Are you one of the many innovation executives who struggle to determine which projects you should be working on first, and which ones should have the highest priority amongst others?  If so, then you are certainly not alone.  In fact, three out of five executives interviewed find this to be one of their top 5 challenges when managing their innovation pipeline.  

Some innovation executives do not have a formal relationship with the business units (BU) or categories and are unable to gain a clear understanding of the potential business impact of a new development requirement.  Others struggle to determine which projects should be prioritized higher than others based on their return on investment (ROI).  Either way, there are a few simple steps that the innovation team can take that will help clarify innovation initiatives, deploy the right resources, ensure proper transitions, prioritize initiatives with the highest strategic impact, and assign each task appropriately to ensure they are handed off to the right team at the right time, with the right level of urgency.

Six Essentials for Mastering your Innovation Pipeline

Innovation pipeline management is different than the traditional IP development stage gating process, and typically consists of the following steps:

Unlike the traditional IP development stage gate process (which is actually a sub-set of the Innovation Pipeline process), the innovation pipeline is looking at a much broader set of initiatives required to attain the company’s strategic goals, and involves more teams and processes designed to fulfill all strategic business needs – some of which are not necessarily conducive to the stage gate process.

Now, let’s take a look at how each of these six steps can be managed in a way that will close the communication gaps, create transparency and ensure that the required outcome of each new initiative is achieved successfully. In doing so, I will discuss and highlight some of the key elements that are typically missing with those organizations claiming to have issues managing their pipeline initiatives.

Receiving the Need, Idea or Challenge from the Business

Successful pipeline management starts with a clear understanding of the need, idea or challenge (for simplicity, I will incorporate all three under the term “need”).  The need must be well defined, providing, at minimum, a full description of the need, the strategic goal it is aligned with, the desired outcomes and success criteria that must be achieved (e.g., efficacy, safety, sustainability, business model considerations, etc.), solutions that have already been considered, areas not to be considered in the solution, and any other information relevant to the specific need. The need is typically documented in a structured brief provided to the innovation team from the business, which will be used throughout the lifecycle of any new developments towards the need. 

As an infrastructure requirement, having an integrated business process with business unit and Innovation team liaisons and a portal to capture and distribute each need are some core elements that will ensure the sustained success and transparency of the innovation handoff. For example, a digital portal can facilitate the receiving of new ideas from designated BU champions in a structured manner, and using automated workflows and scorecards, each idea can be ranked, prioritized and distributed to the proper team for timely completion.  Without such a process and/or portal, needs may be sent to the wrong team, mis-prioritized or even forgotten.

Prioritizing the Need

In order to fully understand the overall impact of the need, and thus prioritizing it appropriately, it may take more than just a quick judgement on the part of the innovation team.  The team must also understand the level of effort required to fulfill the need in order to assess whether or not there will be a return on the project investment, and making such assessments in isolation can cause major miscalculations. It is good practice to perform a periodic (i.e., a monthly, quarterly or semi-annual) review of incoming pipeline needs to make this determination, and to do so as a cross-functional team that includes stakeholders from the business unit, the innovation team, and depending on the type of need, it may be wise to include sales, marketing, IT, supply chain, or other entities that can provide input to the overall impact and required effort.  The great leadership guru, Margaret Wheatley, called it “getting the whole system in the room.”  Learn more about this collaborative Kaizen method.

These other entities are often better positioned to provide inputs on the potential market value, customer needs, IT-related effort, supply chain availability and more. Attendees can be scheduled in various segments that will be more conducive to their attendance in the review (e.g. having IT involved if a digital solution is required). Using the following chart to facilitate discussions during the pipeline review will help save time and ensure that all stakeholders are aligned with the ultimate prioritization of each need.

With this chart front and center in front of the group, a neutral facilitator will introduce a need to the group, which is meeting either in person or online.  The facilitator will then ask the question, “What is the potential business impact of this need or effort?”  As discussions pursue among the group, the need (written on a sticky note) the facilitator will move the need to the left or right of the chart, depending on the magnitude, which is either high or low. Things that may influence the movement may vary, from strategic intent to profitability or market exposure.  Then, the facilitator will ask, “what is the level of effort required for this to happen?”  Similarly, the facilitator will push the sticky note either up or down depending on the discussion. Things to consider in this direction may be cost, resource availability or time.  Ultimately, the sticky note will end up inside one of the four quadrants, determining the priority and order in which the need will be implemented.  As multiple needs are discussed, the conversation will take on more of a comparative tone, and needs may be adjusted from one quadrant to the other.

