THE INNOVATION ISSUE INNOVATION DEFINED ............................... P1

STAGE GATE INNOVATION ........................ P2 Making it work

SUCCESS IS NOT FINAL, FAILURE IS NOT FATAL ................................................. P3 Even trailblazers get it wrong sometimes!

CREATING A CULTURE OF INNOVATION .. P4 Making innovation a part of the fabric of your business

Quarterly Newsletter—Issue 3Q14

THE COMPETITIVE

EDGE INNOVATE OR DIE has become a 21st century mantra—and rightly so. Today’s global marketplace is smaller than ever, communications are instantaneous, competition is fierce and market expectations are high and ever-changing. Innovation in product development and manufacturing is therefore a prerequisite for survival.

But what is this seeming “answer to all ills” that we call innovation? How do we make it succeed? And how do we do so while simultaneously meeting various business and ROI criteria that may be imposed upon us and are often at odds with a long term innovation strategy?

INNOVATION DEFINED

When we speak of innovation, many people immediately think of breakthrough developments that changed the course of the

marketplace, industry or even history: the automobile, the telephone, the microchip, iTunes. However, innovation can be as simple

as changing packaging, repositioning a product, or moving into an adjacent business space.

Some may think that this dilutes the concept of innovation, but a successful—and cost-effective—innovation strategy incorporates

all of the above by managing a portfolio of development projects that not only works towards breakthrough products and

technologies, but also allocates resources to the improvement of existing products, the expansion of existing products into new

markets, or the development of existing technologies into new products.

One of the better illustrations of this concept is Bansi Nagji and Geoff Tuff’s* “Innovation Ambition Matrix” (see page 2). Following a

review of a number of high performing firms, Nagji and Tuff also noted that on average, these firms allocated investments in similar

ratios (70% on core, 20% on adjacent, 10% on transformational) although the return ratios were the direct inverse to the investment

percentages.

continued on page 2

STAG E-GA TE PR ODU CT DE VEL OPME NT IS OFTE N SP OKE N OF BUT

SELD OM P RACTI CED. Y ET IT I S A PR OCES S TH AT IS AL L -EN COMP ASSI NG,

R ISK AV ERS E AND ELO QUE NT I N ITS S IM PLIC ITY.

continued on page 3

DEVELOPMENT STAGE-GATE

Too often, product development in today’s organizations

is fraught with miscommunication, misdirection, lots of

activity with little accomplishment, unclear goals. The end

result is wasted time, effort and sometimes a product that

does not deliver on its early promise.

An effective stage-gate development process that is well executed

and well led is critical in eliminating many of these problems,

increasing speed to market and ensuring that the product under

development continues to meet the market requirements.

THE 5 STAGES OF DEVELOPMENT

1. IDEATION—The new product idea. The source can come from

R&D (based on a new technology), Marketing (based on market need

or gap analysis determination), Sales (based on specific customer

need), Operations (based on a new process that offers manufacturing

alternatives). Each idea should be screened to determine its overall

viability (does it meet the company’s overall strategic goals) before

moving on to the next stage.

2. PRELIMINARY REVIEW / BUSINESS CASE—Technological,

operational, marketing viability. This should include estimated R&D

cost and requirements, market size and potential, operational

requirements, ROI estimates. Product and time parameters, including

product functionality, target cost and market goals should be

established as much as possible. The goal here, as Stephen Covey

succinctly put it, is to “start with the end in sight.”

3. DEVELOPMENT—A critical step in which all departments—not

just R&D—should be involved with frequent communication and

updates to ensure that the product criteria established in Stage 2

are being met, and that needs and timing remain unchanged.

continued from page 1

INNOVATION DEFINED THE INNOVATION AMBITION MATRIX

By understanding innovation in terms of all of these elements,

creating a strategy that fits in with a firm’s core competences

while allowing for growth makes the entire innovation

strategy, while no less daunting, far more manageable and

sustainable.

While all of this is going on, there is one more important

element that should be incorporated in the innovation

spectrum—and that is the review and maintenance of the

existing product portfolio. Are the products still relevant and

in demand? Are there any weak or inefficient products that

could or should be repositioned, improved, or even sloughed

off to make way for newer products? Maintenance of

inefficient products is a hidden cost in many organizations, in

terms of time and talent. To allow innovation to function at

its most effective, these resources should be freed up in order

to be allocated to efforts that add greater long term value.

*Nagji B., Tuff G., “Managing Your Innovation Portfolio”, Harvard

Business Review, May 2012

“INNOVATION HAS NOTHING TO DO WITH HOW MANY R&D DOLLARS YOU HAVE. WHEN APPLE CAME UP WITH THE MAC, IBM WAS SPENDING AT LEAST 100 TIMES MORE ON R&D. IT’S NOT ABOUT THE MONEY. IT’S ABOUT THE PEOPLE YOU HAVE, HOW YOU’RE LED, AND HOW MUCH YOU GET IT.”

