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How to build an Effective Front End Process (Stage 0)
Posted on April 4th, 2016 by Stephen Toton in Chemical R&D
How many times have you heard that your Innovation portfolio is too incremental, or lacks fresh innovative ideas that will generate top line revenue growth?
How many times have you seen good ideas fail as projects in the commercialization process because the value proposition or value capture was not assessed properly?
How many times have you participated in all-day ideation sessions with the walls plastered with yellow sticky notes or chart paper containing hundreds of ideas, leaving the room with no rational of direction, feasibility, or implementation?
How many times have you seen failed attempts to implement an idea bank in your organization, only to discover that no one ever gives the hundreds of ideas that pour in serious consideration – and then they wonder why it’s not working and people are discouraged?
These are all symptoms of not having an effective Stage 0 process. In many organizations, rather than building an effective Stage 0 process, we tend to treat it as an event and not a critical step in the innovation process.
In my experience, an effective Stage 0 process needs to have structure, resources and a Decision Board. But rather than operating in a Stage Gate mentality, the environment needs to feel more entrepreneurial. There are two phases in Stage 0 that are very crucial when generating a new project; Ideation and Opportunity Assessment.
The first part of the Ideation Phase is to identify the challenge or problem that needs to be solved. These could be market, technical, or business model related. The more specific a problem or challenge can be framed, the better the output of ideas. Although challenges can be aggressive, they should not be aspirational or vague e.g. “We need to double our revenue by 2x in the next five years.”
There are several methods for ideation that can be effective, but the best I’ve seen is to form part-time teams of “Ideators.” Allow them to compete for 30 days, using any methods they choose. They can meet at any time and in any venue – including chat rooms, video conferencing, etc. Give them the freedom to explore out of the box solutions – however, the output of their idea needs to have some structure. For example:
- Describe the idea.
- How would it solve the problem or challenge?
- How would you implement this?
- Do we have the capabilities in house?
- Describe a high level value proposition.
- What risks do you anticipate?
- What do you believe is the relative market size of the idea?
Depending on the enthusiasm of the team, the quality of the output is usually excellent, giving the Decision Board enough information to give the team direction.
Ideators are people in the organization that are creative and think out of the box. They can be from R&D, Marketing, Sales, Operations, etc. This is not something that requires a survey or analysis to determine. The informal network in your organization knows who they are. Ideators want to participate, and usually will do this activity over and above their current jobs. Make sure you identify a leader for each team and let them do the selection of team members.
When these ideas are presented to the Decision Board there will be some fine screening to determine which ideas go to the next phase. In most cases, the idea teams may be asked to go back and refine their ideas. This is a normal part of the process, and iterations should be expected. Once the idea is articulated and can answer the questions above, the Decision Board will either approve the team moving to the next phase or inventory the idea.
Note: I have tried crowdsourcing methods in the past with many different organizations. Although the software and process can be very engaging and inclusive, I did not find the quality of ideas to be exceptional. Most were good ideas, but not highly differentiated or transformative.
If the Decision Board determines that an idea is worth pursuing, but still has many unknowns and risks associated with it, they’ll ask the team to do a “deep dive” in the Opportunity Assessment phase. Keep in mind, we haven’t formed an official project yet. If an idea is simple to implement and there is a high degree of certainty to capture value, then of course we can form a stage gate project immediately.
Depending on the magnitude of the idea, a deep dive can be 30 to 90 days and will require some resources, including external funding for market research or technical discovery. In this phase, we’re trying to answer the high impact questions usually in three dimensions: Commercial Attractiveness, Strategic Fit and Risks / Uncertainties.
- What is the relative size of the market opportunity?
- How much of that opportunity can we capture?
- What is the value proposition?
- How will we capture value?
- Who is the competition?
- Is this aligned with our strategy?
- Do we have the capabilities?
- Do we need to acquire or partner to get capabilities?
- Does this require significant capital investment?
Risks / Uncertainties
- Does this require significant invention?
- Do we have Freedom to Operate?
- Do we understand the Value Chain?
- Are there any legal, brand, or ethical risks?
During the “Deep Dive” the team may meet with the Decision Board for updates, but the final presentation requires a “go, no-go, or redirect” for the team. A “go” means we start an official project with a project leader and team and give them the resources to proceed to the next phase.
I know the Stage 0 process I just outlined may seem onerous, but the output is very effective and rewarding. In my experience, after analyzing hundreds of failed projects, the majority of failure modes could have been avoided in the early phases of a program and most were non-technical. Why not reduce the risk of these failure modes in Stage 0. The goal is to have to have more successful ideas and opportunities enter the innovation pipeline with a high degree of success.
Give it a shot – ideation is all about trying new things.
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