The cost component of the profit equation has received most of the attention in the past three or so years. But cost-cutting is now yielding diminishing returns. Furthermore, the strategic value of reducing costs has been neutralized by the fact that everyone has done a pretty thorough job of it. Going forward, improving business outcomes will depend more on attending to the revenue side of the equation. To increase revenues, we need to be able to innovate.
The technology sector continues to invest heavily in research and development (R&D). IBM, Microsoft, and Hewlett-Packard lead the way with more than $4 billion each in R&D spending according to their most recent fiscal year reporting. But the business of innovation is not just about R&D; it's about using innovation management technology at all levels and in all operational domains of an organization.
In part 1 of this series on innovation management, I defined innovation and its value, considered innovation as a business process, and outlined Gartner's five categories of innovation management products (see Resources). In this part, I discuss the technology used to automate parts of the innovation process: environmental scanning, road mapping, creative thinking, and idea management.
Environmental scanning is "the acquisition of information about events, trends, and relationships in an organization's environment, the knowledge of which will be of assistance to top executives in identifying and understanding strategic threats and opportunities," according to F. J. Aguilar (see Resources). As far back as 1988, studies indicated that an estimated 53 percent of multinational companies had formal in-house scanning capabilities.
Businesses often use environmental scanning to underpin competitor intelligence and reputation management initiatives, as well as to monitor "megatrends," trends of widespread and major impact. They also use it to track the "weak signals" of emerging trends and to look out for "wild cards" left-field events that may significantly affect the business.
Environmental scanning involves more than regular keyword searches on Google or other search engines. Traditionally, the starting point for a scanning process was the newspaper clipping service, which was usually outsourced even in the pre-Internet days. Today Internet business service providers such as Nexcerpt and CyberAlert use software agents to search online publications, Web sites, newswires, and newsgroups to find information of interest using keywords you supply.
However, most services go beyond using mere collections of keywords as the basis for a search and let you define complex Boolean queries, assign priorities to different information themes, restrict the scope of sources covered, and add content and context to the reports produced by the service before they are distributed by email to internal audiences within your organization.
Environmental scanning is an essential foundation for your own innovation process, as well as a means to track that of your competitors.
How a business uses environmental scanning can be driven by or contribute to its product or organizational road maps. Technology companies, and especially software companies, are major advocates of road mapping, a technique that helps create a combined strategic, product, and marketing perspective for the stakeholders involved in delivering innovation. Road-mapping software is important to innovation because it helps to define, update, and visualize the route toward realizing an innovative product, service, or organizational change.
As more and more businesses operate as part of value webs collaborative networks of business partners and customers that exploit their combined knowledge to create new kinds of products and services clear road maps have become vital to keep all participants synchronized. Value webs generally include a driving brand leader, around which the other participants cluster. For example, the software supplier would be the leader in a value web that includes customers and business partners, such as value-added resellers (VARs) and independent software vendors (ISVs). In order for these participants to feel comfortable about their participation in the value web, they depend on regular and transparent roadmaps provided by the brand leader. Without these road maps, an innovative product or service may fail to execute on its vision, solely due to poor communication.
According to the 2002 "Roadmapping Software Survey Report" by the University of Cambridge Centre for Technology Management (see Resources), a software solution for technology road mapping is likely to consist of two major components:
It's possible to use generic tools such as Microsoft PowerPoint or Microsoft Project to visualize individual road maps or to store the road-map steps and the links between them. But where road mapping is established as an integral part of corporate strategy development, more sophisticated software is required, such as Geneva Vision Strategist and Vision Synergy from the Learning Trust. Motorola uses this software to manage a strategic road-mapping effort that keeps track of some 10,000 future development programs. To find out more about this software, visit the Purdue University Center for Technology Roadmapping. (See Resources, under The Learning Trust).
Road-mapping software helps to create a workflow for innovation execution. This workflow helps all stakeholders understand what is being delivered and what their roles are in delivering it.
The "sparking" process I outlined in part 1 of this series depends on an organizational culture that values systematic creative thinking initiatives, which in turn can benefit from software designed to support specific activities such as brainstorming and mind mapping. It's also important to remember that capturing the results of creative thinking is as much dependent on hardware as on software, and the whole process can benefit from the provision of the right kind of creative space.
No creative thinking session should be without an interactive whiteboard like the Smart Board from Smart Technologies Inc. or a whiteboard enhancer such as Mimio from Virtual Ink Corp. (See "Interactive Whiteboard" in Resources.) And if you don't want to lose your latest business or product idea scribbled on a napkin, then a digital pen like the LogiTech IO from Logitech Inc. might help. Or, better still, use your palmtop or Tablet PC to capture your doodles.
Providing access to this kind of hardware in a space designed for interactive working is also likely to pay dividends. Stanford University is one academic institution that is studying the kind of interactive workspaces that can assist with creative thinking (see Resources). The university has created a prototype "iRoom" that it uses to experiment with new ways of creatively working together.
One kind of brainstorming software is provided by ParaMind Software. ParaMind takes your input in the form of a block of text and generates a mass of alternative versions of that text from which some new perspective might be gained. This approach helps to uncover possibilities but is rather limited in terms of taking them further.
