A project manager can lobby for support and resources necessary for the idea refinement and concept development. A project manager is also important to the coordination of both technical and design issues.
15. A creative organizational culture. Such a culture allows a firm to utilize the creativity and talents of its employees, as well as maintaining a steady stream of ideas feeding into the fuzzy front end.
16. A cross-functional executive review committee. A cross-functional team for development is not enough – cross-functional competence is also needed when evaluating product definitions.
17. Product portfolio planning. The firm need to assure sufficient resources to develop the planned projects, as well as “balancing” their portfolio of new product ideas.

Excellence in individual factors and activities is not enough!

Although successful management of the fuzzy front end requires firms to excel in individual factors and activities, this is a necessary rather than sufficient condition. Firms must also be able to integrate or align different activities and factors, as reciprocal interdependencies clearly exist among different activities and factors. In the literature this is often referred to as “a holistic perspective”, “interdependencies among factors”, or simply to as “fit”. To date, however, nobody seems to know exactly which factors should be integrated, and how this should be achieved. Still, innovation managers are strongly encouraged to view the front-end activities as a coherent whole, rather than stand-alone activities. This advice is further legitimized because the fuzzy front end process seems to vary not only among firms, but also among projects within the same firm where activities, their sequencing, degree of overlap, and relative time duration differ from project to project. Therefore, capabilities for managing the fuzzy front end are both highly valuable yet difficult to obtain. Firms therefore need first to obtain proficiency in individual success factors, but also the capability to integrate and arrange these factors into a coherent whole aligned to the circumstances of the firm.

Balancing acts in the fuzzy front end

In addition to individual success factors and their interdependencies, firms need to master several trade-off situations which we refer to as “balancing acts”.

As a first balancing act, firms need to ask if screening of ideas should be made gentle or harsh. On the one hand, firms need to get rid of bad ideas quickly, to save the costs associated with their further development. On the other hand, however, harsh screening may also kill good ideas too early. Ideas for new products often refine and gain momentum through informal discussion during development work, a fact which forces firms to balance too gentle and too harsh screening.

Another balancing act concerns formalization. The basic proposition is that formalization is good because it facilitates transparency, order and predictability. On the other hand, in striving to enforce effectiveness, formalization also risks inhibiting innovation and flexibility. Even if the empirical evidence is still scarce, the relationship between formality and performance seems to obey an inverted U-shaped curve. This means that both too little and too much formality has a negative effect on performance. From this follows that firms need to carefully consider the level of formalization they impose on the fuzzy front end.

A third balancing act concerns the trade-off between uncertainty and equivocality reduction. Market and technological uncertainty can, and need, often be reduced through environmental scanning and increased information processing in the development team, but more information often increase the level of equivocality. An equivocal situation is one where multiple meanings exist, and such a situation implies that a firm needs to construct, cohere or enact a reasonable interpretation to be able to move on, rather than to engage in information seeking and analysis. Therefore, firms need to balance their need to reduce uncertainty with the need to reduce equivocality, as trying to reduce one often implies increasing the other.

Furthermore, firms need to balance the need for allowing for flexibility in the product definition, with the need to push it to closure. A key objective in the fuzzy front end is a clear, robust and unambiguous product definition because such a definition ensures efficiency and facilitates the subsequent development phase. However, product properties, features and attributes often need to be changed during development as market needs change or problems with underlying technologies are experienced.

Finally, a final balancing act concerns the trade-off between the competing virtues of innovation and resource efficiency. In essence, this concerns balancing competing value orientations, where innovation and creativity in the front end are enabled by organizational slack and an emphasis on people management, while resource efficiency is enabled by discipline and an emphasis on process management. In addition, the fuzzy front end process needs to be adapted to the type of product under development. For physical products, different logics apply to assembled and non-assembled products respectively. Emerging research shows that a third logic applies to the development of new service concepts.

Conclusion

This short article advices managers and other persons involved with innovation to pay particular attention to the factors and activities which precede formal development efforts. Firms that want to increase their proficiency in the front end should do their utmost to identify individual success factors and to obtain proficiency in these, to integrate these factors into a coherent whole, to master multiple balancing acts, and to recognize that the front end process is affected by multiple contingencies, unique to each firm. To conclude, managing the fuzzy front end is indeed no easy task, but can have an enormous positive impact on performance for those firms that succeed.

By Johan Frishammar and Henrik Florén