Many readers seemed to “bristle” at the idea of process and innovation in the same sentence when I first posted on this topic [1]. In the original post, I proposed that innovation at the fuzzy front end was more effective if managed as a process. This post revisits these ideas, addresses your comments in more detail, and identifies innovation that responds well to process.

Many companies run into trouble when they try to trim the number of “ideas” and “product concepts” down to a manageable number of projects to be fully funded, customer/consumer tested and ultimately developed for sale. First there is the problem of what types of ideas should be chosen for development. Are they on strategy? Are they disruptive or incremental? How many of each type should be chosen (i.e. how big should the budget be?) Do they make commercial and technical sense? Will customers want them? What mix of big ideas and smaller ideas are needed for the company to be successful? What is our development capacity in-house vs. external sourcing?

We all know that innovation is notoriously difficult. Bigger and better ideas are elusive. In an era when the literature is full of “fail fast” and “build/ship/iterate” mantras, it’s easy to forget that this philosophy doesn’t always work. What has been successful for many “best-in-class” companies is long term, carefully planned projects that deliver significant innovation. While these projects can be very risky, many well-known innovative companies have examples of long term projects that succeeded against the odds and enabled them to break out relative to their competition. Later in this post I look at Pratt and Whitney’s new PurePower Geared Turbofan aircraft engine as an example of this type of disruptive innovation.

Defining an Innovation Strategy … The critical process issue to address at the front end of innovation is to define an innovation strategy. An innovation strategy lays out the framework to answer some of the questions above. In what market categories is the company going to compete and in what categories is it not going to compete? Is the company going to be an Innovator, a Fast-follower, or a company that competes on cost, quality of service or a new business model (like Uber for example)? An innovation strategy will answer and set boundaries on the number of disruptive and incremental projects a company will initiate or source from outside the company. Incremental projects make more sense for a company that has self-identified as a “follower” company than for a company that competes on price. Another important question is the size of the idea. Many good ideas and product concepts have been discarded or implemented by grossly inaccurate estimates of future market size, both large and small, or because of the high risks and costs of new product development.

Ideation … As many readers pointed out, inventive spark and creativity do not lend themselves easily to systemization. The ideation stage always needs to be open and flexible. I prefer to start from the position that there is no such thing as a bad idea and there can be process developed around the ideation phase. For example, a brain storming meeting might have rules of conduct that include conversation at the table can only build on previous ideas.

How Process helps you move from Ideation to Product Concept & beyond … My experience is that converting innovation ideas to product concepts, to prototypes, and finally to successful products requires a disciplined approach – sort of like loading an old style gun – if you miss any of the important steps it misfires or goes off in the wrong direction. For me, this is where process is critical. The two book-end stages of product development i.e. creativity/ideation and development/commercialization, require completely different management approaches, but too often they are handled exactly the same way, to the detriment of innovation.

The fuzzy front end of innovation must be managed differently from the back end of innovation. It requires a different mindset than later-stage product development and manufacturing. For example, if the goal is innovation (or problem solving), networks are needed to connect different expertise, experience and perspective. If the goal is efficiency (or implementation), networks are needed to connect similar expertise, experience and perspective. In network analysis language, networks for idea generation require loose, heterogeneous ties while networks for execution demand strong, trusted homogeneous ties. While the fuzzy front end of innovation does not easily lend itself to systemization, careful governance and a well-established and disciplined governance process is required so that ideas are selected and nurtured for development in a way that innovation workers feel that they can guide and have real input into the development direction of the new product. Many R&D workers have stories of failed “pet” projects that upper management or others with influence forced through the system at the expense of legitimate projects. The governance process needs to be well executed in a disciplined manner so that those crazy off-strategy “pet” projects don’t end up in the pipeline, wasting resources. This is what I mean by the power of process at the fuzzy front end of innovation.

Some readers also confused the idea of process in innovation with six sigma or TQM approaches. This is not what I mean. Those approaches are more directed to cost-reduction innovation and incremental innovation. My focus is on the application of process in innovation strategy, improved innovation processes, and in the innovation governance process.

Lack of internal support for innovation is often also a struggle for innovators in large organizations. Most managers in a large organization are busy with day-to-day budgets, staffing, personnel issues, compliance etc. and have little time to sit quietly and think “big picture”. Innovators often typecast these colleagues as conservative and resistant to change. Their challenge is “How can we convince the rest of the organization to get funding for this innovation project?” This is where having an innovation governance process can help in evaluating ideas objectively. A well-disciplined, objective, governance system must not only be flexible and nimble but also have the gravitas (authority) to fund, protect and resource selected projects.

Innovation in Highly Technical Industries … In an effort to expand innovation beyond single-sourced in-house innovation, many companies have embraced open innovation, an approach that entails sourcing new product ideas externally. The belief behind open innovation is that while companies have finite market research and R&D dollars to spend, there is a wide world out there full of customers, inventors, academics, entrepreneurs, etc., all of whom would appreciate the opportunity to help commercialize their great ideas. Why not mine this potential?

Open innovation, while a good idea, often isn’t appropriate for innovation in a highly technical business sector where cross business unit (x-BU) innovation shines. While open innovation is a valuable tool in a company’s innovation toolkit, x-BU innovation is a complementary approach that is often under-leveraged or overlooked but can be successfully implemented by larger companies. Cross-business unit innovation is innovation that results from interactions between business units, or divisions, within a larger company. Cross-business unit innovation has some benefits over internal single-source innovation and open innovation. For example, x-BU innovation makes it easier to keep initiatives secret, provides first access to internal information and innovation occurring elsewhere in the company, and helps in coordinating multiple technologies and resources required to bring complex innovation to market.

