One way to establish market differentiation is through the introduction of innovative new products.  Establishing that differentiation is one thing, but maintaining it is quite another.  Here we have put together a ten part series on how to generate higher returns from your innovation investments.

From our series of highly informational articles, companies will learn: how to treat innovation as a cross-functional business process, how to align innovation execution and business strategy; how to create sustainable innovation; how to train your senior executives to successfully execute innovation initiatives; how to effectively manage process and project management; how to measure performance of your processes; how to ensure broad stakeholder buy-in;  how to understand the importance of product roadmaps; how to provide the tools necessary for successful product innovation; and finally, how to ensure that portfolio management coincides with process management.

Here is one of the ten practices that leading innovators use to increase the payback from innovation spending:  Ensuring Broad Stakeholder Buy-In.

Plan Ahead to Ensure Broad Stakeholder Buy-In

One of the most important best-practices for implementing a new innovation process and supporting tools is to first construct an internal communications plan.  The goal should be wide-spread process adoption. Stakeholders need to understand how a structured process can help them more readily achieve innovation and business objectives.

In addition, the plan should clearly identify the roles that process owners and other stakeholders must play to ensure that the new process is broadly and consistently used throughout the organization.

The plan should include the following critical elements:

•    Execution timelines, along with definitions of communication events,

•    Target audiences,

•    Key messages, and

•    Desired outcomes

As the plan and processes are readily available to stakeholders and widely adopted, the business’s objectives become obvious, making it possible to achieve innovation and other important goals.  Planning well in advance the processes that are set to ensure innovation will help further facilitate a company’s returns from innovation investments.

For more information on the top practices that leading innovators use to increase their returns on innovation spending, look for the next article from our ten-part series: Understanding the Importance of Product Roadmaps.

While establishing market differentiation can be accomplished by introducing innovative new products, maintaining that market differentiation may prove to be a bit more difficult. Here we have put together a ten-part series on how to generate higher returns from your innovation investments.

From our series of highly informational articles, companies will learn: how to treat innovation as a cross-functional business process, how to align innovation execution and business strategy; how to create sustainable innovation; how to train your senior executives to successfully execute innovation initiatives; how to effectively manage process and project management; how to measure performance of your processes; how to ensure broad stakeholder buy-in; how to understand the importance of product roadmaps; how to provide the tools necessary for successful product innovation; and finally, how to ensure that portfolio management coincides with process management.

Here is one of the ten practices that leading innovators use to increase the payback from innovation spending: Effectively Managing Process and Project Management.

Effectively Managing Process and Project Management

Many organizations make the mistake of equating innovation process management with project management. Innovation process management allows executives, portfolio managers, and process owners to take a global view of how product innovation is being strategically planned and systematically executed throughout the organization. In effect, process management provides the foundation for project management. Conversely, project management entails tracking and scheduling hundreds, if not thousands, of tasks related to creating a new product and bringing it to market.

For example, in the lifecycle of a new vehicle 80,000 or more tasks may be required to design, manufacture, market, and sell the car. However, the decision support needs of senior management center on only a few, high-level considerations, such as safety requirements, benefit to the customer, and the unique needs of particular geographical areas. A well-conceived innovation process allows senior managers to determine how these requirements and other external market, technological, and regulatory factors might impact the overall value of the car.

Though project management and process management serve dramatically different purposes within an organization, there is a symbiotic relationship between the two. For a company to get the most out of their investments in innovation, both are needed.

For more insight into the top practices that leading innovators use to increase their returns on innovation spending, look for the next article in this ten-part series: Measuring Performance of Your Processes.

Copyright (c) 2008 Daniel Lafleche

Must the costs of clean development necessarily be prohibitive for developing nations?

Let’s take a closer look at exactly how this is called into question.

There is a common belief that the most efficient way to rein in greenhouse gas emissions is to implement a two-tiered regime in which developed nations will shoulder a much greater burden. The justification for this belief is that because it is wealthier, the necessary foregoing of present consumption will be much less as a proportion of national income. The hardship endured will therefore be substantially less.

There are a number of arguments as to why the nominal costs of developing green infrastructure and power generation should be greater or lesser in developing countries. Those who suggest the costs are greater point to the need to import (often expensive) hardware and foreign technical expertise. Those who argue that it can in fact be less costly point to lower labor costs in developing countries and, sometimes, cheaper domestic inputs. The true answer of course is case- and industry-specific. For simplicity, let’s assume that the costs are broadly the same at the aggregate level.

