front end innovation - peter koen

Understanding the Front End: A Common Language and

Structured Picture

Peter A. Koen, Ph.DStevens Institute of Technology E-mail: [email protected] May 25, 2004 An Co-Sponsored Best Practice Event&

ENGINE

OpportunityIdentification

OpportunityAnalysis

IdeaGenesis

and Enrichment

IdeaSelection

Concept Definition

NPD

Tech SG

Concept

Selection

2

Agenda

� What is the Front End?

� NCD Model� What it is?

� Most Effective Practices� Most important part of Front End – macro

perspective� Elements of Best Projects

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What is the “Front End of Innovation?”

� “Front End of Innovation” is defined by:� Activities that come before the “formal and well

structured” New Product Development (NPD) Portion

Front End of Innovation

Commercialization

New Product Development

Portion

FEI activities are less structured and

less predictable

Structured with a formalized and

prescribed set of activities and questions

New product development portion includes BOTH new product and process

We prefer NOT use the term “Fuzzy Front End” since it implies that the FEI is mysterious, uncontrollable and cannot be managed.

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Stage

Commercial-ization


Traditional Stage Gate

Idea Selection Process for Incremental

Products

Platform Strategies Leveraging Existing

Customer Value Chain

Highly Innovative and Profitable Platform

Strategies Leveraging Core Competencies/Capabilities

Size of Bubble is related to Profit

Potential

What is the “Front End of Innovation?”

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Breakthrough

Breakthrough products* (i.e. new to the company or new the world) offer a 5-10 times or greater improvement in performance

combined with a 30-50% or greater reduction in costs

Definition

*Leifer, R., McDermott, C.M., O’Connor, G.C., Peters, L.S., Rice, M. and R. W. Veryzer. Radical Innovation. Massachusetts: Harvard Business Press, (2000)

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Platform

Definition

Platform products* establish a basic architecture for a next generation product or process and are substantially larger in

scope and resources than incremental projects.

**Meyer, M.H. and Lehnerd, L., The Power of Product Platforms, New York: The Free Press, 1997

New Platform: Kodak’s development of disposable single use 35 mm camera

Incremental Extension: Addition of flash

Incremental Extension: Underwater version

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Why Focus on the Front End?

� Differences

Milestone AchievementStrengthened ConceptMeasure of Progress

Multi-function product/process development team

Individual or team emphasis in areas to minimize risk

Activity

Believable with increasing certainty as the release date gets closer

Often uncertain with a great deal of speculation

Revenue Expectation

BudgetedDepends. In the beginning

stages many projects may be “bootlegged”

Funding

High degree of certaintyUnpredictableCommercialization Date

Disciplined and goal oriented with a project plan

Experimental, often chaotic. “Eureka” moments. Can schedule work – but not

invention

Work

New Product Development StageFront End Innovation

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Agenda

What is the Front End?

� NCD Model� What it is?



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New Concept Development Model (NCD)

Provides a common language and terminology necessary to optimize the “Front End of Innovation”

ENGINE


OpportunityAnalysis

Idea Generation

and Enrichment

IdeaSelection

Concept Definition

Engine“Controllable”

Core Front End “Activity” Elements

InfluencingFactors

“Uncontrollable”

Koen, et. al., “Providing Clarity and a Common Language to the “Fuzzy Front End,” , Research-Technology Management, (March-April 2001): pp 46-55.

Koen, et. al., ““Fuzzy-Front End: Effective Methods, Tools and Techniques,” In P. Belliveau, A Griffen and S. Sorermeyer, eds. PDMA Toolbook for New Product Development. New York: John Wiley and Sons, 2 -35, 2002.

NPD

Tech SG

Concept

Selection

10

Definitions

� Opportunity� A business or technical need that the company or

individual realizes by design or default they might want to pursue to capture competitive advantage, respond to a threat or solve a problem

� Idea � Most embryonic form of a new product, service or

envisioned solution

� Concept� Has a defined form (i.e. written and visual) with

features and customer benefits combined with a broad understanding of the technology needed

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Agenda


NCD ModelWhat it is?



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Quiz

ENGINE


OpportunityAnalysis

Idea Generation and Enrichment

IdeaSelection

Concept Definition

What elements of the NCD Model are highly innovative (i.e. lots of new products every year) companies very proficient in?

