/////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// In the second instalment of Marketit~g's series on innovation and new product development we focus on the ideation stage- an area that a third of our readers say is the biggest challenge they face bringing new products to market - and break down methods for approaching it. hen Air New Zealand sat down to rethink the appeal of its long-haul offer, it looked across different transport modes to find cut-s about how people like to travel. \tVhat it found was that some people think of an extended trip as a time to be social, while others would nuhcr keep to themseh·es. Mindful that the majority of its long· haul flights run ov<.·rnight, and on average 90 minutes longer tha1'1 any other airline, it introduced two new seating arrangements. In economy, the airline lat1nchcd the Sk1·couch. or 'Cuddle Class; a specially designed row of three seats with a lie-flat space that lets couples and fumiJks lie down like they would or1 their couch at home. And, ill premium economy, it introduced the Spaceseat in two variations- one for individual travellers preferring soH tude and another so that couples could turn to face each o ther during the flight. In May 201 1, the Skycouch took top honours in the aviation ca1cgory of Co,de Nast Traveller's 20 II Innovation and Design Awards, beating Singapore Airlines' new first class A380 c~bin. W ith the help of illllOvatiO•'I agency IDEO. the airline focused on unmet consumer needs, creating new and differentiated products that travellers lo,,ed. h is this step in the innovation process - the 'front end' or ideation s tage- that we will focus on for the second ii'IStaJment of Marketin(s innovation and new product development (NPD) series. The remainder of our investigat ion will fOC\IS on the spedfic chaUengcs marketers face throughout the d ifferent stages of the innovation process. by breaking it down into the front, the middle and the back. THE FRONT END OF INNOVATION Dr Scott J Edgett, a n internationaUy recognised innovation t·xpcrt and co-creator of Stage-Gate, an MARKETING I OCTOBER 2012 I wMV.marktr•ngmag.com.au Product Development Institute Inc. and Stage-Gate International are registered trademarks. www.stage-gate.com innovation framework used by many oft he world's biggest brands. says the front end, or the idea stage, is where the highest risk lies. But it's also the stage most comsnonly shor1cut. "'It's interesting that the area with the highest risk is also the cheapest pa rt of the proce;s," says Edgell, highlighting companies' willingness to skimp on investment in the front end, often to their detriment. Big companies ha\·e becosne skilled at the middle and back end of the innovation process- the product building and commercialisation stages. accord ing to Edgell. But they do not excel lo the same degree at ideas. " It is at the front end where we see the real change and challenges ... compal''lies are s.·wing '\Ve haven't got enough good ideas coming i n~·· \Vith such intense competition and the maturation o f many categories, good ideas are becorning harder to come by. Yet without them successful innoV3tion cannot occur- no amount of testing or refining can 1nake a bad idea good. The fro nt end is where the inspiration for the J'I Cw product is fo\md, and assessed for its viabilily. Jt includes tasks such as b rainstorming and discovery, market analysis, matching to corporate capabilities and preliminary financial and business assessment. It poses a number of challeng<.>s, from understanding COJ'I SUJrter in sights and finding great ideas co acc,arace and early project selection. Failure to understand and adequately respo nd to unmet consumer needs, or inadequate market anaJysis, was nominated as the number one cause of new product failure b)' several of Marketing's sources. Because identifying and qualifying genuine growth oppo rtunities is challenging. many compan ies leap from high-level ideas to concept development. lt's not that they ignore category assessm<.