A New Framework for Disruptive Innovation Management 2012 - Dr. Jose a. Briones

Beyond Stage Gate
A New Approach For The Management Of Innovation Processes
Jose A. Briones, Ph.D.
@Brioneja

2
Agenda
Introduction to the problem
Review of conventional Stage-Gate
Classification of Innovation Projects
The Spiro-Level approach
Summary

3
Legalese
Stage-Gate® is a registered trademark from Stage-Gate International’s Product Development Institute Inc.
“The fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright” - Copyright Act of 1976, 17 U.S.C. § 107

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Ratio of R&D needed per unit of GDP output has gone from 1:1 in the early 90’s to ~3:1 in 2009 (Source: Dr. William Strauss, FutureMetrics)
Success rates of innovation projects can be as low as 2.5% but rarely exceed 20% depending on when we define a project launch
Effectiveness of product development process is broken
We can no longer throw Ph.D.’s at a problem
Problem

5
Proliferation of Solutions
Where do they all fit?
When do I use each tool?
What is a reasonable expectation?

6
Challenge
Create a unified framework for innovation projects/product development that
Provides the flexibility needed for innovation to work
Still has the metrics needed for proper measurement of progress and resource allocation.

Innovation
Twitter: @Brioneja www.Brioneja.com

Classical Innovation Process
Idea Generation
Idea Selection
Project Management

Two Types of Innovation
Incremental or sustaining
Occurs in linear fashion
Radical or disruptive
Occurs in non-linear, discontinuous or
iterative fashion

10
Innovation Projects Classification and Segmentation
Google’s Wave
Was it the appropriate decision?
Short term versus long term?
Product versus platform
Orkut vs. Facebook - 2004

Classical Innovation Management
Standard processes for innovation management reflect the linearity of incremental innovation
Stage Gate
Waterfall
Do not work well in disruptive or radical innovation

12
Identify the source of the following quote:
‘I am become death, destroyer of worlds’

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Mediocrity
"I am going to come to you with a contrarian view of innovation, deeply researched, with more than $7-million worth of data behind the assertion that the Stage-Gate model as we know it today is…going to guarantee total performance mediocrity for your businesses.
Larry Keeley, president of Doblin, Inc
April 2006

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Suitability
“The Stage-Gate system is not suited to the task of assessing innovations whose purpose is to build new growth businesses, but most companies continue to follow it simply because they see no alternative”
Clayton M. Christensen

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Classical Stage-Gate Process
Source: Product Development Institute, Inc.
Project is managed in a linear fashion
“The Stage-Gate system assumes that the proposed strategy is the right strategy, the problem is that except in the case of incremental innovations, the right strategy cannot be completely known in advance” – Clayton M. Christensen

16
Xpress and Lite Variations of Stage-Gate
Source: R.G. Cooper, Stage-Gate International
These modifications still use a linear approach to innovation project management.

17
Modifications to Stage-Gate: “Spiral Development”
Source: R.G. Cooper, Stage-Gate International
Iterations occur within a stage, with no mechanism to start over

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Modifications to Stage-Gate
“Simultaneous Execution” and “Stage Overlapping” can also be used to address some of the Stage-Gate deficiencies, but are not enough to overcome the restrictions of the linear approach.

Disruptive Innovation
Classical
Business Management
Iterative
Estimates
Flexibility
Virtual teams
Efficiency
Forecast
Progress Measurement
Resource allocation
How Do We Reconcile Conflicting Requirements For Disruptive Innovation?

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The need for iterations
For Disruptive innovations, 1 round of VOC’s is not enough to be the cornerstone of a project
Customers cannot say that they want what they do not know
Customers can only provide feedback on incremental modifications on what they do know
Iterations are needed where customers evaluate a prototype and a new cycle starts, complete with a new VOC, market and business analysis

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What is the solution?
Modify innovation management into a real spiral approach: Spiro-Level
Incorporate classification via level of uncertainty in your project portfolio management
Manage different types of projects using levels on the Spiro-Gate

1
2
3
Solution

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Classical Product Development Classification
Adjacent Markets
vs.
Blue Ocean
New
Market
Existing
New
Existing
Product
Conventional product development categorization fails to
acknowledge the differences in available information within
each space