Steve Jobs

continued on page 3

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be tailored to your business needs, including

Product Innovation

Do you have a slew of one-customer or low-margin

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Looking to enter a new market but unsure where or how

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develop short and long term market and product

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Market Communications

Do you have lots of product data sheets but nothing that

really shows your customers what you're capable of as

an organization? Does your business have a wealth of

knowledge, but no communications that reflect that

expertise or your unique advantage? We help you

position your products and your business within the

marketplace to gain maximum value and build brand

recognition through communications, public relations

and implementation of processes that increase your

unique value.

continued from page 2

STAGE-GATE DEVELOPMENT If at any point during this stage there is a change in product scope, cost or

timing, then a review of the business case may be warranted to determine if

further development should continue or expectations should be adjusted.

4. TESTING—A critical part of the process since this will validate the product or

determine if additional R&D time is required. This step will also determine if the

product continues to meet the criteria and goals established in Stage 2.

5. COMMERCIALIZATION / LAUNCH—Production ramp up and marketing plan.

Again, all departments should be involved to ensure that the 5Ps of the Marketing

Plan (product, price, place, promotion, people) can orchestrate a flawless launch.

However, it is not enough just to have a good process in place. The keys to

successful stage-gate development are leadership and execution, as well as

cross-functional involvement and contribution at all stages of the development

process. Effective leadership of a stage-gate development ensures:

Regular communication across all disciplines at every stage of the process

That the product continues to meet all criteria established at Stage 2 of the

process.

That the activities engaged in the entire development process add value to the

overall innovation strategy.

While some consider innovation to be a

daunting undertaking, it is worth bearing in

mind that even trailblazers on the path of

innovation can falter at times as the quotes below bear witness.

“But what….is it good for?” Engineer at the Advanced Computing Systems Division of IBM, 1968, commenting on the microchip. “This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.” Western Union internal memo, 1876 “The Americans have need of the telephone, but we do not. We have plenty of messenger boys.” William Preece, British chief engineer of the Post Office (1834-1913) “Inventions have long since reached their limit, and I see no hope for further development.” Sextus Julius Frontinus, Roman Engineer (40-130 AD) “Everything that can be invented has been invented.” Charles Duell, US Director of Patents Office, 1899 “The talking picture will not supplant the regular silent motion picture.” Thomas Edison, US Inventor (1847-1931) “The concept is interesting and well-informed, but in order to earn better than a ‘C’, the idea must be feasible.” This was a response from a Yale University management profes-sor to a paper written by Fred Smith proposing reliable overnight delivery service. Fred Smith went on to found Federal Express…..

“Television won’t last because people will soon get tired of staring at a plywood box

every night.” Darryl Zanuck, 20th Century Fox film producer.

“The world potential market for copying machines is 5000 at most.” IBM in 1959 (to the

eventual founders of Xerox) saying the photocopier market was not large enough to

justify production.

“SUCCESS IS NOT FINAL, FAILURE IS NOT FATAL. IT IS THE COURAGE TO CONTINUE THAT COUNTS ” Winston Churchill

LET US HELP YOU

(302) 697 1623 WWW.AUSTENCONSULTING.COM M C A Austen Marketing &

Communications, LLC

CREATING A CULTURE OF

INNOVATION

Innovation is a subject too large to cover in a few newsletter columns but so important in the fabric of an organization. Whether offering a

product or a service, innovation—and particularly fast track innovation—offers huge payback for any business in terms of profit premium

and long term sustainability. Well positioned, fast track innovators can enjoy lower costs, faster growth, brand strength and higher margins.

So how do you create a culture of innovation?

1. Vision & Objectives—top management must provide the vision and priority for innovation.

2. People & Skills—innovation is based on knowledge: customer and industry knowledge, technological and environmental knowledge.

This knowledge should be easily accessible to all personnel, not locked behind functional or hierarchical doors.

3. Multi-Functional Teams—input at all levels is critical for success.

4. Systems & Integration—conventional ROI criteria can often choke innovation since even the best new products may not show ROI for

several years. Consider regular meetings to slough off weak, obsolete or inefficient products to make room for newer versions. Don’t

keep innovation separate—integrate into the mainstream with regular meetings so that it engenders commitment and energy

throughout the organization at all levels.

5. Innovation Pipeline—keep the pipeline filled. Not all successful products are breakthroughs: many are line extensions, product

improvements, product repositioning.

In today’s world of rapid technological development, changing

tastes and increasing competition, product life cycles are

becoming shorter and shorter. Businesses that fail to update are

sooner or later squeezed out of the market as their margins

decline and they lose market share. To combat this, more and

more companies are turning to accelerated New Product

Development as a major competitive weapon.

TAILORED MARKETING SOLUTIONS TO HELP SMALL BUSINESSES EXCEL IN THEIR MARKETS