Designing new products is no longer just about 'blue-sky thinking'. E&T talks to Keith Goffin, co-author of 'Innovation Management', to find out what other factors should be addressed to ensure you stand out from the crowd.
'Innovation management is about getting more and better products successfully to market,' says Keith Goffin, one half of the authorship duo behind a book that looks into why organisations find it so difficult to fulfil this straightforward commercial and technical ambition.
Called 'Innovation Management', the book is aimed at MBA students as well as practising managers. Packed full of case studies – there are 77 of them, with more than half directly relevant to the SET sector – a second edition has just been published to bring readers up to speed with current thinking.
Subtitle 'Strategy and implementation using the Pentathlon Framework' draws its inspiration from the sporting quest for excellence – but why the pentathlon rather than a sprint or a marathon?
'Just as with the Olympics, in a multidisciplinary event you don't get the gold medal if you're good in just one area,' explains Goffin. 'The Innovation Pentathlon Framework is the result of research that allows companies to evaluate their ability to manage innovation. When we developed it, we found that managers struggle because they see innovation as complex, and are unable break it down into easy-to-understand components of equal value. That's what the framework does.'
Theory meets practice
Goffin is Professor of Innovation and New Product Development at Cranfield School of Management. But before anyone runs away with the idea that his book is a work of purely academic theory, it's worth noting his broad experience in industry prior to entering academia.
Goffin cut his teeth at a medical equipment manufacturer where he was responsible for bringing some highly successful – and, he freely admits, not so successful – products to market. It's this combination of research and experience that make Goffin and co-author Rick Mitchell well placed to write the book.
'Most managers know that you need creativity to drive innovation,' says Goffin. 'It's an important area, but certainly not the only one. We've found that some companies are more about ideas, with the result that nothing gets done, while others are good at the implementation process for ideas that aren't all that great.'
Enter the Innovation Pentathlon Framework: a simple and yet subtle approach to evaluating whether your business has all the ingredients in the mix, in the right measure.
'What we do with the framework is get companies to apply it so see where they need to concentrate. Rather than simply acknowledging that they need to get better at innovation, it forces them to focus on what it is they need to do to achieve this,' Goffin says.
He goes on to explain that a recent survey in the food and beverages sector found that 90 per cent of new products fail. 'So many companies are losing money. That's why it's so important to be good at innovation management. To avoid being one of the many companies that fail.'
Buzzwords and jargon
'Innovation Management' was originally published in 2005, so what's happened in the past five years to make a second edition necessary? 'The discipline of innovation management has developed and more things are now known. But that's positive and negative.'
A proliferation of buzzwords and jargon is obscuring what's really going on. 'For example, there are a lot of advantages to open innovation but the downside has not been sufficiently recognised.
'Lots of companies are jumping on the open-innovation bandwagon – with R&D bringing ideas from outside into the company – but it doesn't always work as in, say, the highly publicised case of Procter & Gamble. So in the new edition of the book we're trying to bring some balance into the equation.'
Which brings us back to the 'pentathlon'. Open innovation, says Goffin, is a front-end concept, but you still have four other areas of equal importance to attend to. 'And you've got to be careful, because if you are sending out the message to your engineers that R&D isn't the central source of ideas in your company, you run a real risk of demotivating them. And this comes down to another component of the pentathlon, which is related to whether you are creating the right culture of innovation.'
I suggest to Goffin that the received wisdom is that innovation is always and only about ideas. The four subsidiary points of his pentathlon – prioritisation, implementation, strategy and organisation culture – are just that: fancy ways of applying the brakes to creativity. Most companies are resistant to innovation (although they pretend not to be). For them, the path of least resistance is to do something in a specific time-honoured way, because that's the way it's always been done.
Goffin laughs at this. It's a viewpoint he's familiar with. 'The five points are of equal importance and you've got to find the right balance. If one of your aims is to make R&D more productive, you can save 25 per cent of the budget. But are you taking out thinking time? On paper, the department may look more efficient, but have you killed the best ideas? You might find that if you try to change the culture then that might have an effect on the way ideas are generated, and vice versa.'
As a result innovation management is much more ambiguous than, say, quality management, where the objective and means of achieving it are more clearly defined. 'When you are trying to improve quality, everything is known. Whereas, in innovation management there is complexity. There's more you can apply from social science than from pure science.'
So where are we going wrong? Why aren't we all coming up with the next icons of modern product launches? 'The main reason behind 90 per cent product failure is that many of the products hitting the market are very similar to existing ones.'
There's some interesting research that finds a company's chances of success increase by three or four times if its product is differentiated and different from what's already available. 'But a lot of companies – because they use focus groups – are told by their customers that what they want is what they already have, only faster, smaller, cheaper. Companies then implement this feedback and find themselves all on the same trajectory.'
So actually coming up with what could be 'really exciting' for customers is a crucial factor, and as another of Goffin's – 'Identifying Hidden Needs' – makes abundantly clear: the customer isn't always right, is easily suggestible and by dint of not being an innovator, doesn't know what's possible.
Goffin admits that the pentathlon is an 'unfinished journey'. There are a number of topics within innovation management that need developing and books like this need to be constantly updated. Before open innovation there was the all-pervading fashion of 'disruptive technology' where innovations subvert the expectations of the market place in terms of price or application.
'There will be another fashion that can be applied. But individually, none of them will solve your innovation management problems.'