Assigning the Work to the Appropriate Team or Cross-Functional Teams

Work assignments may vary, depending on the skills, experience and prior knowledge required to successfully complete the initiative.  If the need requires the development of new IP, then it may be assigned to the R&D (development) team, but if certain requirements cannot be fully met by the development team, or if fulfillment does not fall within the company’s core competencies, then the technology scouting team may take over and fulfill the need externally.  Some needs may require more input and may need to be put to a crowdsourcing challenge, either within a given department, across the entire company, or even to external suppliers and collaboration partners.  It is important to assign the task to the appropriate team, which may require further discussion and consideration.

Pipeline tasks must be thoughtfully assigned to ensure the least possible effort, the highest competency level and the highest possible outcome.  In fact, some incoming needs may not require development of any kind.  For example, a change in the corporate strategy may necessitate innovation research (i.e., horizon scans, upstream research, technology trend analyses, etc.) to identify possible directions of future development.  In some cases, the company may decide to target new startups for acceleration and investment.  The diagram below depicts some of the sources and teams that may be required based on a given need.

Managing the Work

Once a work task has been assigned, managing the progress and outcome of the work is next.  For this stage, it is important to establish clear project metrics and process KPIs to ensure a successful outcome.  Project metrics are established and tied directly to the criteria and desired outcomes articulated in the Needs Brief (see Step 1).  Additionally, each team within the innovation group should have clearly defined process metrics that are either leading or lagging.  For example, if a project requires the acceleration of a new startup, a lagging metric could pertain to the value achieved at the end of the project when the startup is commercialized, while a leading metric could be the successful and timely achievement of specific tasks and milestones while building the startup’s new capability.  In other words, properly designed leading metrics should increase the probability of successful lagging metrics, or outcomes (cause and effect).

When metrics and KPIs are established, having a reporting system in place to ensure transparency of outcomes during the development process is key.  This is where many innovation teams lose track of a project, as key tasks lack the visibility necessary to track and intervene, when necessary, ensuring that the final outcomes and deadlines are met.  And without these metrics, continuous improvement becomes rather difficult. Most innovation teams utilize a stage gate process to manage these requirements, but all too often metrics are only established for IP development and lack the necessary KPIs for ideation, technology scouting, startup acceleration and other less traditional innovation initiatives.  As they say, an ounce of prevention is worth a pound of cure, and with the costs that can incur with some development efforts, the lack of transparency can become a legitimate liability.

Proof of Concept

Proof of Concept is a stage where selected ideas, technologies or third-party solutions are tested.  Testing may require different perspectives to ensure the proper fit, scalability and market receptivity.  Using the original Needs Brief, the team will perform a series of bench tests to ensure, at minimum, the following:

1. The solution does what it claims to do
2. The solution fits the business need, meeting all criteria established in the brief
3. The solution integrates well with the company’s existing processes and technology
4. The solution is scalable, and can be brought into production with minimal effort
5. Parts, service and production equipment can be sourced post-production

In many cases (specifically when external technologies or solutions are used) third party involvement will be necessary.  Therefore, a disciplined project management team is vital to ensure that deadlines, milestones and criteria checklists are managed, thus bringing the testing to a timely completion.  If shortcomings are uncovered during the testing period, a good project manager will proactively ensure that an alternative solution or fix is implemented, keeping the project on schedule.  The project manager will also manage schedules of each party to ensure the required resources are engaged when needed.

When the solution is thoroughly tested and all technical, business model, safety, sustainability and other criteria are met, the testing team will sign off and ensure that the solution can be scaled.  This may require additional research into required and alternative suppliers and interaction with the company’s engineering team to determine the steps required for production.

Integration of the Solution into the Business

Once all of the solution criteria are met and scalability is proved, it is time to begin integration into the business.  Depending on the solution at hand, there may be technical (i.e., engineering) work needed, and in some cases, a new go-to-market strategy will be required if the solution involves launching a new product or a next-generation product. Other solutions may require only a quick installation on existing equipment, or a minor tweak to existing business processes.  Either way, the impact and magnitude of change must be understood, ensuring that the proper resources are selected for the job and implementation timelines are properly set.

This stage is often overlooked and underestimated by innovation teams.  For example, if the team fails to accurately set realistic timelines for implementation, sales forecasts, service schedules and other operational activities may be impacted.  If the solution requires a third-party integration or a major change to existing workflows and processes, then a seasoned change management expert may be needed, ensuring that all necessary resources are deployed when needed, expectations are set with those to be impacted by the change, and impacted personnel are properly trained on both the technology and any new workflow processes.

The integration may also require new KPIs to be established if business processes are altered, or if the new solution has demonstrated that new efficiencies can be achieved.  Those directly involved in the new solution may require new goals and objectives, or even new job descriptions, which would necessitate the involvement of the Human Resources team.  Integration is not to be taken lightly – especially given the investment required for the new solution and the promise of new benefits to the business.

Dr. Matthew Heim, Chief Innovation Officer