Last year, I briefly teased one of the most strategic tools we’ve been using for years rebuilding innovation capabilities with industries. The innovation reverse pipeline. This way of working solves the usual conundrum of a typical innovation pipeline where you start with a hundred smart ideas, select the best ones, refine a few, invest in one or two, bake for a two to three years, launch… and fail.
Because (essentially) while you end up inventing fantastic products for the market as it was three years ago when you were ideating.
The usual alternative is to reduce the pipeline’s length. Be ‘agile’, do ‘design thinking’ or ‘lean startup’ and deliver within six months. Which then works. And is also called incremental innovation. Good luck jumping from a Blackberry to an iPhone when the market never used a mobile phone without a keyboard…
If you not only concerned with incremental innovation, solving this conundrum requires different tools and a different innovation mindset.
This is why an innovation reverse pipeline is organized around five simple rules that might appear to be very counter-intuitive at first:
Rule 1. Scenarios over Products Customers don’t buy products, they buy the value they get from a specific part of your business (which includes products). This is what you need to innovate. Not specs. Added value for the customer. Rule 2. Quantity over Smart Start with an idea. The idea is not so important as how it will bounce back with the market. Prototyping is Darwinism for business. Bouncing a lot and reading through it is the really hard thing to do. Not being smart. Rule 3. Farming over Hunting Hunting for a specific new product can work. It is called incremental innovation. Hunting for unknown market expectations is impossible. You need to grow and nurture a farm of possible scenarios. Test them live, and learn from the current crop (not just single outcomes). Rule 4. Knowledge over Money Money is not the main ROI for innovation. Money is a lagging ROI for customers satisfaction. Focus on it myopically and you’ll be stuck in a short-term loop that leads to a dead-end. Innovating a step aheadrequires extensive and on-going market knowledge. Knowledge becomes the leading ROI you need to focus on. Rule 5. Deliver over Refine Short-term is still a non-negociable pressure for your board and stakeholders. Accept it immediately. While you farm scenarios to create an on-going ‘big picture’ perspective, also build pipelines and processes to allow other parts of the company to deliver. Even if they don’t organize their own pipeline around you. Knowledge is not a ROI in itself, money still is. Account for that.
In the end, the first step of such a pipeline looks like so:
This first step is actually the cellular process of growing knowledge through multiple scenarios. This cell is extended and sustained through the rest of the pipeline, aiming for about 20 scenarios explored (farmed) and killed (knowledge harvested) on an on-going basis.
As a practical KPI, consider that after 120 scenarios killed and harvested, you really know where your market is going and what to do about it for the next 3 to 5 years.
I’m currently preparing a few corporate workshops on this approach this summer. I’ll be sharing 5 years of practice and successes (and initial mistakes). I might find time to open up an extra session or two if you’re interested… : )