Spend Less While Innovating More? Yes!
A Booz Allen Hamilton survey and report in Strategy+Business (register for free) found NO correlation existed between R&D spend and innovation. It turns out that higher innovation performers spent less but made sure that innovation projects aligned with corporate strategy and paid careful attention to customers. This idea that a company can spend less and innovate more makes sense. Throwing money at innovation processes that are not well organized and/or measured and not serving the customer doesn’t work.
Black and Decker revealed the two key factors related to their innovation success:
1. Strategy alignment- align innovation strategies to corporate strategy.
2. Customer focus- processes are in place to pay close attention to customers from idea generation to product development to marketing.
Although this article tended to focus on product innovation and R&D spending, Black and Decker’s customer focus reveals that business process innovation is often required to coincide with product changes. One example is a strategy project I worked on for a metals distributor where we segmented the customer base a variety of ways to discover which segments were willing to pay for inventory management services. The change in what was being sold and provided affected sales processes, how inventory was managed, frequency of delivery, and ultimately how raw material and components were purchased. This clearly reveals how market based projects can affect internal business processes.
Excellent project management was a key success factor for these high innovators. The authors revealed the “one R&D tactic” used by all high-growth innovators:
“insistence on managing the innovation process from start to finish as tightly as possible…a disciplined stage-by-stage approval process combined with regular measurement of every critical factor, from time and money spent in product development to the success of new products in the market…combined with a strong portfolio management program…”
Sounds like strong project management and project portfolio management are basic preprequisites for successful innovation. What do you think? Does all this apply to a small company?
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Tags: Agile Software Development, board-of-directors, collaboration, execute-strategy, executive, governance-board, innovation, investment, lean, PMO, portfolio-management, project, project-management, project-management-office, project-portfolio-management, selling-projects, software-development, strategy, theory-of-constraints, value, value-sellingRelated Stories
POSTED IN: Best of the Best Practices
4 opinions for Spend Less While Innovating More? Yes!
ActiveEngine Sensei
Dec 15, 2007 at 10:25 am
The highest degree of ingenuity is born from a high degree of lack of resources. Responding to a customers request is to truly acknowledge a change in the operating environment. The operating environment is really where a business or dies. Sometimes this comes in the form of servicing needs, sometimes in the form of solving a problem that is not of an immediate concern to the business but of great impact. Sensei’s history is full of examples:
http://activeengine.wordpress.com/2007/11/16/surely-you-must-be-joking/
I think that this concept applies to businesses large and small. At risk of over simplifying, the thought process should be shaped by questions of “what accomplishes these tasks for the customer?” as opposed to “how can I get this done without X?” With little to no wiggle room, your mind becomes more focused. With little funds you are forced to change the problem.
Bob
Dec 15, 2007 at 12:13 pm
I agree that both large and small businesses can benefit from these concepts. I also agree with how tight resources focuses you- that’s why I like to shop at Costco (less choice). The idea of customer focus is at the heart of lean; one lean manufacturing approach is to carefully diagram the operational times and steps, along with inventory at each step, and identify what is value added versus non-value added. Value added means what is important to the customer. All other work/inventory/process is non-value added and subject to elimination. Not all can be eliminated for various reasons, but the idea is to minimize non-value added work.
ActiveEngine Sensei
Dec 15, 2007 at 1:17 pm
“carefully diagram” is a great choice - I have a vision of one large sheet of paper with just boxes, arrows and swim lanes to depict summary level steps. This diagram with the Juran graph becomes THE tools for describing what the business does, how it gets to the customer, and what value each department / business unit brings.
You wouldn’t even need Vision or any other fancy drawing app to do this - simple magic markers and post-its would do.
Bob
Jan 1, 2008 at 11:27 pm
Sensei- I’ve always found that a blank sheet of paper (or white board) is great for organizing thoughts together. I’ve used strategy mapping (a process that lays out goals, strategies to attain goals, and tactics to attain strategies, all in a “tree” format) to corral information in an executive level conversation. Definitely not fancy software.
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