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30

20

38

36

68

Tech SG8

Yesterday’s class

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1st Front End of Innovation Conference

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Agenda


NCD ModelWhat it is?



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Elements of Effective Projects

� Early senior management involvement and commitment

ENGINE


OpportunityAnalysis

IdeaGenesis

and Enrichment

IdeaSelection

Concept Definition

The prime imperative for breakthrough projects in the Front End is NOT picking the winners, but

killing the losers early.

Front End Maturity Model

NPD

Tech SG

Concept

Selection

Adopted from PRTM’s model for the entire innovation process

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� Early involvement of business executive champion

� Collaborative culture which encourages knowledge creation� Communities of Practice� IT Tools which enable people-

to-people contacts� Collaborative Work Space

� Constancy of purpose� Aggressive Goals

ENGINE


OpportunityAnalysis

IdeaGenesis

and Enrichment

IdeaSelection

Concept Definition

NPD

Tech SG

Concept

Selection

17


� What is a collaborative culture?� Mutual Trust

� Trust in the individual that you share tacit knowledge with

� Active Empathy� To be able to share pain and frailties

� Access to help� Experts in the organization are will to provide

help� Lenience in Judgment

� Harsh judgment, laughter and criticism will prevent the sharing of ones own true beliefs

� Courage� Individuals should not be afraid of exposing their

concepts to fierce judgment

Collaborative culture means that the

organization cares

Collaborative Environment

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� Creates new knowledge within the community� Connects, acquires, exchanges and builds new knowledge� New science occurs through the process of building upon

internal and external knowledge communities

Breakthrough Knowledge Usually Occurs at the Boundaries of the Old” McDermott, 1999

Diversity

Communities of Practice

Elements of Effective Practices

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Communities of Practice - an example

� Production and Reservoir Engineering Community at Schlumberger� Goal is to better optimize the value of each well� Consists of 536 members around the world� Focused on Schlumberger’s core competence in production and

reservoir engineering� Developed a series of web based case histories� Catalog industry practices into “good idea,” “Local Best Practice”

and “Schlumberger Best Practice”

Community creates a support network for Schlumberger’s technical experts


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� Best Practices:� Focus of on the core competencies of the corporation� Leader should be well respected member of the community and

be able to commit at least 25% time � Experts need not apply

� Initially the thought leaders need to be part of the community� Community of Practice should NOT become another project� Create passion and real dialogue since the COP is voluntary� Make connections between community members seamless

McDermott, R., “Knowing in Community: Ten Critical Factors for Community Success,” IHRIM Journal, March, 2000.

Koen, P.A. McDermott, R., Olsen, R. and Prather, C. , “Enhancing Knowledge Creation for Breakthrough Innovation: Tools and Techniques,” to be published in PDMA Toolbook for New Product Development. 2nd edition, John Wiley and Sons, New York: 2004.

Communities of Practice

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� Projects get started based on:� Customer Trend Analysis (Clear

Opportunity)� Technology Trend Analysis� Technology Road Mapping� Competitive Intelligence

Analysis� Scenario Planning

� These efforts create many triggers

� Need to envision the future

ENGINE


OpportunityAnalysis

IdeaGenesis

and Enrichment

IdeaSelection

Concept Definition

NPD

Tech SG

Concept

Selection

22

Market Attack Team

Phase 2 (Market and Technology Analysis)

Phase 1 (Charter)

Phase 3(Business Concept

Generation)

Phase 4 (Business Case

Generation)

Preparing to Dive

1st Deep Dive

2nd Deep Dive

Race to the Finish

TR1Business

Plan

Select best

conceptsSelect broad concepts to

focus onProject Scope

Experts Meeting

Effort ideally includes 3 -5

full time people

3 months

Challenge Workshop

A process for rapidly developing actionable plans for large market opportunities

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Why Attack Team?

