The Innovation Process in 40 Characters

The Process of
Innovation
Adapted from:
Faley, T (2007). Innovation Process. Ann Arbor, MI: University of Michigan
Price, J (2007). New Venture Creation. Ann Arbor, MI: University of Michigan

Copyright©2020-JoelWenger-AllRightsReserved
Innovation is one of the most overused words in business world. As of 2020:
“Innovation” is used to describe everything from incremental improvements in
technology to revolutionary changes that impact society.
What is “innovation”? It depends…
1.6 billion+ ‘innovation’ search
results from Google
50,000+ “innovation”
books on Amazon.com
@
2

Innovation Is The “Glue” Between Invention And Investment
Invent
• Create new ideas and concepts
Innovate
• Match inventions with people’s
problems to form solutions
Invest
• Commercialize solutions via
businesses
“Research is the transformation of
money into knowledge.
Innovation is the transformation of
knowledge into money.”
Dr. Geoffrey Nicholson, 3M
3

The Process Of Innovation Transforms Ideas Into Businesses
Ad-hoc
Gut-feel
Disorganized
Opportunistic
Fortunate
Individual
Structured
Disciplined
Organized
Purposeful
Planned
Scalable
Invention Innovation Investment
4

The Process of Innovation
Is the business
proposition strong
enough to justify
moving forward?
Is the
business
feasible?
Ideas and
Solutions
Business
Proposition
Business
Feasibility
Business
Plan
Is the idea strong
enough to justify
moving forward?
5

Ideas and
Solutions
Business
Proposition
Business
Feasibility
Business
Plan
• Persona
Mapping
• Technology
Mapping
• What is the
product or
service?
• Who are the
users?
• Why will they
use the
product?
• How does your
business make
money?
• Industry
• Market
• Product
• Company
• Team
• Investor Pitch
• In-Depth
Planning
6

The Process of
Innovation
Step 1 : Ideas and Solutions

8
Ideas and
Solutions
Business
Proposition
Business
Feasibility
Business
Plan
• Persona
Mapping
• Technology
Mapping
• What is the
product or
service?
• Who are the
users?
• Why will they
use the
product?
• How does your
business make
money?
• Industry
• Market
• Product
• Company
• Team
• Investor Pitch
• In-Depth
Planning

The First Solution Is Rarely The Best Solution…
9
Idea /
Invention
Concept
Technology
Map
People
Personas
Community
Map
Affects
&
Effects
Perceptions
&
Valuations
Outcomes &
Results
Potential
Solutions

The Best “Market Research” Models How People Think
And Choose
Describe the community
• Who are the users?
• Who are the technical experts?
• Who are the influencers?
• What are each of their needs?
• What outcomes do they desire?
• What experiences do they desire?
10
People
Personas
Community
Map
Perceptions
&
Valuations

Deconstruct An Idea To Discover Affects And Effects
Describe the idea:
• What does it do?
• What is special about it?
• What does it compare to?
• What is its effect?
• What allows it to do have an effect?
• What is essential for it to do what it does?
• What are the limits of what it does?
11
Idea /
Invention
Concept
Technology
Map
Affects
&
Effects

Link Technology & Community Maps To Uncover Novel
Solutions To People’s Problems
12
Causes
&
Effects
Perceptions
&
Valuations
• Effects of technology; push versus market pull
• Limits of technology and markets
• Combinations of multiple technologies and/or markets
• Look for solutions where the most value is likely to emerge
Outcomes
&
Results
Idea /
Invention
Concept
Technology
Map
People
Personas
Community
Map

Refine The Idea Until It Is Strong Enough To Merit Deeper
Investigation
13
Causes &
Effects
Perceptions
&
Valuations
How can we
do “it”?
Who will value
what “it” does?
Remember, all innovations begin as inventions, but not all inventions are
innovations.
Similarly, commercialization starts with innovations, but not all innovations can
be commercialized.
Outcomes &
Results

