The Perfect Innovation Process for Your Company

The innovation process brings repeatable innovation success to the company

What does the perfect innovation process look like for your company? The perfect innovation process does exactly what you want it to do. It creates the types of innovation you need. It is compatible with available resources. It is also efficient, robust and flexible. This process reflects the innovation strategy. And it is part of the innovation system. But what does it look like? And how can you create this innovation process?

Core components of innovation processes

In various forms, every complete innovation process has at least the following building blocks:

• Trigger: When do the activities start? When someone has a random idea? Once a year? Once a month?
• Search field activities: How does the company search for potential for future products, services and business models?
• Project setup: Who is working with whom and on what exactly?
• Target group and competition analysis: Which customer needs have priority and what alternatives does the market have?
• Collecting and developing ideas: What can be reused, where do we need to come up with something new?
• Feasibility: How can concepts be validated technically, economically and on the market side?
• Realization and follow-up: How are decisions made and responsibility for implementation handed over?

The design, individual tools and iteration loops often differ.

A good innovation process follows the innovation strategy

Why are there different innovation processes at all? Is there not one right answer? Many people say that you just have to copy what Google does.

An example of why innovation processes can be different:

• 3M is a frequently cited example of the “a lot helps a lot” approach. Every year, countless new ideas are developed and brought to market. From video tapes and Post-its to computer disks and specialty films, 3M tries just about everything. If only 5% of them are a success, that’s all right. 95% failure is already factored in.
• But what about Tesla, BMW or other automotive OEMs, for example? They can afford a flop. The second big flop will quickly hit the company’s assets. Much lower risks are acceptable here than at 3M.

The different strategies in the example illustrate this: Seriously different innovation processes are required for implementation. Risk minimization is the focus in one. Diversity and speed in the other. Different questions, roles, capacities, budgets and release mechanisms are the result. The result is innovation processes that could hardly be more different.

If a company does not have a clear strategy for innovation, it is difficult to design, implement and manage a capable innovation process. Because the process follows the strategy. If there is no strategy, all is not lost. Parallel to process development, the team simply decides the strategy itself. This is not entirely risk-free, but it can be done. And it’s better than doing nothing.

Do not develop the innovation process at the green table

What comes first? The process or the real action? In theory, the innovation process comes first. And then the process is brought to life. This happens when employees apply the process specifications, think up innovations, develop them and lead them to market success. And this approach can actually work.

Important prerequisites if an innovation process is to be developed on a blank sheet of paper:

• Experts with first-hand experience of innovation processes in comparable sectors/companies.
• In-house experts who know what day-to-day business really looks like.
• Willingness to put the process through its paces before playing with real money (budget, resources).
• Willingness to adapt large parts of the innovation process after the first run.

It usually makes more sense to run through a standard innovation process once. And only then develop a suitable business process based on the experience gained.

Pilot projects in which innovation is first tested bring these advantages:

• Quick wins: The company achieves initial successes more quickly and innovation is transformed from a buzzword into real added value.
• First-hand knowledge: No assessment sheet in the world finds out the really exciting background information. The relevant insights are found during the work. Either before or after the design of the innovation process.
• Better fit: It is much easier for everyone involved to design an innovation process after living through an example process. The result fits better with reality than a process that is created on a blank sheet of paper.

Creating a beacon with an initial innovation success helps to avoid paper tigers. In reality, however, there can always be necessities that make the opposite approach sensible or necessary. Be it the preference of management, the perceived security of the workforce or the influence of strongly process-driven environments. The trick is not to impose the standard procedure on the organization. The trick is to react flexibly to individual needs and still achieve the best results.

Innovation process supports unusual solutions

Process and innovation. Aren’t these two irreconcilable opposites? Anyone who says that processes and innovation are incompatible is only saying one thing: “I don’t know it that way.” In fact, companies with recurring innovation success usually have a very clear innovation process. It may not even be written down. But it is definitely in the minds of the employees.