·nt overa.ll, but the urge to ' ialJlOvate• often leads to a con"lpacted process that s kips necessary steps. \\'hen the fron t end is left incomplete, the bridge between consumer need and prod uct often fails to meet. Innovation that invests significa nt time and resources into the from end is ine\'itably more ~ § ~ § §~ ~ § §~ § ~ § ~ § ~ § § ~ NPD SERIES ROADMAP September: Necessity is the mother of innovation October: The big idea November: Buildmg the product December/January. Commeroalisat1on No matter what's launched at the back end, if it came from a bad idea, it's not going to sell. If it's J·unk in, it's jun k out. successful than that which doesn't.lf steps are to be skipped, ensure the rigour of the process matches the complexity of the innovation being conductt-d, Edgett advises. "If it's a h igh risk, highly complex project, do it through the typical five-stage IStage-Gate I process, but if it's just a tweak o r an innovation, yota need co go fast to market. Have you streamlined your process to match that?., A SLAVE TO THE CUSTOMER "A slave-like dedication to the voice of the customer" is an integral part of the new product development process, according to Stage-Gate's research. Innovation that has a strong consumer focus enjoys more than double the success rate of innovation that doesn't. Despite this, a strong market orientation and customer focus is absent from many businesses' NPD projects. Idea generation based on consumer insights or input is a constant presence in Arnott's innovation pipeline. RegionaJ marketing director at the s nack food manufacturer, S\asan Massasso,says market interrogation is a daily reality for her team something they live and breathe. •<we have extensive brand plam'l ing and processes that interrogate the broader marketplace opportunities and where we want to take our brands ... we are stepping in and reviewing with consumers, with shoppers, with customers when we bring things tO market. "But we're also really dear tha t consumers aren't necessarily going to give you alJ the answers either,~· Massasso adds ... \Ve work very dose])• with our insight partners to also read between the lines and develop things that we have built upon in pre\•ious years. "The power is in how we, as people that thoroughly understa nd our bran ds and the categories and the marketplaces, apply 1 his insight i11 order to bring the innovation to market and be ahead of the game. rather th;,m just ret rospectively in the game." JUNK IN, JUNK OUT " How much would 1 spend to get one idea chat J could actually launch where I can make $300 or S400 million a year in revenue?" a marketing exect1tive asked Edgett rhetorically. T he impl ied answer: a lot of money. The critical task of unearthing an idea that has k-gs is becoming a n increasingly difficult feat. No matter what's launched at the back end. if it came from a bad idea, it's not going to sell If it's junk in, it's junk out. Innovators spend millions of dollars on insights a nd identifying <white space•- opportunities made wwNftUitktMgfnc)9.COI'I'\8u Product Development Institute Inc. and Stage-Gate International are registered trademarks. I OCTOBER I MARKETING www.stage-gate.com up of needs or demands. which can often be latent, not currently fi11ed. Research organisations and consuhancic-s have tried and teSt(.'d techniques for finding white space. which package together a range of ideation approaches. STAGE-GATE AN IDEA·TO·LAUNCH INNOVATION FRAMEWORK USED BY MOST OF THE WORLD'S BIGGEST COMPANIES Nielsen has 'Market Brand Adviser', which detennine-s the drivers of categories and seeks to understand how c;.teh brand is performing ag<tinst those drivers. It screens ideas through to concept refinement using qualitative and quantitative approaches. Andrew McQuilJan. vice president of innovation for Nielsen, Pacific, explains. "Concept development is often assisted by qualitative work to. ill some cases, come up with concepts from ideas, and in other cases to refine concepts. \.Ve've incorporated factors of successful products into our qual interviews, so that we're asking questions that improve the odds of success once we start doing the quantitative work.•' TNS has 'Matrix•, an approach that identifies, sizes and prioritises growth opportunities based on co•uurner needs. Ray Crook. regional direc tor of innovation and product development, Asia Pacific., at the research firm, s.