But what if the costs of “green investment” in developing countries could be defrayed or even offset entirely, and this without increasing tax strains or calling for foreign donors to foot the bill? Innovating intermediaries such as UK-based EcoSecurities have been so bold as to make this seemingly improbable end a reality. The concept is delightfully simple; as allowed for under the Kyoto Protocol’s Clean Development Mechanism (CDM), developing nations which reduce their greenhouse gas emissions are entitled to carbon credits which can in turn be sold on an open market. These credits are readily purchased by developed-world producers that need them to be in compliance with emissions caps. And the developing-nation party has found an essentially zero-cost avenue to sustainability.

For a better understanding of the mechanism and the championing role played by the intermediary, let’s take a look at an EcoSecurities case study. The process begins with an assessment of a company’s assets to determine the emission reduction that can be achieved. In the project development phase, the necessary “green investment” is implemented with zero capital investment by the contracting company. Finally, EcoSecurities guarantees that it will purchase the carbon credits generated after implementation. The Celulose Irani biomass-to-electricity project in Brazil is an exemplary case. With the help of EcoSecurities, this paper producer was able to find a clean and renewable source of energy by utilizing the biomass that is a by-product of its production process. EcoSecurities provided financing for the project, and lent its technical know-how of biomass energy production to Irani through the implementation of the project. After completion, EcoSecurities purchased Irani’s new carbon credits for resale. Without this involvement, Irani’s expanding production would have continued to apply pressure to the traditional fossil fuel-derived grid.

There are currently more than 900 registered CDM projects underway around the world, about 60% of which are to be found in Asia and the Pacific. The viability of these projects is, of course, dependent upon the continuing ability to sell the acquired carbon credits. This means that the project would become unsustainable if the market for those credits were ever to dry up (for example if developed nations, pursuing their own green projects, no longer needed to purchase carbon credits to comply with emissions caps).

In a world where the United States alone accounts for a quarter of greenhouse gas emissions, provided that some permutation of the two-tiered international agreement can be reached, this seems rather a distant scenario.

Most companies in the innovation game can proudly point to their winners–those new products/services that launched success fully and exceeded expectations for re venue/profit/market share. However, those same companies often express frustration/dissatisfaction with their overall return on innovation investment. Frank Lynn & Associates has worked with many companies that are considered innovators in their industries. This issue of the Client Communiqué shares some lessons learned from the firm’s experience with those leaders.

Lesson Learned: Even the leading innovators express frustration with the process.

We see three common issues that create dissatisfaction: metrics, project initiation, and the innovation process. Inappropriate metrics result in misplaced expectations–even the most successful innovators should expect fewer “hits” than “misses.” Misguided project initiation clogs the development pipeline with so many low-probability projects that the winners cannot be funded properly. And, poor process management sustains the ultimate losing bets in the pipeline for too long. Resources are fragmented across too many non-productive projects, again under-funding the high-probability opportunities.

Lesson Learned: Successful innovators have established metrics that highlight the process.

Most companies measure innovation based on the outputs. For example, a common benchmark demands that 20% of company revenues are generated from products/services launched in the last three to five years. This may be an appropriate strategic goal, but it does not measure the effectiveness of the innovation process. (Even the poorest process can meet this revenue goal if enough resources are thrown at it.)

We have found that the most effective metrics provide actionable insights to the process of innovation. Some of the better practices include:

> Revenue return/dollars invested–including both headcount and hard costs of innovation. This measure provides an indicator as to how well you are allocating resources. Actions derived from this metric could include a change in the project staffing model or changes to the timing of the hard costs (patent application, field tests, etc.) to help lower overall project costs without affecting positive outcomes

> Average number of projects/innovation employee–often, companies take the approach that “every idea is a good idea.” So many development projects are started that the staff cannot devote sufficient resources to any to effectively move them forward. “Addition by subtraction” can result by limiting, or even capping, the number of development projects allowed in the pipeline at any time. A second benefit of this approach is how potential development projects are screened and justified, which is likely to become more rigorous and disciplined

> Average project duration–companies that struggle with innovation have trouble saying “no.” The slimmest glimmer of hope is enough for the sponsor (often an executive) to keep the project alive. The pipeline remains clogged, and the best bet opportunities cannot receive the critical mass of resources they require to move forward. A metric to address this issue is a hard target for average project duration. This metric results in more frequent and disciplined project review. Even a goal to decrease average project duration by 10% will result in quicker “go/no go” decisions and better overall resource utilization

Lesson Learned: Successful innovators actively manage the source of development projects.

