This is the second part of a 2-part series on a study that innovation.support conducted. In the study we wanted to find out where leading firms from various industry sectors set their priorities in developing the early phase of their innovation funnels (“Fuzzy Front-End”). In this article we want to provide you with the key findings of our study. Read Part 1 here.
In the first part of this article series we argued that that the scope and nature of innovation is changing. Big Data, Social Innovation, Additive Manufacturing (3D-Printing etc.) Design Thinking, Lean Start-up, etc. are becoming Good Practice in innovation management. We argued that in “making innovation things right”, i.e. in the back-end of the innovation funnel, many firms have established strong procedures and Product Lifecycle Management systems. This is good, but not good enough to take a leading spot in the innovation race. The innovation race is won by doing “the right innovation things”, i.e. becoming more effective.
The term “Fuzzy Front-End” (FFE) has been established for the early stage of innovation which determines the innovation effectiveness and hence ultimately innovation success. We wanted to better understand where leading firms are setting their priorities in the FFE currently and where they see things going in the future. To answer this, we conducted a study. You will find the background of the study in part 1 and the main findings below.
Factors influencing the optimal design of the Fuzzy Front-End
Since the innovation game is changing rapidly and because the early phase of innovation is crucial for innovation success, firms need to constantly invest in developing their Fuzzy Front-End. There is, however, no clear-cut, one-size-fits-it-all approach to how this should be done. The “best” Fuzzy Front-End for a specific firm depends on external factors – the business environment the firm operates in – as well as internal firm-specific factors.
3 “hard factors” for designing the optimal FFE
In our consulting practice – and this has been confirmed by our study – we have found that firms operating in various industries design the Fuzzy Front-End differently. Even in the same industry one will find different designs of the early innovation phase.
We have found that there are 3 external / “hard” factors that firms consider when they design their Fuzzy Front-End.
- Industry clock speed – The faster the industry ticks, the bigger the “listening ears” and the “ideation platforms” need to be.
- Disruptive risk – The more the firm’s business is in danger of disruption – by Digital Transformation or by industry convergence – the more powerful the Fuzzy Front End needs to be in order to capitalize on opportunities and to read early warning signs.
- Innovation strategy – Depending on the firm’s innovation strategy, the FFE needs to be designed accordingly. Some important aspects in this context are: Starting point (Leader vs attacker); Number and nature of search fields; Where to innovate open / closed; Where to explore / exploit; Timing (Pioneer, early adopter, main stream); Principal innovation paradigm (e.g. Market Reader, Need Seeker or Technology Drivers).
5 cultural dimensions in designing the optimal FFE
On top of these “hard” factors, the firm’s innovation culture plays a decisive role in designing and developing the Fuzzy Front-End. We have found that in designing their FFE, firms are searching for the optimum in at least 5 cultural dimensions (think of each dimension to be a continuum between the values indicated):
- Rigidity in approach versus flexibility
- Formal interactions between innovators versus informal interactions
- Discipline versus creativity
- Limitations imposed on staff versus freedom to operate
- Process Management versus People Management
Current priorities in FFE: The reasoning behind our questions
In finding the current priorities in developing the Fuzzy Front-End, we picked some aspects that we hear over and over in client discussions:
- “We need new ideas” – New ideas or combinations of existing ideas are the starting point of the innovation process. In order to increase the chance for success, these ideas need to be linked to insights from the business environment. Our first two questions were aimed at this focal point. On top of the ideas for “bread and butter” innovations, many firms are working hard to find ideas that lead to breakthrough innovations – hence our third question.
- “We need to become better in the processing of ideas” – It is not healthy to take in more food if one’s digestive system is blocked. This is an analogy to firms saying that they are not looking primarily for new ideas but to improve the processing of ideas floating around. For this reason, we asked our fourth question.
- “We need more inspiration” – Nowadays it is Good Practice to have a number of channels for new ideas to come in to the organization. Of course, ideas can come from internal staff. But modern software tools, customers, start-ups / SMEs, academia etc. are also a rich source of new ideas in many industries. We put these considerations into questions 5, 6 and 7.
- “We need to better utilize the experts that we have” – More and more firms are using internal “seeker/solver” processes to crowdsource potential solutions to tough innovation challenges. We wanted to better understand the significance of our observations in our question 9.
- “We need to accelerate the Fuzzy Front-End” – Typically, a significant portion of the time-to-profit for innovation ideas is spent in the FFE. We wanted to better understand whether firms try to reduce the lead time in the FFE more from a process angle or more from a resource angle. This brought us to questions 10 and 11.
- “We need to better understand the relevance of new technologies” – Some of our clients are testing whether software tools, processes and physical events could improve the assessment of the exponentially growing global technology pool. We have worked this thought into question 12.
- “We need improve in our culture” – Some of our clients are seeing real Management commitment and / or Best Practice sharing as the key driver to develop the FFE. We wanted to better understand this and formulated question 13 accordingly.
