Service Innovation

Seems like service innovation is an emerging topic of conversation. PDMA is hosting a conference on this topic October 21-25, 2006 (www.pdma.org/2006). It also came up on the Fuzzy Front End (FFE) panel last week.

I remember feeling there was some mystery to innovation for services until I read a paper by Gabriel Bitran. After the paper I remembered that the main thing to focus on with service innovation is the same thing one should focus on with product innovation. As always with innovation, the thing to focus on is solving a customer problem.

There were some other interesting things in the paper around a dominant design that emerges for services, but that happens for products as they mature too. If you had to design a mature service like a hair salon, you wouldn't want to innovate where it wasn't needed because it would confuse the customer without adding unique value. Imagine walking into a salon and being told they cut the left sides and right sides on alternatiting days of the week. Unless that somehow addressed a novel value proposition, it would just be something "creative" that wouldn't solve a customer problem.

Focus, focus, focus on solving problems for customers. I don't think we can repeat that to ourselves enough.

The Fuzzy Front End of Product Development at NorCal PDMA

This week the Product Development Management Association (PDMA) of Northern California held a panel discussion on the Fuzzy Front End of Innovation. I was fortunate enough to be one of the panelists.

The panel was well attended and the discussion was very rich. Luke Hohmann of Enthiosys hosted the panel. He also announced a new book of his coming out and talked about Innovation Games, a series of workshop exercises that are just right for stimulating the right kinds of discussion with customers to find out what they truly want.

People to involve in the process of Idea Management

As I always say, innovation is a team sport. You want to have a number of different roles represented at the fuzzy front-end (FFE), while also avoiding having “too many cooks in the kitchen”.

There doesn’t necessarily need to be one person for each of the roles, with innovation you often have people with multi-disciplinary backgrounds because of the importance of being able to bring as much information to the table as possible to see the big picture. The roles that are important at this stage are:

• Lead User – Ideally, find one or more potential customers from the market who experience the pain to such a degree that they are actively seeking solutions and even developing their own prototypes. Look for Lead Users who come from different industries where there are similar problems to your target market. They often have inventive ideas to add.
• Business unit manager / CEO – Doesn’t need to be involved in the day-to-day, but definitely needs to provide some management oversight to ensure the rules of the game are followed, check points met, and commitments are made to take the idea management process’s output to the next phase of development.
• Senior technologist(s) – A handful (1-3) technologists who understand the company’s technology, or the target technology of interest. Try as best as possible to find people who can be freed up from their day-to-day responsibilities so as to be able to focus on the FFE process. Avoid types who are too cynical, you need creative technologists, or at least ones that will not only look at what the hard challenges are.
• Marketing professionals (1-3) – You need bright marketing people, typically product managers who have a technical background. Go for hands-on, folks, not people managers. A marketing-based people-manager can make a good facilitator for the FFE process, however.
• Intellectual Property Management - Have an IP lawyers involved to help identify potential patents to write to protect the opportunity.

A list of other stakeholders that should be kept “in-the-loop” regardless of their hands-on involvement in the process:

• R&D managers
  
• “Portfolio” managers
  
• Strategic planners and analysts
  
• Project / Program managers
  
• Marketing managers and analysts
  
• Business development managers
  
• Brand managers
  
• Knowledge management professionals
  
• Quality assurance managers
  
• Operations, Finance

A common thing that can happen is a lot of people want to be involved in this process. I have witnessed several postpartum meetings following a product development initiative where groups like Quality Assurance and Operations request to be more involved in the up-front design process so that testing and operations plans could be started earlier.

What is “idea management” and how does it apply to the FFE?

In product development (or innovation more generally), you deal with lots of lists. Idea management is an early phase in product development where you generate a list of ideas for possible products you could create. There are other situations where you have to manage lists of ideas though. For instance bug fixing (and equivalent product improvement processes for non-software products) is a form of idea management. Another is feature planning where you go around asking customers what features they would like to see in the product and you generate a list of these ideas. The difference with idea management is that it occurs at the Fuzzy Front End (FFE) when you don’t even have a product and you may not even have any customers. It’s the blank white board of product development.

One of my marketing professors had a great piece of advice for idea management. He said you have to be prepared to look at a lot of ideas. I’ve found that to be good advice because at the FFE, you never have enough information to tell which are good or bad ideas. Only by pursuing an idea can you answer questions about the idea. The investigation itself takes time and resources. So it makes sense to construct a portfolio of opportunities and start by investigating them all, just a little bit. Once you’ve done an initial phase of investigation, you whittle down the list and do another pass of deeper investigation. You keep repeating this process until you just can’t kill the last remaining idea. That’s the process of idea management.

The hard part is taking the decisions to abandon ideas. If there are multiple people involved, the task can become political and that’s where leadership needs to step in to help set the ground rules. If you’re working alone at idea management, it can be difficult to get to the last step of idea management, the point where you’re left with one remaining idea. You may be an entrepreneur who faces a tough decision about running forward with this last remaining idea because you still won’t have all of the information you’d like to decide if it’s worth it or not. You may be inclined to go back to the beginning and restart your idea management process. It is hard to know the right thing to do.

Here is a list of other problems with Idea Management:

• It is often confused with Knowledge Management, which suffers from a negative stigma.
  
• Taking the initiative to formalize the process and establish “the purpose, scope, responsibility, ownership, tools and procedures for idea management”. Similarly it’s important to set “expectations of Return on Investment (ROI)”.
  
• Collecting too many ideas and not to being firm enough on criteria.
  
• Getting idea management started: sometimes the ideas just sit in the proverbial “suggestion box” unread for years. For one thing, you can’t proactively patent those ideas, let alone build businesses out of them. Sometimes you just lose the employees who came up with the ideas, so it’s important to harness peoples’ inclination for creativity.
  
• Failing to invest in idea management sufficiently for the process to run itself.
  
• Not recognizing the potential for inter-departmental idea management. What happens if department x has an idea for department y that would help the overall company function more efficiently?
  
• Lack of tools and proven best practices for idea management.
  
• Some companies function by giving a lot of praise to individual inventors. Without systemic changes, these inventors may be forced to “defend a pile of accolades,” keeping ideas to themselves rather than participating in the collaborative idea management process.

Sources
KnowledgeBusiness
Outlogic Blog
Corante Ideaflow
ZDNet
MyWebPagesJPB