The Process of
Innovation
Step 2 : Business Proposition

15
Ideas and
Solutions
Business
Proposition
Business
Feasibility
Business
Plan
• Persona
Mapping
• Technology
Mapping
• What is the
product or
service?
• Who are the
users?
• Why will they
use the
product?
• How does your
business make
money?
• Industry
• Market
• Product
• Company
• Team
• Investor Pitch
• In-Depth
Planning

Creating The Business Proposition Is Iterative
16
Business
Proposition
Business
Influences
Business
Offering
Solutions
Crafting the business proposition
establishes the path to commercialization
• What is the product?
• Who is the customer?
• Why do they buy?
• How do you make money?

Formulate An Initial Business Proposition For Your
“Solution”
• What is your product/service?
• What does your business do?
• Who are your target customers?
• Are their needs compelling enough to justify buying the product concept?
• Why will your target customers use your product?
• Value proposition to the user?
• How does your company make money?
• Define the company’s value capture mechanism
• Is the product pricing consistent with the value created for the user?
17

Create Influence Diagrams For The Business By Mapping
The Market
18
Causal loop diagram of a model examining the growth or decline of a life insurance company
https://en.wikipedia.org/wiki/Causal_loop_diagrama

Business influences define the offering as a Feature,
Product, or Business
Feature = Licensing or joint ventures are most likely business outcome
• Can’t acquire complimentary assets
• Don’t control ancillary IP
Product = Product development effort that gets acquired is most likely business outcome
• Market channel is unavailable
• “Product” must be sold with other products (i.e. bundled)
• Supply chain is non-existent or monopolized
Small / Niche Business = Assets that get acquired by large business the most likely business outcome
• The market small or narrow
• Product line extensions non-existent or limited
• Limited ability to cross into other markets
Large business = IPO or acquisition is most likely business outcome
• Control of Assets
• Viable Supply Chain
• Growing primary/secondary markets
19

Is The Business Proposition Strong Enough To Merit
Deeper Investigation?
• Overlapping the technology, community,
and influence “maps” provides a clear
picture of the business landscape.
• Refine the potential solution and
business proposition by iterating through
the process, knowing that you may have
to revisit the technology and community
maps to “regroup”
20
Perceptions
& Valuations
Causes &
Effects
Business
Proposition

The Process of
Innovation
Step 3 : Feasibility Study

22
Ideas and
Solutions
Business
Proposition
Business
Feasibility
Business
Plan
• Persona
Mapping
• Technology
Mapping
• What is the
product or
service?
• Who are the
users?
• Why will they
use the
product?
• How does your
business make
money?
• Industry
• Market
• Product
• Company
• Team
• Investor Pitch
• In-Depth
Planning

Business feasibility incl a market, industry, and product
perspective
The New Business Road Test, John Mullins © 2003. 23
Market
Attractiveness
(Potential expansion
to new segments, etc.)
Target Segments,
Benefits,
& Attractiveness
(Personas, Needs,
& Wants)
Industry
Attractiveness
(Porter’s 5-forces,
etc.)
Sustainable
Advantage
(Product
Differentiation,
Intellectual Assets)
Market Domain Industry Domain
Macro-levelMicro-level

Business feasibility from a company and team
perspective
Market
Attractiveness
(Expanding to new
segments, etc.)
Target Segments,
Benefits,
& Attractiveness
(Personas, Needs,
&Wants)
Industry
Attractiveness
(Porter’s 5-forces,
etc.)
Sustainable
Advantage
(Product
Differentiation,
IntellectualAssets)
Market Domain Industry Domain
Macro-levelMicro-level
TEAM
DOMAIN
Cohesive value
chain
Ability to
execute
Missions,
aspirations
The New Business RoadTest,John Mullins © 2003. 24

The Process of
Innovation
Step 4 : Business Plan

26
Ideas and
Solutions
Business
Proposition
Business
Feasibility
Business
Plan
• Persona
Mapping
• Technology
Mapping
• What is the
product or
service?
• Who are the
users?
• Why will they
use the
product?
• How does your
business make
money?
• Industry
• Market
• Product
• Company
• Team
• Investor Pitch
• In-Depth
Planning