� Business-Technology Interspersing� Based on Market and Technology Trend Analysis

� Where the future opportunities come from� Science Based Core Competencies� Aggressive Goals� (External) Scientific Peer Review� Focusing (in contrast to spreading too thin)

� Constancy of Purpose� Process Optimization which include:

� Complete Business Case, Management Oversight and involvement and fact based fast kills and metrics

� Full time project team populated with members with demonstrated track record and company credibility

Attack Team approach enables World Class Innovation - Wisdom of the “Sages”

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� Customer� Ethnography approaches� Lead User Methodology� Early involvement of customer

champion� Discovering the Archetype of your

customer� Business-Technology Interspersing� Technology

� Increasing linkages both internal and external (Technology Flow)

� Partnering� Diversity of cognitive styles on

idea enrichment team

ENGINE


OpportunityAnalysis

IdeaGenesis

and Enrichment

IdeaSelection

Concept Definition

NPD

Tech SG

Concept

Selection

25


� Portfolio methodologies based on multiple factors of:� Technical Success Probability� Commercial Success Probability� Reward� Strategic Fit� Strategic Leverage

�Using Anchored Scales� NOT just financial justification� Use of “Options Theory” to

evaluate projects� Screening methodologies are not

used on “breakthrough” projects � “Holy Grail”� Obvious

� RIGOROUS use of the Technology Stage Gate for high risk projects

ENGINE


OpportunityAnalysis

IdeaGenesis

and Enrichment

IdeaSelection

Concept Definition

NPD

Tech SG

Concept

Selection

26

Technology Stage Gate

� Traditional Project Management� Assumes that there is little uncertainty associated

with the technologies� Starting product development before technology

is known � Results in canceled or delayed projects, and wasted

product development effort

Technology Stage Gate is an effective technology development process with management overview,

business and scientific rigor which creates an environment of fast failures.

Ajamian, G. and Koen, P.A., “Technology Stage Gate: A Structured Process for Managing High Risk, New Technology Projects,” In P. Belliveau, A Griffen and S. Sorermeyer, eds. PDMA Toolbook for New Product Development. New York: John Wiley and Sons, 267 - 295, 2002.

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Where it fits


Stage

Commercialization


Traditional Project Management


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Traditional Project Management

� Repeatable Process� 85% repeatable� Leverage from past

experiences� Predictable procedures

� Detailed project plan of what to do and when

� Can estimate cycle time� Structure and discipline are

critical� Creativity is less important

� Project management skills are required

II

IIII

IIIIII

IVIV

VV

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� Difficult to capture and leverage past experiences for future efforts� Cycle time difficult to estimate

� Range of experimental outcomes is vast� Detailed overall project plan is

impractical� Do not know how many gates

� Can’t schedule invention� Too much structure can inhibit

creativity� Project leaders need ability to

manage uncertainty while focusing on project goals

Technology Milestones are “opaque”

TRTR00

TRTR11

TRTRNN--11

TRTRNN

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Technology Feasibility Point


AB C

DE

F

Technology Factor

Conf

iden

ce L

evel


A

B C

D E F

Technology Factor

Conf

iden

ce L

evel

Technology Feasibility PointA

B

C

D

E

F

Technology Factor

Conf

iden

ce L

evel

Some may be difficult to move

Some may even FALL back !

Need to concentrate on the“ problem child “

Usually MULTIPLE technologiesare involved

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Conclusions

� Front End of Innovation can be studied, evaluated and managed – BUT only if there exists a common language� Is NOT “Fuzzy”� Should be thought of in a holistic manner� Different for incremental, platform and breakthrough

� NCD Model Created� Engine� Five Front End Elements� Influencing Factors

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Conclusions

� Greatest weakness of FEI� Engine� Opportunity Identification� Technology Stage Gate

� “Effective” Practices for FEI are being better understood� Technology and Market Trend Analysis� Providing a collaborative environment for enhancing

Knowledge Creation� Really understanding unmet customer needs� Managing high risk projects

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Conclusions

� Breakthrough Projects� Require senior management involvement, commitment and

stomach� Expect only 20-25% to be winners

� The key issue is NOT picking the winners – but killing the losers early

� Discuss option cost to the next risk reduction milestone – rather than total valuation

� Expect that the project will morph into something else

� Disruptive Businesses� Sustaining Businesses need to embrace the disruptive Business

Model � Set up as a separate business unit � Aggressively look for acquisition targets that are potentially

disruptive

front end innovation - peter koen

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