Stepping
Stones
High
Medium
Low
Positioning Options
Platform Launches
Project Classification
Scouting
Options
Technical Uncertainty
Enhancement
Launches
Low Medium High
Source: The Entrepreneurial Mindset
Market Uncertainty
Projects are classified by how much we do NOT know
Degree of uncertainty defines the track they take

Spiral Approach
Time
Spiral has 3 levels
Axis = Resources and Time
High uncertainty projects start at level 1
Move from learning/discovery to definition/forecast
3
2
1
Resources

Tools Management
T
O
O
L
S
Project analysis repeated
Different Tools Selected
Level 1 tools feed subsequent levels
WHEN Vs. WHICH

The Spiro-Level™ 3-D Approach to Innovation
Resources
Launch
Quadrant IV
Quadrant I
Roadmap/Timeline
Idea
Generation
Level
3
Risk Analysis
VOC
2
Customer
Testing
1
Time
Time
Technology
Assessment
Supply Chain
Analysis
Business
Case
Value in Use
Analysis
Regulatory
IP Strategy
Prototype
Development
Quadrant II
Quadrant III
Resources

28
Managing Projects
Projects at different levels of uncertainty must be managed differently
Expectations must be different
Tools to manage them must be different

29
The Business Development Management Role
Must reduce the projects’ level of uncertainty
Transform options and stepping stones into platforms
Generate products/opportunities from the platforms that can be managed with conventional financial and project management tools

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Relationship Between Spiro-Level and Project Type
Level 1
Positioning and Scouting Options
Stepping Stones
Level 2
Platform Launches and Projects
Level 3
Enhancements and individual product launches

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Keys to the Process
Time and resources start small, increase as the levels go up
The analysis is repeated at each level, but the tools used for each level are different.
Level 1 uses tools more suitable for high levels of uncertainty, i.e. Discovery Driven Planning, Probabilistic Decision Analysis
Level 3 uses more conventional management tools, i.e. Linear Stage-Gate, NPV

32
Reviews
Management and Project teams define number and type of reviews
Agreed upon timeline and level of resources defines the number of reviews
By Quadrant
By Level
Level 1 does not need as many reviews as Level 3

33
Tools for Overall Project Management
Level 1
Discovery Driven Planning
Knowledge to Assumption Management
Level 2
Product/Technology Roadmaps
Multigenerational Product Planning
Level 3
Linear Stage-Gate
Agile Development

34
Tools for Product Attribute Value Analysis
Level 1
Market Perceived Quality Profile
Level 2
Kano Analysis
Level 3
Conjoint Analysis

35
Tools for Voice of the Customer
Level 1
Unmet Needs – KJ Analysis
Level 2
Job to be Done
Level 3
Product Features
VOC Level 1: Broad and shallow
VOC Level 3: Deep and detailed

36
Tools for Financial Analysis
Level 1
Reverse Income Statement
Real Options
Level 2
Probabilistic Decision Analysis
Level 3
NPV
DCF

37
Summary
A modified Spiral approach to innovation project management can be used to:
Integrate project portfolio management by level of uncertainty
Manage different types of projects using the appropriate tools
Maintain the right framework to track progress and resources but provide the flexibility that innovation projects need for success
This approach has already been successfully used to create a disruptive innovation product for the construction industry

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Epilogue by Clayton Christensen
“We keep rediscovering that the root reason for established companies’ failure to innovate is that managers don’t have good tools to help them understand markets, build brands, find customers, select employees, organize teams, and develop strategy”
“Some of the tools typically used for financial analysis, and decision making about investments, distort the value, importance, and likelihood of success of investments in innovation”
“There’s a better way for management teams to grow their companies. But they will need the courage to challenge some of the paradigms of financial analysis and the willingness to develop alternative methodologies”

Conclusion
This framework for innovation projects provides
The flexibility needed for successful innovation projects in any industry
The metrics needed for proper measurement of progress and resource allocation.

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Contact Information
Jose A. Briones, Ph.D. (Brioneja)
Twitter: @Brioneja
Brioneja@spyrotek.com
www.Brioneja.com

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A New Framework for Disruptive Innovation Management 2012 - Dr. Jose a. Briones

by Jose Briones on Aug 07, 2010

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A New Framework for Disruptive Innovation Management 2012 - Dr. Jose a. Briones — Presentation Transcript