Actually scholars on innovation management are lagging behind reality. They still recommend the stage-gate model, which saw the light in 1990, as the ultimate way to organize innovation projects. While in the past 20 years so much has changed and new developments also changed the way innovation is realized. Just think of the customers’ involvement in the ideation process, the co-creation with partners and newly available technologies for market learning. These developments are changing the ‘rules of the game’. As a result current collaborative innovation practices do not fit any longer the traditional innovation management models. Time for a new approach!
Old school model
Two decades ago a structured approach for accelerating new product development is constructed: the stage-gate model. Starting with an idea for a new product or service, five stages have to be passed in order to automatically arrive at the market launch.
Stage-gate model (Cooper, 1990)
Besides an ordering of activities, the approach required a go – no go decision at the end of each phase. Since each subsequent phase will require more efforts and (financial) resources, it makes sense to reconsider the feasibility and chances on market success at fixed moments. Negative results of a business case will for example prevent the expensive development of a non-viable product.
The current innovation process is no longer sequential as outlined in the stage-gate model. It is outdated that testing and validation by customers occurs after the development of the innovative product or service. Nowadays the customer is involved in an earlier stage – even in the first ideation phase. Through technology enabled simulations and new methods for market learning, the customer can solid validation before the product or service is developed. The benefits of new methods of market learning are not limited to having feedback at earlier times but also the possibility to tailor the innovation to the needs of the user.
Next the commercialization activities should not be deferred to one of the last phases. Instead of creating a gap between the R&D phase and commercialization phase – the so-called Valley of death’ – activities should take place in parallel. This means, that business modeling and business case activities should not be deferred but have to be included, of course in modified form, from the start.
Finally open collaboration in innovation projects makes the process fuzzier. Partners that you have at the start of an innovation project are not necessarily the ones with whom you enter the market. For instance a university will be very much interested in developing new knowledge or technologies, but is not the most obvious partner in entering the market. Although this example illustrates a foreseeable change, unexpected changes in partnerships are also likely to occur. Due to changes in industry trends, new technologies and insights, interests of partners can change which results in more fluid partnerships.
No phasing at all?
Today’s fuzzier innovation practice wring with the gate-stage model. Still we would like to distinguish a limited number of phases since research shows that structuring of the innovation process clearly contributes to the success of an innovation. Firms that structure their innovation process need fewer ideas to realize one successful innovation and are able to realize more disruptive instead of incremental innovations. It should be noted that disruptive innovations are very important since they strengthen a firm’s long term market position.
Structuring the innovation project by distinguishing multiple phases is not only necessary but also easily to do. Each phase has a very specific objective. We distinguish three phases:
- Setting the stage
- Exploration and experimentation
- Business development and legacy binding
1. Setting the stage
The first phase consists of the identification of the societal or market challenge plus an idea how to address this. Especially when the intended innovation is more complex, a network of partners has to be mobilized in order gather the necessary knowledge and skills. Sharing the opportunity with partners can be considered as a legitimization of the innovation: a partner is not joining whenever he is not basically convinced of the feasibility of the solution. This phase ends when the partners formalize their collaboration and commit themselves to allocate more resources to the innovation project.
2. Exploration and experimentation
The second phase is characterized by intensive exploration of the market and technology options, the development of new knowledge and an investigation of possible variations of the innovation. Preliminary plans for the innovation are not kept secret but shared with stakeholders or customers. Their feedback is essential for developing the right innovation. When an innovation becomes more concrete, potential users can start experimenting.
3. Business development and legacy binding
In the third phase the prototype of the product or beta-version of the service has to be taken in production. A continuous delivery of the product or service has to be organized and the target market has to be made ready for the market launch. While previous phases can have large numbers of partners, smaller numbers of parties are in general involved in this phase.
Although most activities are not exclusively linked to a single phase, the nature or intensity of an activity differ per phase. For example exploration is not exclusively linked to the second phase. In the first and last phase exploration will also occur, but not that extensive. A full listing of required activities per phase will follow.
Over de Auteur
Irma is meer dan 20 jaar actief als management consultant in de ICT sector en oprichter van SMARTconsulting.nu. Zij heeft een bedrijfskundige en financiële achtergrond en specifieke ervaring met innovatiemanagement, business modellering, financiële assessments, risico analyse, scenario ontwikkeling en benefit realisation management. Naast deze expertise heeft Irma onderzoekskennis en ervaring opgebouwd door in (internationale) researchprojecten te participeren.