Why is it that bright ideas often fail to develop into profitable products or services? The answer can be found in the Book of Ideation, the first all-in-one compilation of tools, methods and learnings about how to evaluate and refine ideas that will deliver real value to your company or organization.

Any creative process is chaotic by nature. Organizations need to understand when and where to impose some form of order on this chaos without stifling creativity.

People must recognize that to evaluate and to create are two separate things. When and where to apply a structured approach, that’s what this book is about, says author Sven Andrén at Googol.

The Book of Ideation is a collection of tried and tested procedures, tools and inspiration describing how to generate, evaluate and refine ideas effectively. It is based on idea management courses and workshops at Tetra Pak, a company with 60 years’ experience of market leadership in a very competitive business.

Continuous innovation is vital in order to drive growth, market share and profitability. Crucial to excellence in innovation are the right tools and the right procedures, says Michael Grosse, who heads Development & Service Operations at Tetra Pak.

Structure, please

Working in a structured way with your ideation process improves your chances of realizing the full potential of ideas that flow through your organization. ”If you don’t get your ideation process right from the beginning, obviously it won’t produce viable products or services in the end either,” says Sven Andrén, who formerly headed Global Idea Management at Tetra Pak. The Book of Ideation contains many different approaches on how to nurture ideas. ”There isn’t one single method or tool that fits all organizations or even departments within a company. One method might work wonders in one place, and fail in another. But all the methods described in the book have been tested repeatedly in practice, and we know that they deliver,” he says.

Fear not the new idea

New ideas are useless if they just remain words on paper, and are expensive if they fail.

You have to manage the ideation process or you might very well end up allocating resources to a project that will prove useless. In some organizations this even leads to skepticism towards new ideas, says Googol CEO Dariush Ghatan.

”People often get stuck in routines and established processes. The methods and tools in the book offer both groups and individuals a fresh perspective. It contributes, in an easily understandable way, to increase the value of ideas they are working on,” he says.

Success through failure

An example of a simple but effective technique used to identify the strengths and weaknesses of an idea is the ’negative idea generation’ method.
”This is one of my favorites in the book,” says Sven Andrén.

You ask questions like ’How do we decrease profits?’ ’How can we produce with lesser quality?’ How do we ensure customers are disappointed?’ These negatives immediately throw light on strengths and weaknesses of the ideas you are evaluating.

Shared brainpower delivers higher value

Another important advantage of a structured ideation process is that it reveals the potential of cooperative creativity. Researchers and developers have a natural tendency to promote their own pet projects. If individuals learn to work together at enhancing and refining ideas, every member of the group becomes a committed stakeholder. ”When a group has worked together on refining and developing an idea, the idea gets very strong support. This significantly increases the chances that it will make it to the product development stage,” says Dariush Ghatan.

The Book of Ideation has been selected as course material in the Master of Innovation Program, at Innovation Academy, Sweden’s first training and education establishment for innovation practitioners.

To pre-view and order the book, please visit www.bookofideation.com

The press release in Swedish

Googol Business Navigator

So you have established the innovation process, including ingenious evaluation criteria to sort out the valuable concepts from those which are not. Yet still, your staff does not perform as well as you had hoped for. You may want to think about what can make life easier for the great people in your organization. Perhaps a cultural change towards a more curious and learning organization is what you really need.

One way to initiate that change is to start communicating the principles you would like your co-workers live by to make the change you want to see. As always, start by changing your own behaviour. In this series I will give some examples of innovation principles. Whether you should use them in your organisation or not I can not tell, without knowing more about your specific situation.

Principle #1: Courage

Many great inventions of our time would not have become innovations if someone hadn’t had the courage to make it happen. From time to time, the people you work with must have the courage to make the decision. For people to be courageous the corporate culture must allow failures as part of the process to success. Everyone must feel that taking a calculated risk is necessary to step ahead of the competition. What could you do tomorrow to induce courage in your organization?

Googol Business Navigator

Making people being seen is probably one of the most impactful ways to generate engagement which in turn leads to innovation and results. Are you present? In flesh and in spirit?

When Real Madrid or any soccer team or sports team, face a difficult situation, where do you find the coach? Where is Mourhino or Alex Ferguson? I see them at the edge of the little box, as close to the the pitch as possible!, often even outside so that the referee has to ”correct” them. They are precence. They feel they need to be close, to be truly part of the team and also show leadership and support.
If the manager does something stupid and has to be punished by the referee, what is the punishment? He/or She will be sent off up on the stand. He might as well be sitting on the moon. Precense and showing that you are part of the game is absolutely key to underpin the importance of achievement, success and recognition.