Current priorities in FFE: The results
And here is what we have found in our study sample:
- Discrete Manufacturing (e.g. machinery or consumer electronics) firms are mainly striving to use more and better innovation impulses. Their second priority is to aim at improving the processing of ideas and to improve structuring the FFE via well-defined processes.
- Consumer Packaged Goods firms are primarily working on using more and better innovation impulses and on improving the processing of the ideas to build on these insights. Additionally they are also trying to get better in structuring the FFE and in sharing Best Practices across the organization.
- Firms from Process Industries (e.g. Chemicals) are focusing on securing Management buy-in for innovation. With secondary importance they are trying to leverage their existing expertise base by running internal seeker/solver processes in order to solve tough innovation challenges.
- Life Sciences firms are confident that they have a world-class base of experts. For them, the key priority is to make their internal experts get to share best Practices. The second priority is to extend their innovation ecosystem and to search for new approaches in order to get more ideas from internal staff.
- Due to market disruptions for many Utilities firms, their main focus is on getting more ideas from internal staff and produce a large number of potential breakthrough concepts that may be the basis for future business models. Additionally, they working on improving the processing of ideas via structured processes and improve innovation effectiveness by active customer integration.
Future priorities in FFE: The results
We also asked our interview partners about future priorities in developing the FFE of their firms. This does not mean that current priorities would be of no relevance in the future. Rather this means that in the future additional aspects will become a focal point for optimizing the FFE. As expected, the answers we received vary from industry to industry. The results are (underlined by some actual statements from our interview partners):
- Discrete Manufacturing: Improving innovation behavior of Management and of staff (“Biggest challenge: Act beyond the words” and “We need to become more professional in using what we have.”)
- Consumer Packaged Goods: Improving clarity and actionability of innovation strategy and improving innovation behavior (“We need to get a clearer image of how to do disruptive innovation” and “Establish cross-business unit co-operation for the idea stage.”)
- Process Industries: Innovation behavior of Management and improving processes and procedures (“Separate systems for bread & butter vs. disruptive innovation” and “Establish fail fast / fail forward culture.”)
- Life Sciences: Improving innovation behavior of Management and of staff plus establishing a risk-taking culture (“Aligning and liberating capabilities” and “We need to become better at appropriate risk-taking.”)
- Utilities: Becoming more open in innovation and improving innovation behavior of Management and of staff (“Breaking silos with outside world” and “Establish new values for staff and Executive behavior.”)
Priorities in FFE software support: The results
If one looks at priorities in software support in the FFE, there are a number of factors that need to be considered. Some factors are more infrastructural such as the need for one global platform for all of the firm’s staff working in the FFE. Other factors address functionality to support FFE work such as connecting ideas with other relevant ideas and with experts. And a third set of factors addresses the cultural aspects such as providing transparency on idea processing status for the ideators.
As expected, priorities differed from industry to industry but interestingly, Consumer Packaged Goods and Process Industries were similar. Software priorities in the FFE are (in descending order of importance per industry):
- Discrete Manufacturing: One global platform for the firm; Managing a large number of ideas and concepts; Automatic connection of ideas with other ideas and with experts.
- Consumer Packaged Goods and Process Industries: Avoiding the “black hole effect” for ideators; Idea management; Real-time connection of ideas with other ideas and with experts.
- Life Sciences: Easy anywhere, anytime, playful engagement of people working in the FFE.
- Utilities: One global platform for the firm; Managing a large number of ideas and concepts.
Conclusion and outlook
Excellence in innovation execution is widespread these days. So excellence in the FFE – in other words, in defining the innovations to come – is the real driver of superior innovation performance. Consequently, firms think very hard about how they can optimize their respective FFE.
In this study with leading firms from different industries we found that the “optimal FFE” depends on industry characteristics and a number of factors that are specific to the firm. All of these firms are also investigating software support for the FFE, where again priorities differ from industry to industry. Combining the right business angle with powerful, state-of-the art FFE software will produce a powerful thrust in FFE, and hence innovation, performance.
innovation.support plans to extend the basis of interviewed firms and to enlarge its database of FFE priorities. We also plan for 2016 to run a re-designed study that will add quantitative results. Of course, we will share our findings with you right here in due course.
image credit: asdeu.eu
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Rob Munro runs innovation.support’s business in UK and Ireland, following 20 years in multinational chemical and material companies creating new technologies, building businesses and developing capability. He has held senior management positions from manufacturing to commercial and R&D, developing business and innovation strategies, improving business work processes and delivering complex high-value projects. Rob also founded The Growth Engine specializing in developing innovation strategy to build more robust, effective innovation systems.
Frank Mattes founded innovation.support and runs its business in the German-speaking countries. Frank Mattes has 15+ years of experience in managing innovation, change management and projects. He has worked for several specialized medium-sized consulting companies and for The Boston Consulting Group. Frank also founded and runs innovation-3 which focuses on integrating cutting-edge innovation approaches into existing innovation management systems. Frank is also the author of several books.