Startups often have neither a clear innovation process nor the need for repeatable innovation. However, in many cases, best practices for innovation are also established in start-ups. These are very similar to a clear innovation process. For example, procedures such as Lean Startup.

The innovation process helps to ensure that necessary questions are not forgotten at the right time. It creates space for truly creative and unusual solutions. Only when I don’t have to think about what to do with a good idea every time, or where I can get funding for a quick test, can I relax and focus on developing groundbreaking ideas.

Innovation processes therefore create a support structure that takes the pressure off and not a bureaucratic corset. In the reality of bureaucratic processes, the transitions are of course fluid. And the fact that an innovation process can be a great help does not mean, of course, that it cannot also be done badly and incorrectly.

Does a business process for innovation really have to be individual?

The question already provides the answer. A business process is always individual. Why is that? Because the rest of the company is also individual. And the innovation process must also match this uniqueness. If there were an off-the-shelf company, a franchise location for example, then you could also imagine a standard innovation process. But this is rarely how innovation is practiced.

Common models and frameworks for innovation processes

And although a business process is always individual, this does not mean reinventing the wheel. There are numerous process models that can serve as the basis for successful innovation processes:

• Graz model
• Design Thinking
• ARIZ (process model from TRIZ)
• Homburg & Krohmer
• Lean Startup
• Effectuation
• Stage Gate
• … and of course we also use a TOM SPIKE process model for successful innovation that has proven itself especially in the B2B industry.

Each of these approaches has its own strengths and weaknesses. In some cases, entire sub-areas are excluded. Adaptation is therefore necessary in each case.

Innovation culture is always an issue

Process, process, all I ever hear is process. What about the culture? Yes, good question!

Culture is what people do when nobody is watching.

A culture is therefore a habit. One that many or all people in a group have in common. A shared habit. Process and culture are quite similar in this respect. The only difference is that culture is often not explicitly regulated. The process usually is.

What kind of culture is desired in the company when we talk about a culture of innovation? There are several aspects here. The error culture often plays a role. The way in which mistakes are reacted to. How one’s own mistakes and the mistakes of others are evaluated. And what this feedback loop means for possible future mistakes. Are mistakes avoided where possible, concealed or even suppressed or denied? Or are mistakes seen as necessary and, where appropriate, as positive?

Seen in this way, culture is nothing other than the lived process.

How do you create a culture that promotes innovation?

So if culture is a living process. Does a change in culture always mean a change in process? Strictly speaking: yes. And even more precisely: There can be no cultural change if the process change that is to be achieved is not clear. What innovation habits and innovation behavior are desired? It is these considerations and the associated implementation that make a culture conducive to innovation possible. And the innovation process is a core component of this. Ensuring that the desired procedures (culture or process) are actually put into practice is, of course, a challenge in itself. This is where the ADKAR model for successful change can help, for example.

Other components of the culture are the organization’s beliefs and slogans. Is it “First time right”, “Fail cheerfully”, “Fail fast & Fail early” or “Up or out”? In a good innovation process, such claims are firmly anchored and underpinned with actionable instructions.

So demanding a change in culture before anything else can begin is quite nonsensical. A culture is only created when it is clear how to act. And by carrying out and practicing this action. So culture always comes last, never first. Of course, it can still be responsible for failure. Or at least it makes a good scapegoat.

The 7 most common mistakes in the innovation process

The quickest way to learn is from mistakes. Even from the mistakes of others. So what can be bad about an innovation process? “We don’t have an innovation process at all” is out of the question. What does that mean? One indication is that you can’t read up on the planned innovation process. It is therefore not written down. But that is of course only half the truth. After all, having a “process” does not mean that something has to be written down on paper. Nobody has written down on paper how they cook pasta. Yet almost everyone has a clear process for it. The salt only when the water is boiling? A question of principle. In any case, put the pasta in the boiling water first.