This is also demonstrated in Hertzberg’s two-factor theory.

Are you truly present? Try harder and see what happens.

Googol Business Navigator

Over the years, I’ve worked in some challenging places. And the biggest lessons I keep learning and re-learning is that no two countries are the same, whether you’re negotiating a lease on an office or delivering health care. We all do it. We land in a place and we start making comparisons to the familiar. I once had a rather confident young colleague – recently arrived in country – who insisted that Afghanistan was just like Albania. Our assumptions are shaped by what we know, or what we think we know.

The problem is the wrong assumptions lead to the wrong conclusions and over confidence will lead to some embarrassing situations, or a whole lot worse results.

This is particularly true when negotiating, or trying to make just about anything work in a country that’s not your own. In the humanitarian and development field, we often talk about field realities. We spend a lot of time trying to understand context, so we’re governed by on the ground realities not our own faulty assumptions. Even so, we’re often humbled by just what we don’t know.

It’s an important lesson we should always apply to one of the hot new trends in development assistance, the role of innovation. With Western Capitols managing deficits and debt, there is more pressure than ever to stretch euros, dollars and kroners and find new solutions to old problems. That has us all searching for new and better ways of doing things, leading to the rise of projects and agencies that focus on social innovation and entrepreneurship.

It’s a welcome step to be sure, as the best and most durable solutions are those that come from the bottom up rather than the experience of those most removed. It also builds on idea that individuals – and teams of individuals – have creative power waiting to be unleashed. The idea is to create the right environment, with the right mix of resources, for the social innovators to find their voice. It also addresses that vexing problem I keep coming back to of being tripped up by our own assumptions or misreading the context.

Albania, after all, is really nothing like Afghanistan.

Googol Business Navigator

Googols’ and my own philosophy is that the best ideas are waiting to be discovered inside great companies or agencies, that the best way to have a positive social impact is to harness our business creativity and “intrapeneruship.”

The seed of social impact starts with soil fertile enough to nurture good ideas into great solutions. In thinking about a response to so many of our global challenges, we often want to start big or find the gesture that will make the difference or impact. We look outside rather than inside. I don’t think that is a mistake, just a missed opportunity. Turn the problem of context on its head, start with what you know, and what you or your company do best and work from there.

I don’t think that is a mistake, just a missed opportunity.

The really challenging part is found in the lesson I keep learning and re-learning, in that context is everything when trying to find bold new solutions. You just never really know if something will work unless you’ve tried it out, and that’s why being bold and not afraid of failure is such a key part of innovation. At the same time, you’d be amazed at the power of problem solving in developing the simplest idea for a complex problem.

The social market has limitless demand. Meeting that demand is about harnessing our own creativity and realizing the innovative power of our own products and ideas. Great things will come from what we know, as long as we are humble enough to realize just how much we don’t understand.

Googol Business Navigator

Innovative companies that base their competitive advantages on the development of new products, services and business models understand that it is not enough to be Lean Six Sigma in the development process. Equally important to act fast and efficient, is to choose what to fill the production pipe with. Therefore, the challenge is not only to do things right but also to do the right things.

Innovating through projects

The most common and widespread form to organize innovation activities today is via the project. That is, a temporary organization that aims to take an idea via concept and pilot to a specific product, service or business model that fulfills a market need in an economical and manufacture able form. Over the past decades, significant expertise has developed within the area of project management, however, focusing primarily on doing the projects right.

Therefore, as more and more projects are developed within a company, the challenge is no longer just how to manage a single project, but how to manage the right (and often complex) set of interdependent projects. The literature defines those development entities and their activities as project-based or multi-project organizations.

Selection skills

A consequence of the multi-project approach of innovation is that the realization of strategic objectives relies on the results from groups of projects, where each project makes a particular contribution to the firm´s competitiveness. While some projects contributes to providing profitable new products other projects prepare the company for the future by exploring new markets, technologies and skills. In other words, the set and mix of development projects that are running today decide tomorrow market position.

Therefore, given the resource and risk constrains as well as the level of innovation and calculated value creation, a central task for companies is to select what projects to develop; all to achieve strategic objectives.

Innovation Portfolio Management – ‘what to innovate?’

For this reason, the discipline of Innovation Portfolio Management has received increased attention among corporate innovation managers and researchers in the academic world. Its processes and tools help managers create a relevant portfolio approach to business projects and products, to more effectively respond to business strategy and goals.