Historically, companies tended to take an “inside out” approach to innovation (i.e., “let the inventors invent”). The result was that the vast majority of projects had little direct relation to a market need. While these projects often resulted in neat new ways to use new technologies, they were usually considered ahead of their time. (A good example is a mainstream technology used in warehousing and distribution today–RFID (radio frequency identification). When introduced in the mid 1980’s, they were generally met with market indifference.)

As the “market driven” buzzword took hold, many companies moved to the other extreme. Every development project has to have justification from the marketplace. While hit rates on innovation did improve, this approach lost the “quantum leap” advances–too many of the projects resulted in small incremental improvements in features/benefits. These were certainly welcomed, but not market changing.

The most appropriate approach is a combination of the above extremes. We use a benchmark of 75%–75% of the projects initiated should be market driven. These projects are targeted from the outset to deliver a specific benefit to a specific market segment. The desired competitive advantage for the innovator is stated as part of the justification for the project. Effectively, these 75% of projects are sponsored by the marketing/sales organizations. The remaining 25% of projects are less constrained. Sponsorship can come from anywhere within the organization. The inventors are allowed to invent, and while the hit rate on these projects is substantially less than the market driven ones, the payoff can be substantially higher.

Lesson Learned: A key differentiator that separates innovation leaders is the discipline in process management.

A world class innovation process requires disciplined management. State of the art today is the “stage gate” process. Development projects are managed through a series of stages. Each stage culminates in a review and “go/no go” decision. Only those projects that pass through this gate are funded to the next stage. The discipline introduced through this review process assures that the development pipeline is kept lean, and resources are skewed to the highest probability opportunities.

While the concept of a stage gate process is easy to envision, what separates the successful innovators from the rest is the set of inputs used at each stage. Assessment of both technical and market feasibility are intertwined. A typical stage gate process would consist of the following stages and inputs:

> Stage One: Concept Definition–the purpose here is to articulate the logic behind the development concept, as well as the assumptions that justify the project investment

> From the technical perspective, the basic science/engineering hypotheses are introduced. The sponsor also provides a road map as to how the technology would be developed and scaled up. What assumptions would have to be tested? Where are the potential barriers? And what is the technical project plan for development?

> From the market perspective, some broad definition of the target market and potential benefit must be provided. To whom would this product/service be sold? Why would customers prefer it over existing solutions? Why not? Typically, this information is gathered through secondary data and/or a few conversations with potential customers to gauge desire to have an alternative solution

> Stage Two: Proof of Concept–the purpose of the proof of concept gate is to provide evidence that validates the concept behind the development project. Broad financial metrics are introduced to begin to flesh out the potential return on the innovation

> Proof of concept from the technical perspective means that the science/technology works. Whether in a lab or pilot plant environment, prototypes can be produced to meet the form and function requirements outlined in the concept design

> From the market perspective, positive reaction to the concept must be proven. Through some combination of qualitative market research (“what if” testing) and quantitative research methods, a sense for market acceptance, potential size of market and share, and broad price/value relationship versus existing alternatives must be established

> Stage Three: Commercial Viability–at this stage, the purpose is to assure the concept has “scalability”

> From a technical perspective, the ability to manufacture the product on production scale (or replicate the service model) must be proven. And, the economics or doing so must remain in parameters set earlier in the concept definition stages

> From the market perspective, the concept must pass “beta testing.” Prototypes should be accepted by target customers and the perceived benefits realized. Reactions of target customers at this stage will provide guidance to the timeframe and aggressiveness of the launch and ramp-up, along with the financial ramifications

> Stage Four: Commercial Positioning–the purpose of this final development stage is to define the most viable positioning of the product/service prior to launch. This stage serves as the bridge to the commercialization steps

> From a technical perspective, the positioning step proves that the product/service can be produced, packaged, and delivered to the target customer in a form that meets the promise of the concept for the customer and provides value relative to existing alternatives used by that customer

> From a market perspective, the parameters for launch must be established. These include all aspects of the offering, including price points, packaging, etc. Often, these are established by launching the product/service on a small scale (i.e., in a couple of test markets) and making the necessary modifications in the offering prior to broad commercialization

> Stage Five: Launch–the launch stage represents the handoff of ownership of the project from the development group to the mainstream organization. Product or market segment management takes ownership. Business plans are developed, including revenue goals, operational strategies, sales/marketing/channel strategies, etc. to bring the innovation into the mainstream of the business

Summary

If we look at the big picture, we find that the most successful innovators understand the importance of managing the process. In doing so, they address each of the drawbacks discussed above. These companies understand that the metrics must address the process. They are driven to initiate projects primarily from the “outside in.” And, they are disciplined in managing the low-probability opportunities out of the pipeline as soon as possible. The result of these disciplines is that innovation leaders differentiate themselves as much by treatment of the losers as by generating a wealth of ideas or commercializing the winners.

