The document discusses an innovation funnel process for developing new products and processes. It begins with a wide range of ideas that are gradually refined through screening. Only a small fraction of initial ideas become full development projects. Managing the funnel involves expanding knowledge to generate more ideas, screening ideas to focus resources on the most attractive opportunities, and ensuring selected projects meet objectives. The document also presents two models - one where larger firms generate many ideas through R&D for screening, and one where smaller startups focus on a single project.

1. Innovation Funnel
The aim of any product or process development project is to take an idea from concept to reality
by converging to a specific product that can meet a market need in an economical,
manufacturable form.
The overall development process starts with a broad range of inputs and gradually refines and
selects from among them, creating a handful of formal development projects that can be pushed
to rapid completion and introduction. This notion can be illustrated as a converging funnel
(above).
In its simplest form, the development funnel provides a graphic structure for thinking about the
generation and screening of alternative development options, and combining a subset of these
into a product concept. A variety of different product and process ideas enter the funnel for
investigation, but only a fraction become part of a full-fledged development project.
Managing the development funnel involves three very different tasks or challenges. The first is to
widen the mouth of the funnel - the organisation must expand its knowledge base and access to
information in order to increase the number of new product and new process ideas. The second
challenge is to narrow the funnel neck - ideas generated must be screened and resources
focused on the most attractive opportunities.
The goal is not just to apply limited resources to selected projects with the highest expected
payoff, but to create a portfolio of projects that will meet the business objectives of the firm while
enhancing the firm's strategic ability to carry out future projects. The third challenge is to ensure
that the selected projects deliver on the objectives anticipated when the project was approved.
Two Dominant Models ofthe Development Funnel
These models are broad patterns showing the kinds of choices firms have to make.

2. Model 1 (above) is common in larger , technology intensive firms who rely primarily on their
Research and Development group to generate ideas for technologies, products and processes.
Encouragement is given to generate many more ideas than will be applied, and these are then
screened in various ways and at various stages.
Model 2 (above) is a top down model common in small, entrepreneurial start-ups, in which the
firm bets on a single project. In both illustrations the circles represent newproducts; shading
indicates the extent of development, and size the scale of the project.
References
 Wheelwright. S. C. and Clark. K. B., 1992, Revolutionizing Product Development, The
Free Press, New York.