~ys there arc five 'drilJ sites' investigated for new ideas: the normal'friction life tensions' that people have, core category needs. usage cx:casiOJl needs. COJlvergence a11d breakthrough innovation opportunities. The focus is turning back to bre-.tkthrough innovation as confidence improves. Crook notes, but it is hard to deliver on. "It's bringing the polar needs that consumers have together. A classic one would be heahh versus t·a ste within snacki11g ... Edgett says the techniques companies are using to help g.ener.1te ideas and turn consumer insights into something tangible to the product development team are changing rapidly. " It's tough to constantly come up with a new idea, the techniques they•re ll)'ing are different, and they're trying all sorts of different techniques in the hope some of them will work." The 'stages' are where the PfOiecf team undertakes key tasks ro advance ro the nexr dec1s10n po1nt. or gate. They"re cross·functional- there are no R&D or marketing stages. but a set of parallel activities undertaken by people from different funcrional areas in the firm. working together to complete each stage. The 'gates' preceding each stage are 'go/k1ll dec1sion p01nts". Gates serve as quality·control checkpoints. tunnelling out sub-standard ideas and projects. FRONT END: THE IDEA (THIS ISSUE) 8ta1nstotmu>g and d.s<:Ov<!ty §~ ~ ~ ~ § ~ § §§ ~ ~ § ~ ~ § ~ ~ § ~ IDEA DETECTORS: WHICH TECHNIQUES WORK BEST? In 2010, Stage-Gate concluded analysis on a study of ideation techniques used by 160 US firms, sparked b)' earlier findings that only 19 percent of busines.'ies had proficient ideation processes. EightC'Cn different sources of new product ideas were investigated. including eight 'voice·of·customer' techniques. six open innovation approaches, and a handfuJ of other internal and strategic approaches. The study found ' ·oice of customer methods delivered the best ideas. whiJc open GATE" 1: Does the Idea merit any WOtk? Failure to understand and adequately respond to unmet consumer needs, or inadequate market analysis, was nominated as the number one cause of new product failure by Marketing's sources. STAGE 1. SCOPING: a quick investigation and sculpring of the project GATE" 2: Does the idea JUStify extensive investigation? STAGE 2. BUILD THE BUSINESS CASE: the deta1led homework leading to a defined product, a business justrfication and a detailed plan of action for the next srages. GATE 3: Is the business case sound? MIDDLE: BUILDING THE PRODUCT (NOVEMBER ISSUE> STAGE 3. DEVELOPMENT: the actual design and development of the new product. Add1110nally, the manufacturing (or operations) process is mapped out, the marketing launch and operahng plans are developed. and rhe test plans for rhe nexr srage are defined. GATE" 4: Should the project be moved to external testing? STAGE 4. TESTING AND VALIDATION: the vetificat10n of the proposed new product, its marketing and production. GATE" 5: Is the product ready for commercial ~unch? BACK END: COMMERCIAUSATION (DEC/JAN ISSUE> STAGE 5. LAUNCH: full commercialisation of the product - rhe begtnnmg of full production and commercial launch and selling. MARKETING I OCTOBER 2012 I www.market~ngmag.com.au Product Development Institute Inc. and Stage-Gate International are registered trademarks. www.stage-gate.com CASE STUDY: VIVA SHOWER FAST WIPES The cleaning ca1cgory" a h1gh frusuahon calcgO<y and one where hrrle tnnovahon has taken place in the past f1ve to 10 years. accord1n9 ro Usa McKee. market1ng manager fO< VIVA towel and cleanong producls. K1mberly·Ciarl:. The paper P<oducr manufacrurer brought a 'blue sky' s~r dean1ng Pfoducr to market. adapflng supply dla•ns and manufacrunng processes ro incorporate dean.ng product capa~1hes 1n O((Se-r to meet consumer de5ore fO< a "mplofoed deanong P<OCess. THE IDEA !'riOf lo I he launch ol VIVA Shower FasT Wipes. over 140 SKUS conlflbuled 10 The household deanong market w11h balhroom clean1ng represen11ng 12 percen1 of lhos group Wllh the segment decl1n1ng at approxmlately four percenl each year. Kimberly-Clark 1den11fled a clear need to revitalise the segment to not only offer consumers a better and cleverer ahernat1ve to clean thetr showers. but also to dnve value and n\Cremenral volume'" the ~ ethnography ~ 1s time ~~ consum1ng § ~ and expensive §~ to undertake, §~ and if § § § observation or § § § r terpretat1on § § § § § s -Ills are § § § lack1ng, 1ts § § § accuracy §~ § § can be § § ~ compromised. category Consumer research uncovered lhar The task of cleanong the sho- screen os one of the mosr dreaded household chO<es Tlvee on 6ve consumers believed 1hey dodrfl have a sa"'fac1ory soltmon fO< soap scum on The shower screen and toles. They deSired deaiWlQ PfodUCIS thaT are easy to use and lhaT alow Them to fit cleanong onlo theor busy