A blogsite (like a Lexus) must be durable.

Very few people think about their blog content or blog architecture in the context of durability. When I mention it to people they say –

“What? How can you wear out your blog?”

Understanding blog and content durability requires a deeper understanding of the likelihood of future changes that would constrain or otherwise obsolete your content.

There’s no question there will be future innovations that will render the way blogs work today, as obsolete in a future context. Durable blogs will possess attributes that allow them to transform and reshape themselves with little effort. Non-durable blogs will require complete rethinking, rewrites and reformatting of large portions of content and application code bases; non-durable content will require significant reshaping to migrate into new use cases.

Your blogsite platform should be agile and buil;t on XML and XSLT services that are completely unrelated to blogging or blog architectures. Your advertorial marketing platform based on sound information architecture design.

One example of content durability is how MyST melds Captyx components into blog posts. By using embedded XML components components (for things such as embedded videos), we can [optionally] prevent them from displaying in RSS feeds. This is intentional and done so for many reasons – not all subscriber devices can display embedded videos, thus your blog content soon becomes less durable. But the behavior is critical to creating and managing a durable content system because it makes it possible to create, manage, and integrate content items with (and without) embedded objects.

This agility is critical to future requirements that have not [yet] been invented. Imagine the day comes when you have 10,000 posts and you suddenly need to utilize your content in ways that heavy objects (such as video components) are not able to be included. Your competitors (who have embedded video code directly into their content) will not be able to participate in such a new use case without significant friction – they are busy creating non-durable content that assumes all objects in a post must be included in that post regardless of the use case.

Examples of durability abound in MyST Blogsite® – from the native MyST-ML [XML] markup language available universally across the platform, to the URL-based XML API from which a variety of XML formats can be accessed. In between we find filter patterns that allow you to scope RSS feeds and subsets of your content as HTML, Topic Cloud, which dissects all keywords into a relational map to your posts, and Link Properties that can exist as reference bibliographies in HTML or free-standing syndication feeds.

Your blog content platform and posts should be designed with one assumption – change is coming.

Toyota Motor Corporation has recently announced via its website www.toyota-media.com/euen/ its plan of initiating sustainable plant activities for its production operations. The activities will focus on the role of nature in developing production sites that blend with their natural surroundings.

Toyota wants to develop and operate such production sites with the objective of reducing CO2 through the use of renewable energy including those derived from biomass and natural energy source such as wind and solar power. The automaker also aims to contribute to the local community and to help in conserving the environment by mean so planting trees and plants. It also wants to achieve a groundbreaking environmental performance through introduction of innovative technology and kaizen or improvement activities.

Toyota the producer of high quality Lexus car cover plans to employ its sustainable plant activities at its TMC’s Tsutsumi Plant which manufactures the Prius hybrid vehicle and chosen to pioneer the model sustainable plant. Aside from the cogeneration system that is already in place, the plant will also make use of a 2,000kW photovoltaic generation system which is one of the biggest in current use among the world’s automobile plants.

The press release posted at www.toyota-media.com/euen/ reported that Toyota is planning to paint some of the Tsutsumi’s exterior walls and other surfaces with environment improving photo catalytic paint which is designed to break down air-born nitrogen oxides and sulfur oxides. The paint is said to have the cleansing effect of around 2,000 trees.

An environmental sustainable plant is not complete without the greeneries; Toyota is planning to have trees local to the area planted in the plant. The automaker also intends to use its biotechnology and its afforestation knowledge like for instance covering the ground and walls with NOx-absorbent vegetation. And as part of its plan to contribute to the local community it will open an on-site environmental educational facility for the enjoyment of the general public.

By implementing all of the above environmental plans with the photovoltaic generation as the main focus, Toyota hopes to lessen Tsutsumi’s CO2 emissions by 5 percent which is equivalent to what a 240 hectare tropical rain forest can absorbed.

Toyota Motor is also doing some developments on its Takaoka Plant. The automaker is installing new innovative assembly line which will begin operation soon. Toyota is hoping that the by further streamlining production systems such as Global Body Line and Set Parts System, it will be able to improve its productivity and energy efficiency. Moreover, the automaker is also expecting that with the addition of the a second innovative assembly line at Takaoka in 2009, the plant will be able to reduce CO2 emission by 35 percent.