2.5 Innovations and Concepts

Businesses today face the need to use technology to modernise their existing products and services, or to create totally new ones. In order to remain competitive, every company must encourage employees to come up with and bring forward new ideas, and have an easy, effective and fluid process that ensures a fast and agile development of new ideas into working services.

 

Innovation

Innovations create bigger opportunities and are critical for the survival, economic growth, and success of a company. Innovation means developing original concepts and is a driver of optimising business. Companies that innovate are able to set the organisation in a different paradigm in order to identify new opportunities and the best methods to solve current problems.

Innovation is often misunderstood as mere ideation. Most companies have some systematic processes for ideation, but do not fully utilise the opportunity of the collective brain power of smart people. What most companies struggle with is converting ideas into value propositions and taking them to market, in other words, innovation in their go-to-market products or customer offerings. Also, innovation is not always getting the biggest idea out of the door. It could be a process of tactical ‘tinkering’,  i.e., continuous process of identifying problems and solving them at an operational and delivery level.

It boils down to how prepared we are to listen and watch our customers and stakeholders, understand their behaviours, their innate and unexpressed needs and satisfy them. One way to do this is to leverage modern technology and prepare prototypes and data analytics to get insights. However, in this case technology is only as good as the insights it provides. More importantly, there needs to be a culture of experimentation, based on the insights we derive, to provide better experiences for internal and external customers.

In most cases, in order to secure the company’s competitiveness and encourage constant renewal, innovation activities should be systematic and purposeful, and be part of the company’s core practices and culture.

 

Innovation leadership and culture

To realise innovation, leaders should be open-minded and collaborative. Feeling comfortable with uncertainty and managing changes are behavioural components to innovate. Innovative leaders are curious and are optimistic since they dare to take risks.

Any idea or innovation may be valid for the company’s business. Therefore, it is important to create an organisational culture which embraces creativity and openness when suggesting new ideas. At the same time, there should be a process which examines whether the idea has a business case or not. Those ideas which do not have the required business potential need to be terminated quickly and those with commercial potential should be immediately put forward to the next development phase.

 

Concepts

During the innovation process, the term ‘concept’ refers to an outcome examining the realisation of the business potential of an innovative idea.

The aim of concept design is to illustrate how to turn an idea into scalable and pragmatic business opportunities. A concept defines, from a business perspective, how the idea can be realised by considering technical solutions, organisational and business changes and ecosystem implications. When properly conducted, concept design provides valuable and business-driven specifications to source, develop and deliver new services.

Even if the concept design goal is to ensure that an idea is realistic and worthy of being developed further, it is equally essential to ensure that the innovation process remains creative and leaves room for the free flow of ideas throughout the process. Therefore, concept design follows the design thinking principles by first enriching the idea during brainstorming sessions and then rooting to reality during proofing sessions.

 

Innovation management process

The innovation management process defines the steps from creation of new ideas into realising the business value of a concept. The process produces high quality input for demand management to be developed further into a ready-made service.

Innovation management consists of two main phases:

  • Ideation phase in which you create the initial idea
  • Concept design phase in which you design build and test the first prototype/service/product.

This end-to-end process should be supported by data analytics in order to validate and increase the potential outcome of the ideation and design phases.

 

Figure 2.5.1 Innovation management process

 

Ideation

The ideation phase refers to the creation of new ideas in the very beginning of the innovation management process. Ideation can be people, process and data-driven. Companies can foster people-driven ideation by creating a culture that encourages people to bring in new ideas and offer an easy and clear process to take the ideas further.

Data-enhanced ideation requires systematic data analytics that allows the discovery of useful information to be used for data analysis-based innovation.

 

Concept design

The concept design phase transforms the selected ideas into well-defined plans which give insights into the business potential of the ideas.

The process of designing concepts is crucial as it efficiently translates initial business needs or ideas into accurate concepts. Involving a variety of stakeholders at an early stage and working together using agile, human-centred and design thinking principles is a good way to solidify new ideas and eventually define how to create value for the business. Deepening the commitment level, i.e. spending more time and getting more people engaged at each phase, supports the fail fast – scale fast strategy.

Figure 2.5.2 Concept design

 

The outcome of the concept design process is a description of the potential realisation of the innovative idea which can also be materialised in the form of a proof-of-concept or a prototype. It describes the change for the business and how to bring an idea to a tangible product, resulting in business benefits. As such, the concept does not address the exact costs as those will be calculated when making the business case in requirements gathering and feasibility evaluation.

 

Innovation management process dashboard

One important aspect of the innovation management process is to measure and communicate how much business value has been created and how many ideas have been developed and rejected. The communication can be done, for example, in the form of a dashboard visualising the innovation portfolio and development pipeline. The key measurement is the realised business value in terms of business revenue or a similar realistic metric.

 

Financial steering

The innovation management process requires strong financial and commercial steering to ensure that the company’s resources will be used in the best possible way.

Typically, companies have two alternative ways of deciding how to allocate money for innovations:

  1. Allocate a certain amount of money for each value stream owner who will independently steer and make prioritisation decisions for ideas.
  2. Have a centralised decision-making forum which will make the prioritisation decisions for the demand portfolio.

No matter which financial strategy is selected, it is important to set the metrics to measure the business benefits realisation throughout the service lifecycle.

 

IPR
Intellectual property rights (IPR) should be considered early in the innovation process especially when using partners outside the company to take part in development. Chapter 4.1 Commercial and property rights presents the main points in ensuring an adequate way of sharing benefits, property rights and risks within the ecosystem.