In order to position Innovation Portfolio Management, we describe this service as, if strategy answers the question, ‘Why should we innovate?‘, then Innovation Portfolio Management responds to the question ‘What should we innovate on?’.

A call for action

• In what way does your company select what projects to develop?

/Joachim Cronquist, Senior Partner, in collaboration with Ernesto Gutierrez Marchesano, PhD

Googol Business Navigator

Googol Business Navigator

Part 3 of 3 (also Part 1 and Part 2)

By measuring the return on investment (ROI), net present value (NPV), risk versus reward and other metrics of different projects, a company can decide which projects it should or should not invest in. But while the company may find hundreds of projects satisfying these metrics, it might not have the necessary resources to support all or even most of them. This is where resource allocation comes into play; ROI and NPV measure what projects should be done, but resource allocation helps to decide what can be done.

In trying to solve this issue, companies often turn to IT tools, be they sophisticated Project Portfolio Management (PPM) packages or simple Microsoft Excel spreadsheets.

Resource allocation helps to decide what can be done

A single solution for resource allocation

Many companies implement IT tools with the deeply-rooted belief that the better the tool they use, the more certain and deterministic the solution they would get. They expect their resource allocation tools, given the right data, will eventually allow them to accurately and precisely determine the many variables involved in projects.

But the one best solution that can eliminate risk and uncertainty from the picture is a myth. There can never be one single solution for resource allocation situations. In truth, the task of resource allocation requires revisions and reiterations of the plan, continually getting feedback on and making improvements to it. Throughout the process, unpredictability and estimation are ever-present.

Many large and successful companies today have a resource planning system that involves both top-down and bottom-up feedback loops [1]. The eventual plan that is executed involves a reconciliation of both sets of inputs, which is reached only after a series of iterations.

At any point in time, there is a solution, but it is not the only one.

What makes a good resource allocation approach

Fundamentally, a resource allocation approach has to be based on concrete financial metrics. However, a good approach should also take these factors into account:

1. Human factors: Politics and other non-rational issues should be surfaced and addressed, ideally by transparent debate between stakeholders during the resource allocation process.
2. Usability: What results from the resource allocation planning should not be endless rows of numbers that are hard to comprehend or implement. While the process itself is complex, the presentation of the results should be as simple and understandable as possible, allowing for iterations and revisions to shape the plan.
3. Uncertainty: A deterministic approach to resource allocation is not possible. An approach that learns to live with and work within uncertainty will be more successful.
4. Consensus: A plan that gains the buy-in of its stakeholders is more likely to be communicated and implemented well. This is as opposed to a plan that is churned out by one or two senior managers for other departments to adhere to.

What this calls for is an innovative approach to resource allocation, one that is effective in helping companies bring as many seeds from their R&D processes as possible – every one of these an opportunity – to life.

[1] A top-down approach is where senior managers dictate fixed levels of resources for middle managers to oversee, and a bottom-up approach is where individual project managers are allowed to determine the level of resources they require.

Part 3 of 3 (also Part 1 and Part 2)

/Joachim Cronquist, Senior Partner and Brandon Leong, Analyst

Googol Business Navigator

Part 2 of 3 (also Part 1 and Part 3)

Most people agree that there is no one best solution for how to allocate resources in companies. This depends on every company’s size, organizational structure, politics, culture and other factors.

Still, there is a point of convergence for how companies are currently dealing with this issue: companies today are relying heavily on IT tools and software packages to make these decisions; so much that in the 21st century, resource allocation without software is virtually unthinkable.

Exsisting IT tools

IT solutions for resource allocation range from installed software packages (MS Project and Primavera ) to web-based products (Project Insight and Daptiv ) to large, integrated packages for project portfolio management (Compuware’s Changepoint and CA Technology’s Clarity ). Most of them are SaaS (Software as a Service) certified .

Other smaller-scale resource allocation programs are based on sophisticated mathematical analysis from the field of Management Science. An example of this is Data Envelopment Analysis (DEA) programs, developed from the mathematical method called Linear Programming.

In its most basic form, a resource allocation spreadsheet can be built using Microsoft Excel.

;

Software/IT: The panacea for resource allocation?

The power of these IT solutions, depending on their complexity, lies in their ability to calculate, sort, rank and analyze the myriad of variables involved with great accuracy. Some of the more sophisticated programs allow managers to visualize the interconnectedness between projects in some way.