Start With The Investor Presentation
• Leverage the content retention hierarchy to make your presentation
memorable
• The graphics can be used as exhibits in the business plan
IncreasingRetention
• Generic Text
• Text with clearly marked headings
• Bullet points
• Tables
• Graphs
• Diagrams & pictures
27

Key Elements Of An Investor Presentation (Pitch Deck)
• Solution
• Value proposition / Advantages
• Business Model
• Value Capture Mechanism / Value
Chain
• Market / Industry
• Users / Size / Segmentation / Growth
rate / Stage of development
• Competition
• Relative comparison and competitive
positioning
• Marketing and Sales
• Go-to-market strategy
• Operations
• Company-building timeline / Key
value-building milestones
• Finance
• Historical results / 5-year projections /
Key milestones / Capital
• Business Management
• Bio’s of Key personnel / Org charts
28

Source Material For An Investor Presentation (Pitch Deck)
• Solution
• Business Proposition (Steps 1 & 2)
• Business Model
• Business Proposition (Steps 1 & 2)
• Market / Industry
• Feasibility Study (Step 3)
• Competition
• Feasibility Study (Step 3)
• Marketing and Sales
• Business “Planning” (Step 4)
• Operations
• Finance
• Business Management
29

The Business Plan Is A Living Document
• Business planning is an ongoing activity. You’re never really done.
• Keep your plan alive by reviewing it regularly. Start each review by listing the
assumptions in your plan and how well they’re holding up.
• At this stage, the goal isn’t to finish a business plan…the goal is to quickly adjust it
as you move forward.
30

Key Elements Of A Business Plan
Solution
• Describe product and/or service offering
• Compelling value proposition
• How is your solution dramatically better, faster, cheaper and/or cooler
than current offerings?
Business Model
• How do you make money
• Value chain position
Market & Industry
• Define end-user customers: What is their unmet need? Are they aware
that it’s an unmet need?
• Industry map
• Value chain and margin structure
• Size / Segmentation /Growth rate / Stage of development
• Basis of competition
Competition
• Competitors and their respective offerings, size, market share, and
growth rates; competitive dynamics; basis of competition; comparison
• Your competitive positioning
Marketing and Sales
• Go-to-market strategy
• Marketing strategy
Operations
• Company-building timeline
• Timing of key value-building milestones
Finance
• Summarize historical results plus 5-year projections for:
• Revenue / Gross profit and margin / Operating profit and margin
• Headcount
• Key metrics: Time to first revenue / Time to break-even / CAGR of
revenue, Capital requirements, Capital contributed to-date (amounts and
from whom), Total amount required looking forward, Amount being raised
currently
Business Management
• Summaries of key personnel / Org chart
Appendices
• Full financial statements
• Historical and 5-year pro forma
• P&L, cash flow, balance sheet
• Narrative with assumptions
• Management resumes (if appropriate)
• Product literature
• Evidence of customer interest (customer lists, letters of intent, etc)
31

Thoughts on Commercialization
• Commercialization is the process or cycle of
introducing a new product or production
method into the market.
• The commercialization process has three key
aspects:
1) A Funnel: It is essential to evaluate
many ideas in order to reach one or
two products or businesses that can be
sustained long-term.
2) Stages: It is a stage-wise process,
and each stage has its own key goals
and milestones.
3) Stakeholders: It is vital to involve key
stakeholders early, including customers
32
• Many technologies begin in the laboratory
and aren’t practical for commercial use in
their infancy.
• The development segment of “research and
development” requires time and money, as
systems are engineered to make the
product or method commercially viable.
• The launch of a new product is the final
stage of product development and the one
where advertising, sales promotion, and
other marketing efforts encourage
customers to adopt the product or method.

The Innovation Process in 40 Characters

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