The best way to recognize whether there is a process is whether the result repeatedly satisfies to a comparable degree. Where there are surprises, the process is usually missing. Or it doesn’t work. Find out more about the 7 most common mistakes in the innovation process. As a basis for the development of a process, or to finally make the existing process effective.

Basic questions for your innovation process

Anyone developing an innovation process is faced with many questions. Some of these questions should actually follow from the innovation strategy. But that doesn’t matter for now. Every good innovation process must answer at least the following questions:

1. who creates the innovation?

Possible answers to the question “Who creates the innovation?

• Is there a fixed team that is supposed to create innovations?
• Do different people regularly come together as a team to create innovation?
• Does each individual in the company create innovation and is he or she released or supported accordingly?
• Or are innovations perhaps not created within the company at all, but simply bought in (mergers & acquisitions)?

2. what demands does the company place on the innovation?

The following questions may provide clues:

• Where do we locate our innovation efforts in the Ansoff matrix?
• In which area of the Innovation Horizons do we want to move?
• How quickly do we want to be on the market or how much time do we take to invest in innovation before we really have to earn money with it?
• Is it enough for us if the innovation process delivers innovations that already exist in other sectors? Are we only satisfied with absolute world firsts? Or do we perhaps already call it an innovation when we finally achieve what our direct market competitors have already achieved?

3. which topics are allowed, where are there bans on thinking?

When it comes to innovation, many people talk about greenfield sites and that everything should be allowed. But this does not correspond to the reality of the company. Not everything is allowed, nor does everything really make sense. Restrictions arise, for example, from the following points:

• Which topics and sectors have been burned in the company because there have been failures or other inglorious developments in the past?
• Which personal preferences of the owner family, the advisory board or the management, executives and employees should be taken into account?
• What strategic determinations prohibit certain routes and paths for the innovation of the future?

4. how much time and effort do you want to invest in innovation?

Innovation is an investment in the future. Perhaps helpful, perhaps necessary, perhaps simply wanted. No matter what the motivation for innovation is, capacities and resources are definitely limited. And even if external capital is an option to support and finance innovation, there is limited capacity to get to this point of external financing. Dimensions of this limitation issue for innovation are:

• How many people can and will the company involve in the innovation process before an implementation decision is made?
• How many months does the innovation team have to come up with a concept that is ready for a decision?
• What percentage of your day-to-day business can team members devote to activities in the innovation process?

5 Who is responsible for the innovation process?

Ultimately, someone has to wear the hat to drive issues forward and make final decisions. This hat for the innovation process is typically held by a person from the following corporate functions:

• Head of Innovation
• Head of Product Management
• Head of Research and Development (R&D, CTO)
• Managing Directors

6. who gives the go-ahead so that promising concepts can be put into practice?

Some attempts at innovation fail. Often on the market. But even more often they do not reach the market at all. Innovations fail as early as the innovation process because the company is not prepared to make the necessary investments to realize the innovation idea. Decision-makers for the release of innovations for implementation are, for example

• Managing Directors
• Corporate management (C-Level, n-1)
• Corporate Advisory Board
• Holders
• Product Owner and Service Owner, who will be responsible for the operation of future solutions
• Sales management as the future person responsible for the long-term sales of the innovation
• Critical multipliers and promoters who can significantly influence the success or failure of the innovation process, possibly even without formal mandates and responsibilities

7 Who provides the necessary input from the various areas of the company?

Targeted innovation is the goal of many organizations. This requires the contribution of many areas of the company. But who can, may and should provide the necessary input for innovation? Not everyone can be involved in the innovation project. And yet you don’t want to reject potential supporters. Various parties can be involved at different levels, for example:

• Direct project participation and thus permanent participation in the innovation process
• Established feedback loops for feedback and additions at important milestones
• Client role and definition of the framework conditions
• open forum for self-motivated contributions
• Targeted collection of ideas and inspiration on specific issues and challenges