loves Many found the SPfays. cloThs. scrubbong brushes and need to change clothes pull hem off clean1ng I he sh~ and a source of frusTratoon Trends also showed consumers prefer not to use htghly toxtc. strong smelling chemtcals ro deal\ and seek conven•enr solulions 1ha1 deliver effoc:acy Wllh ease. The VIVA Shower FaSI Wopes concep1 was developed to meet consumers· needs by prov•d•ng a s•mple. QUICk and effec-hve soturtOn ro shower deamng frustrations The bus1ness case for lhe tdea was sTrong- !here was no cannobalosa11on potentoal as KJmber1y.Ciark had no exostong PfodUCIS on lhe ballvOO<n clearong category. meaiWlQ al volume v.ould be oncrernenTal Brand equoTy on the vrvA name emerged as a competdM! a<tvanlage Nexr monrll The JO<Irney Komberly.Ciark embarked on ro resr. rer.ne and df!Velop rrs breakrtrrough deanong producr innovation yidd<d disappointing results and th< rang< of other techniques were suited to niche situations only. lt also rcv~alcd that while some methods were used extensively, notably focus groups and siUdies of early ado)'tcrs. others such as ethnography or co·creation communities were less popular despite proving to be more fru itful sources of ideas. ETHNOGRAPHY Ethnography was found to provide the dc.:pest insights into user~· unmet and unarticulated nteds and is a powerful source of breakthrough ideas, the study found. The approach in,-olvcs 'camping out' wtth consumers m their natural ~tring for extend«i periods of urn<, watching and probing as they go about their .-·rr)-day li,.es, Th< depth of knowl«lg< that can be goin<d is unrivall<d by other techniques. It is, howt\'Cr, time consuming and expcnsiYt 10 undertake. and also subject to the skill of I he researcher or observ<.'r. If observation or intcrprct,Hion skills a rc lacking, its accuracy can be compromised. A scolt-d·down version of e thnography - customer visil tcoms, where cross·functionaJ teams interview customers - ~1bo emerged from the study as an undcr•ppreci,ued approach. FOCUS GROUPS Th< stalwart of qualitati,·e re><arch, focus groups are still widely_.. and a fruitful source of ideas. They often in\'oh·e proj«tion techniqua to draw out the trur dri\·~rs behtnd "-ants and ne«<s. ln,·ef'S(' br.un· storming-·staning with product shortcomings. then brah\storming to propose solutions- is also a tri~ and tested methodology for ideation. ' LEAD USER' ANALYSIS Analy~is of'lcad us.ct•s', or early adopters that have been identified fo r their 'future shaping' proclivities, can yield illllOVlHivc product ideas. It was an effective and popular lechniquc among the firms stud ied. credited for uncovering ideas for people who are'ahead of the "-ave:: The major chalJenge with its use is in id<ntifying le.d usen, gelling th<m to participat< and stroctunng the research. COMMUNITIES/CO<REATION/ CROWDSOURCING Onlu'\t communities, virtual focus groups and crowd.sourcing approaches have become widely u~ed techniques. Qualitative research conducted online www m.wkt ltnOmagcom.tu IOCTOBER 2012 I MARKETING Product Development Institute Inc. and Stage-Gate International are registered trademarks. www.stage-gate.com has a number of benefits. inclt1ding cost and logistic:aJ efficiencies, the ability to use multimedia content as stimulus and a d igitaJ research environment where panicipams are usually n'lo re candid. Its useful application depends on the aims of the project and the participants reCrtlitcd to take part. The panel recruited to take part can be made up of lead users, po pulation reprcscnta th'C groups or brand/category enthusiasts. Researching enthusiasts can be a double-edged sword. \Vhile leveraging their passion for the brand or category can deliver great results, their engagement with the topic can lead to biased results. Crook advises being targeted with co-cr<.