Alternatively, IdeaFisher from IdeaFisher Systems Inc. uses a "stream of consciousness" technique in which you type in a word or phrase or answer a question posed by the software. You then explore the associations provided, record the results, and loop back to the beginning, using a new word generated by IdeaFisher. This iterative looping helps create forward momentum in the brainstorming process.
Other approaches are the "flash card" and "concept scrambler" offered by IdeaCue (a division of Macroworks). IdeaCue is particularly suited to "new-old" innovation: improvements and enhancements to existing products. An electronic flash card displays random improvement ideas, one after the other. The concept scrambler combines multiple ideas; you determine if a particular combination sticks. All these approaches respectively categorized as explosive, iterative, or combinational have their place in terms of jump-starting or maintaining the momentum of a brainstorming effort.
These kinds of products are great for individual brainstorming and face-to-face meetings, but what about virtual brainstorming with groups collaborating over the Internet? That's where online services such as Facilitate.com come in. These services let remote participants brainstorm together via their Web browsers using functions such as electronic flipcharts to collect, categorize, and prioritize topics. Plus, they support online voting, surveys, and chat rooms to help you further focus and develop the topics raised. You could also leverage more generic Web conferencing, video conferencing, and online meeting services such as WebEx or even a Microsoft SharePoint portal to achieve similar results. Broadband connectivity and restrictions on corporate travel make these kinds of products more realistic and valuable alternatives to the traditional brainstorming session.
But creative thinking isn't just about language and text. It also benefits from visualization. There are a number of brainstorming tools, including those focused on Tony Buzan's Mind Map techniques, that can help with visualization. Some of these tools, such as SmartDraw, simply offer collections of symbols and connectors that help you create various types of mapping diagrams using a drag-and-drop paradigm. More specialized tools, such as Mindjet's MindManager or SimTech Systems Inc.'s MindMapper, enable you to create, display, and convert root-and-branch type mind maps to better visualize ideas and plans that you can easily update or reorganize to reflect changing realities or priorities. Creating mind maps is also an ideal application for use on the latest generation of tablet PCs.
There's no doubt that brainstorming and mind-mapping software are more likely to generate a broader and deeper range of innovation possibilities than simply a room full of people and a blank flip chart. And most of this software is very inexpensive.
In the preceding sections I covered some technology that helps automate the "upstream" end of the innovation cycle. Now let's look at idea management, which automates at the downstream end of the cycle by developing ideas so that they can eventually be "monetized" as Mark Turrell, CEO of Imaginatik so vividly put it.
Imaginatik is one of the pioneers of idea management, which might be described as the business process of making money from ideas. Once environmental scanning has uncovered opportunities or threats and the activities of road mapping and creative thinking have generated some interesting innovation possibilities in the form of ideas, you then have the raw material for idea management.
Idea management encompasses much more than online employee suggestion boxes, Web-site frequently asked question (FAQs), and other kinds of online feedback systems although all of these should be considered as potential input sources for an idea management process. Imaginatik's Idea Central and Idea Chain products are representative of the new generation of idea management applications that go beyond these limited point solutions.
You'd use Idea Central to collect ideas, evaluate them, and develop their potential; to create an "idea-base" to be browsed and searched; and to manage the workflow aspects of moving an idea through a development pipeline. Idea Chain complements Idea Central by bringing customers, suppliers, and research partners into the loop and helping manage intellectual property rights.
Both products help to support Imaginatik's six-stage idea management process, which includes:
Other vendors see idea management slightly differently. For example, Akiva's spin on idea management is called Enterprise Innovation Management. As Akiva sees it, "Enterprise Innovation Management (EIM) is a system for organizing, tracking, and deploying ideas. With an EIM process, an organization can collect ideas from employees, customers, suppliers, and industry groups to dramatically improve business performance for rapid innovation and reduced expenses." And the way that you achieve this goal is by combining lightweight communications models such as message boards, instant messaging, and group chats with more established communication channels such as Web publishing, document management, and mailing lists. Here, idea management is viewed much more as a community-based paradigm that benefits from the input and feedback of a wide range of stakeholders in the idea generation and development process.
Idea management looks like one of those applications whose time has come. After all, many businesses have spent a fortune on call-center and customer service software that is designed to fix problems. Surely it's time to start spending more on technology designed to create innovative solutions?
Idea management applications can be used to develop any kind of idea, but for specific kinds of idea management focused on delivering a new product or service a vertical solution is required. In the third and final part of this innovation management series, I'll cover some applications specifically designed for managing product innovation, which claim to manage the complete innovation life cycle, end to end.
Stewart Mckie is an independent consultant and technology writer specializing in analytic, enterprise resource management, and Web services applications. Reach him via his Web site at www.cfoinfo.com.
Part 1: "Let Innovation Thrive," Jan. 1, 2004
Aguilar, F. J., Scanning the Business Environment, Macmillan Co., 1967.
IdeaFisher Systems: www.ideafisher.com
The Learning Trust: www.learningtrust.com
ParaMind Software: www.paramind.net
SimTech Systems: www.mindmapper.com
Smart Technologies: www.smarttech.com
Stanford University iWork project: swig.stanford.edu/pub/publications/iwork-overview-layout.pdf
Virtual Ink: www.mimio.com