8 What happens to ideas that arise accidentally and unplanned in the company?

A structured innovation process doesn’t mean that thoughts, ideas and ideas don’t occur in passing. And these random thoughts should not be neglected. On the one hand, because they are, of course, potential treasures. And even if they are usually not diamonds in the rough and often more like semi-precious stones mixed with sand, it is important to take ideas seriously and not to discard them too hastily. If you’re offended by the first idea, you probably won’t come up with the second, tenth or fiftieth. Random ideas can be dealt with as follows:

• Collecting and transferring to the right place in the innovation process
• Leave it up to the idea provider and give them the opportunity to drive ideas forward independently. Parallel to the focused innovation process as bottom-up innovations
• Check for suitability to the set framework conditions for the innovation process and actively reject what is currently not suitable
• Integrate into the project team together with idea providers
• Transfer to an idea backlog; arguably the worst of all alternatives when dealing with random ideas in the innovation process

9. how is the success of innovation measured (retrospective indicator)?

Can something that is too diverse, creative and arises outside existing structures be measured as innovation? Often discussed. And yet the answer is clear. It must be possible to measure what we want to work towards. The indicators used to measure success in the innovation process depend on the objectives of the respective company. Possible retrospective indicators are

• Share of sales with “new” products and offers; for example, less than 24 months on the market
• Share of margin from “new” products and offers
• Comparative position in competition and ranking of innovative companies
• Number of innovation projects launched in accordance with the company’s definition of innovation
• Number of completed innovation projects; successful and unsuccessful
• Ratio of successful innovation projects to unsuccessful innovation projects
• Lead time from the go-ahead to the concept decision, from the concept decision to market entry or from market entry to break-even

10. how can you recognize whether the innovation process is on the right track (forward-looking indicator)?

When retrospective indicators provide answers, the outcome is already clear. Unfortunately, it is then too late to steer or save anything. Forward-looking indicators are needed to be able to steer and act in the ongoing innovation process. They tell us whether we are on the right track or whether we need to make adjustments in order to achieve our goals. Forward-looking indicators can be, for example

• Number of identified and quantified customer problems as part of the company’s definition of innovation
• Number of validation points for problem hypotheses and solution hypotheses Innovation process
• Competitive advantage of the innovation concept in the technical and subjective benchmark
• Proportion of stakeholders convinced of the innovation potential (snapshot)
• Acceptance rate of solution idea, solution concept, prototype and MVP in the defined target group
• Validated market potential in euros

Conclusion: Design the innovation process specifically, don’t copy from textbooks

Innovationsprozesse mit passenden schicken Visualisierungen gibt es in jedem Buch, unzähligen Linkedin-Artilen und bei noch mehr Softwareanbietern. Sie alle sind zu gewissem Grad richtig und doch in der Praxis selten hilfreich. Letztlich sind es nicht die High-Level-Fragestellungen, die über einen effektiven oder gescheiterten Innovationsprozess entscheiden. Es sind die Schnittstellen zu anderen Geschäftsprozessen, die Mechanismen die auch im Druck des Tagesgeschäfts nicht umgangen werden und die Indikatoren, die es sich lohnt zu messen und die relevante Hinweise zur Steuerung des Innovationsprozesses zu geben.

Such business processes are best developed using an engineering and design approach, not copy-paste with trial-and-error. The targeted process design approach delivers clearer answers in less time and saves countless iteration rounds and endless discussion loops. The fact that there is a good process for developing a good process should therefore not be a deterrent. Experience shows that it is worth it. The higher the ambition for successful innovation, the more so.

About the innovation consultancy TOM SPIKE

As an innovation consultancy, we support industrial and technology companies in conceiving and implementing new products, services and business models and making them successful on the market. Developing a suitable innovation process is an important step for many companies. This ensures repeatable innovation success. When developing innovation processes, we follow a participative approach and work closely with experts and managers within the company. In our experience, this is an important guarantee that the innovation process is accepted and actually put into practice. We rely on focused workshop formats both in process development and when supporting innovation projects.