·a tion and clearly defi1ling to participants where the opportunity fits. "Co-creation is a good way to get ideas from consumers, butt hey need to be harvested in the right way. You need to ensure that you're co-creating around are;.ls where there is a space. \Vc might get there and say, 'Let's go out and co-create a light tasting beer: But we need to understand if there is a gap in the marketplace fi rst." Generally, the effectiveness of community approaches was rated highly in Stage-Gate's research. T hey can be set up to be ongoing, similar to traditional customer advisory boards. but the ir ru11nir1g costs are low. A key challenge is, while this method comes with its efficiencies, it requires considerable skill, insight and time to analyse what is often a la rge amount of written responses. ~ ~ §~ § ~ § § ~ § § ~ § ~ § ~ ~ §~ ~ § ~ § ~ §~ § ~ § ~ OPEN INNOVATION Open innovation opens the doors of the o rganisation to idC"dS,technology. intellectual propert)' and even fully·developed products to outs ide sources. Jn spite of the hype about this a pproach, open methods aren't proving particularly popular, according to Stage-Gate, nor are they perceived to be particularly effecti\•e as SOtlrces of new product ideas. Out or six open innovation approaches investigated, the three most eff<.-ctivc were ideas from partners and vcndo~. ideas from the external scientific community and ideas from start-up businesses. None, however, proved to be as effective as voice-of-customer methods, possibly due to their newness. T hey have potential, however, by virlue of their access to a wide a rray of parties- a 'brains trust' of experts beyond the ability of the standard organisation to employ. The open approach is one that IDEO has thrown itself into, according to its chief creative officer, PauJ Bennett. The agenC)' was contracted by the Formally soliciting new product ideas from your own emp Ioyees was the most popular ideation method in the survey, but its effectiveness was found to be disappointing. Queensland Government in 201 1 to find solutions to the gap between rural food production and urban food consumption. An open challenge was posed at last year•s Ideas Festival to create a closer connection between locaJ food production and consumption and improve sustainability. Concepts were then gathered together to input into the developrnent of solutions to the challenges. A major disadvantage of the approach is the sheer amount of time and work it takes to scan, solicit, handle and process the ideas or intelleChlal property. "It takes an a rmy of people;• o ne of Stage· Gate's respondents indicated. OTHER METHODS Top-down o r strategic approaches to innovation have proven fairly popular over the years and include two methods: exploiting disruptive technologies and •peripheral vision'. Both emerged in the research as widely used and effective idea generation techniques. Patent mapping and mi11ing is also well-known a nd quite popular for identifyi ng areas of competitor activity and hence potential areas of focus. Man)' firms engage in this activity to stay across what competitors a re doing, but the approach is a reactive, rather than proactive, ge1'1erator of new ideas. 'Internal idea capture' - formally soliciting new product ideas from your own employees- was the most popular ideation method in the survey, but its effectiveness was fo und to be disappointing. The fron t end of the ilH'IovatiOll process is the most important s tep in the journey; it's the founda Oon upon which the project is buih. Executing the first stage of developing a new product is a matter of fo rmalising the st-arch fo r a big idea, while doing b ackground homework to assess its \•iabilily and listening to the voice of the consumer every step of the way. Nearly all of the best performers h'we a game plan and use a structured approach, such as Stage· Gate. Innovation is in tcgratt..-d into the culture of their o rganisations, aligned to their corporate strategy and effective portfolio management ensures the right mix of innovation projects is p1..1t together. 'With incrementa l innovation reaching near exhaustion, the hunt for bigger and bctt<.·r ideas is a top priority. T.'lking a big idea and making it a reality - like Air New Zealand d id by making it possible fo r passengers to lie down in economy- requires a s trong focus o n, and respect for, the front end of innovation. M MARKETING I OCTOBER 2012 I www.marker.ngmag.com.au Product Development Institute Inc. and Stage-Gate International are registered trademarks. www.stage-gate.com Stage-Gate International is the world's leading full-service provider of solutions which enable organizations to improve their Product Innovation and Portfolio Management capabilities and performance. Our clients include 5000+ organizations of all sizes across all industries. +1-905-304-8797 www.stage-gate.com Visit our website and subscribe to receive the latest research, information and complimentary articles to keep you current in product innovation!