On the flipside, packaged IT systems usually come with significant costs. Aside from up-front and recurring monetary payments, there are implementation costs; business-trained employees who have little knowledge of the software and its intricacies need time to learn how to use the IT systems, which means time before returns on investment can be realized. The more sophisticated the tool, the harder it could be for business people to use. For some software, the amount of time employees need to spend on data collection and entry can become a real burden for the company.

Since resource allocation involves many stages (gathering of data on available resources, collection of individual project needs, consolidation of total resource needs etc.), it is relevant to examine which stages these IT tools are involved in, and more specifically to what extent they act as decision-support tools or decision-making tools.

• Do they help to gather data on existing resources?
• Do they collect resource requirements for projects?
• Do they consolidate resource plans?
• Do they analyze resource bottlenecks and over-allocation issues?
• Do they make decisions, in terms of prioritizing projects and balancing the portfolio?
• Do they do all of the above?

Resource allocation requires more than a software package

The bottom-line is that an approach to resource allocation calls for more than an IT tool or software package.

There are at least two reasons for this:

1. While a computer’s data-processing abilities, accuracy and rationality are indispensable, other ‘soft’ factors such as office politics and the need for transparent debate between different stakeholders have to be factored in. Face-to-face interactions about resource allocation increase employee buy-in for decisions and build mutual understanding between them, while computer-based decisions fail in this aspect.
2. It is common for companies to implement a resource allocation software package as a knee-jerk reaction to an over-commitment or over-allocation problem . In doing so, they fail to understand the root causes of the issue and build in control processes before putting the system in place. The common assumption is that since the resource allocation tool has best practices embedded within, the tool itself is enough to address the problem. In truth, the multitude of differences between companies makes resource allocation different for each of them, even when the same tool is used. A process framework has to be established so the IT system can be integrated into the company’s operations, and subsequent results can be used in the right context.

Food for thought:

• Does your company use a software package that deals with resource allocation? What feedback do you receive from employees who work with it?
• What feedback do you get from stakeholders who are affected by these resource allocation decisions?

Part 2 of 3 (also Part 1 and Part 3)

/Joachim Cronquist, Senior Partner and Brandon Leong, Analyst

Googol Business Navigator

Booz&Co has released the 2012 Global Innovation 1000 study. It is an annual report that focuses on the innovation practices of the world’s largest corporate R&D spenders, and aims to draw conclusions about how to manage innovation to achieve real value.

One of the main conclusions is that the best performing companies take special care on how they spend their R&D resources. The report state that “the process of choosing which ideas to convert to full scale product development is perhaps even more critical to a company’s innovation success than is the ideation stage”. That is, successful companies have established processes and methods to assure that their portfolio of development projects reflects their strategies and, therefore, optimize the R&D spending.

The results of the study are in line with what Googol find in its work with client companies.

On the one hand, most innovative companies are well aware of the fact that the challenge is not only to “do things right”, but also to “do the right things”. Consequently, it was expected to see that the top performing companies have a formal and structured approach to Project Portfolio Management. Or, the decision-making process for selecting and prioritizing the ideas and projects in which resources are going to be allocated.

On the other hand, it is somewhat surprising to find that the decision-making process, crucial for corporate success, still is an unresolved challenge for so many companies. Googols experience from working with innovative companies and studies of innovation research show us that most management teams still have problems when deciding where to spend their R&D budget. They tend to end up in either an “exploitation trap” or an “exploration trap”. Whichever, in the end, the development projects will not mirror company strategies.

Furthermore, the authors of the report argues that “to ensure good decision making, executives need to make use of the processes and techniques best suited to their chosen innovation strategy, and put the right people in place to execute on them”. We agree…with a remark. Our finding is that innovative companies are the ones that are able to sustain current strategies, and at the same time succeed to open up for new markets and technologies. It implies a decision-making process and decision makers that are able to choose not only what the market demand today, but also what the market (might) demand tomorrow.

Thus, the main challenge is to be able to evaluate and select different types of ideas and projects that contribute to fulfill contradictory demands: short-term profit and long-term competitiveness, standardization and differentiation, low-cost and high performance, the exploitation of existing knowledge and the exploration of new knowledge. It is, precisely, the challenge of managing a complex and paradoxical reality that make Portfolio Management both a crucial task for companies, and an exciting area to study…

/Joachim Cronquist, Senior Partner at Googol and Ernesto Gutierrez Marchesano, PhD

Googol Business Navigator