Case Example: Pratt and Whitney’s new PurePower Geared Turbofan Aircraft Engine … A good example of successful long term disruptive innovation that utilized the x-BU approach is Pratt and Whitney’s new PurePower Geared Turbofan aircraft engine. The engineering team innovated, borrowed and adapted multiple technology and engineering ideas to make it work. Outsiders might assume x-BU innovation is commonplace; after all, the employees work for the same parent company. However, the truth is that it’s fairly rare. This is because organizational silos limit collaboration, goals are typically set at the business unit level, and procedures for sharing revenues and allocating expenses across multiple units often don’t exist. Also, innovation projects are often managed at the business unit level and the organizational structure and processes don’t exist for x-BU innovation. x-BU innovation is difficult to manage because of the greater number of players involved. x-BU innovation is a good example of where the power of process is especially needed. If managed correctly and if a disciplined governance process is applied, it can lead to really good results as in the Pratt & Whitney example.

I was intrigued to read about the genesis of Pratt and Whitney’s new PurePower Geared Turbofan aircraft engine [3]. The development time for this new incredible engine was 30 years…and without process in the fuzzy front end of innovation this important development could easily have stalled or been scrapped. This marvel of engineering is 16% more fuel efficient, 75% less noisy than comparable engines and has fewer parts so maintenance is faster and cheaper.

The engine was first conceived in 1988 and protected as a skunkworks/incubator project as project managers hid the project from internal “bean counters” that could have easily killed the project. The budget was protected by a “conspiracy of believers” inside the company to keep the “shareholder value” bean counters at bay. The engineers weren’t just indulging themselves in a science project; they understood that the product life cycle in their industry was decades and that each innovation needed to be significant to provide a real edge for the next generation of aircraft engines. (For other stories about skunkworks/incubators c.f. my Nespresso post [2].)

As with many disruptive innovations, there was a particularly passionate innovation worker behind the scenes. When the PurePower GTF began to take shape in 1988, a 28-year-old engineer named Michael McCune in East Hartford, Conn, started developing a gearbox to slow the fan – the big rotating blades at the front of the engine that provide most of a jetliner’s propulsion. For planes flying at typical speeds, a slow fan that moves large volumes of air at a moderate velocity is more efficient than a fast-spinning fan that accelerates a smaller volume of air. The slow fan is also quieter. The problem was that the fan was attached to the same shaft as two other parts of the jet engine – the low-pressure turbine and low-pressure compressor. Those parts would be more efficient if they ran faster, not slower. Sharing a shaft was a compromise that hurt each part’s performance and left nobody happy.

The solution McCune and his co-workers identified and pursued was one that had already been used successfully on turboprop planes: a gearbox between the shaft and the fan that lets the fan run slower while the compressor and turbine run faster. The gearing approach hadn’t been tried at the scale of a commercial jetliner because the conventional wisdom was that it would be too heavy and wear out too quickly.

Pratt engineers borrowed technology and ideas from other divisions of their parent company, United Technologies: information on gears came from Sikorsky, which makes turbine-powered helicopters; bearing know-how from Pratt & Whitney Canada, which makes the geared PT6 engine for smaller turboprop aircraft; and simulations of how lubricants move through the gear came from the United Technologies Research Center. Additionally they sourced special parts from Timken, the 116-year-old bearing maker, and permission from NASA to use its wind tunnels in California and Ohio.

It took 30 years and $10 billion, but Pratt and Whitney now has an aircraft engine that is a quantum leap better than the competition, and much like the Boeing 787 Dreamliner is to aircraft design, this type of engine will ensure it stays ahead of its competition for many years to come. This could only have happened with highly developed processes at the fuzzy front end of innovation.

Differentiating Incubator Programs from Innovation Programs … In the Pratt & Whitney case, the project at the beginning could be best described as an incubator program. Interesting technology was tested to see if it could be utilized for the final desired commercial product. Once “proof of concept” was reached then the project transformed into an innovation program. The learning here is that companies should not be afraid to initiate incubator programs especially when a clear product concept can be identified…..these often lead to disruptive new products.

Summary … Some readers of the first post on the fuzzy front end of innovation have commented that an innovation process or an innovation governance process will make innovation bureaucratic and slow creativity down with unnecessary paperwork and approvals. However, long term projects and x-BU innovation in particular, need the discipline of process. The mantra of “fail fast” and “build/ship/iterate” is not a good or efficient model for significant innovation that requires large resources and long time-frames. These projects need careful stewardship through the innovation process to succeed.

Innovation requires two different management approaches….Ideation and creativity at the front end of the project need to be nurtured with an open and curious culture whereas the development and commercialization phases at the back end of the project need careful planning and project management execution skills. Culture and management styles have to be different at the front end verses the back end of innovation. Effective governance processes are required at the fuzzy front end of innovation vs. execution processes which are required at the back end of innovation. The power of process in innovation is huge…it’s a matter of knowing what type of process fits and when to use it.

References …
1) https://innovationcrescendo.com/2013/09/24/the-power-of-process-at-the-fuzzy-front-end-of-innovation/
2) https://innovationcrescendo.com/2014/01/15/innovation-in-large-corporations-managing-skunk-projects-to-success/
3) http://www.bloomberg.com/news/articles/2015-10-15/pratt-s-purepower-gtf-jet-engine-innovation-took-almost-30-years