Predictive Innovation Practitioner In a nutshell Predictive Innovation is a structured
way to describe what people want and how to provide it.
Anything that can be made or done can be described. If you can describe it you can also describe
the ideal version.
The Ideal Product does What I want, When I want, Where I want, with whom I want, in the
way I want, for the price I want with no hassle.
If you step backwards from the ideal to what is available today, each of those steps is
an innovation. There isn't just one straight path to the ideal, and many of those paths
are dead ends. Predictive Innovation gives you a structured way to describe the entire
idea space showing you all those paths. Describing all possible innovations:
reduces risk increases profits
maximizes return on investment and allows you to calculate the Total Innovation
Value making it easier to choose and get support for good projects
The most common approach to New Product Development is to use a Staged Gate Process starting with
a huge number of ideas then filtering them down through a number of stages until what
is hoped to be a successful product is launched. Despite the typical Staged Gate Process having
7 stages the failure rate of new product launches is 40%, basically random. Despite 50 years
of attempts to improve Staged Gate the failure rate has remained 40%.
A study of 576 projects at 360 Fortune 500 companies revealed there was a huge difference
between the results of product managers at the same companies using the same process.
The bottom 1/3 had an average of $2 million profits with the 40% failure rate. The middle
1/3 had an average profit of $21 million again with the 40% failure but the top 1/3 had $189
million profits, 95 times as profitable as the bottom 1/3. Instead of a 40% failure rate
they had a 96% success rate. Clearly the top 1/3 were doing something very different from
the bottom and middle.
The best definition of innovation is: Profitably satisfy unmet desires.
Profitable doesn't just mean money. Consumers profit from using the innovation. They give
money to get their desire satisfied. Businesses profit monetarily. Charities profit from doing
good. Whoever is involved with an innovation all of them must benefit or it just won't
happen. Unmet desire is one that has not yet been
satisfied some other way. Innovation does something new or better.
To innovate you need to know what to do, how to do it and you must do it correctly. So
there are two basic types of innovation systems, thinking systems and doing systems. Staged
Gate is the most common doing system. Creativity is the most common thinking system.
Creativity is unpredictable, unreliable, unfocused, inefficient, highly emotional. Its often said
in brainstorming sessions to leave egos at the door which shows you how emotional it
is. Creativity is also person specific depending on people with special talent. Anyone can
do Predictive Innovation without being particularly creative.
Staged Gate manages the risk but you can see that the risk is caused by using creativity
for ideas. If you use a different Thinking System Staged Gate can focus on the risks
of doing and achieve the 6-Sigma results you want.
The Staged Gate Process using creativity starts with a large number of ideas and filters them
down. On average it takes 300 ideas to produce 1 product. That filtering process costs 9
times as much as developing a single project. When we analyzed innovation as a process we
discovered there are 7 Essential Functions to the innovation process.
Those steps are: Reveal emerging expectations, the things customers
demand in the near future Generate ideas that satisfy the emerging expectations
Convert ideas into designs Make new products or set up systems to perform
services Communicate value, both internally and externally
Deliver new product or service Get and use feedback that is meaningful, and
start again with generating ideas Notice that you don't need to reveal emerging
expectations again. Emerging expectations are the criteria for ideas and products. This
is what to measure and the current measurement. Since in the first step you defined the emerging
expectations you already know what customers will want, it is something closer to the ideal.
The ideal product perfectly satisfies all the criteria for a product. Each improvement
between the ideal and what is available today is an innovation. Feedback tells you how close
to the ideal your product is and how much closer is needed for the next improvement
to be accepted by customers. The second step is generate ideas that satisfy
the emerging expectations. There is such a thing as a bad idea. Any idea you spend time
or money on that doesn't profitably satisfy a customer's desire is a bad idea. If you
skip revealing emerging expectations then the ideas are a random mess and you end up
spending huge amounts of time and money sorting and testing the ideas hoping to find a good
one. If instead, you start by defining the criteria of the emerging expectations you
know what customer's will want so you can focus on generating ideas that match the criteria.
Predictive Innovation also gives you a structure for ideas so you can quickly identify the
right idea and all the related ideas. This makes it possible to choose the best idea
and have a sequence of future products related to that core idea.
Once you know what to make you need to know how to make it this is what you do when you
Convert ideas into designs. Even if customers want an idea if you can't profitably make
it then its not a good idea for you. Being able to solve the technical challenges so
that you can profitably make what customers want is essential to success.
After you have the design you must efficiently follow it. Making the product or setting up
the system to perform the services is where the doing system takes over. This is where
Staged Gate and other process control methods like 6 Sigma will help you the most. You will
still need a thinking system to improve your process and overcome unexpected challenges
and Predictive Innovation helps you there as well.
Communicating value is really done throughout the entire process. You must get approval
from stakeholders, funding for projects, and motivate workers in addition to selling to
customers. The criteria revealed with the emerging expectations provides you the tools
to effectively communicate value to everyone in their own language.
Innovation hasn't occurred until the customer has the product and is using it to satisfy
their desires. So you must deliver the new product. And finally you should get and use
feedback from all the steps. Knowing the criteria again is essential to asking the right questions
and determining how to measure the results. Without first revealing the emerging expectations
the entire process suffers. Using Predictive Innovation changes everything.
Instead of filtering down from a pile of random ideas you start with accurate criteria to
build up a family of successful products. This increases profits and reduces risk at
the same time.
Predictive Innovation Overview There are 6 dimensions to Predictive Innovation,
these are: Actors
Desires Scenarios
Alternatives Outcomes
Elements For Practitioner we will focus on Alternatives,
Outcomes, and Elements.
Every scenario has approximately 7 outcomes and each outcomes has 7 types of elements
with 15 types of alternatives. This makes the hypercube of the idea space.
15 Alternatives times 7 elements times approximately 7 outcomes produce approximately 735 types
of ways to innovate for any scenario. These are types so there can be multiples
for each type but there is at least one of each type, this defines the idea space.
The complete idea space must have at least one of each of the 735 types. Most products
don't properly satisfy one or more outcomes and only cover 3 elements with 1 Alternative.
This means that less than 1% of the idea space is covered by most products. That leaves a
huge amount of space available for innovation. By not covering the entire idea space a large
amount of the possible profits are ignored. Most products cover less than 1% of the idea
space and only 13% of the idea space is even explored. This is a huge area of missed opportunity.
That ignored space is not only missed opportunity it causes risk. That unexplored region is
open to competition, might have easier higher profit ideas that better satisfy customers
desires. If you remember the difference between the profitability of the different project
managers its very close to the same ratio. The reason the top 1/3 of product managers
are 95 times as profitable is because they reduce the risk and increase the opportunities
by covering the entire idea space.
Conclusion Describing all possible innovations:
reduces risk increases profits
maximizes return on investment and allows you to calculate the Total Innovation
Value making it easier to choose and get support for good projects