Innovation & Experience - Lessons learned and internal benchmarking in the Innovation Life Cycle Process

Contents

1 Introduction
1.1 Motivation
1.2 Problem definition
1.3 Objectives
1.4 Target audience/group
1.5 Results expected

2 Innovation Management - the key driver for growth
2.1 Basics
2.2 Innovation Life Cycle Process
2.2.1 Idea Management
2.2.2 Process/Product Development
2.2.3 Launch/Continuous Improvement

3 Benchmarking

4 Lessons Learned

5 Applying internal Benchmarking and Lessons Learned in the Innovation Life Cycle Process

6 Visualisation of Problems

7 Conclusion

8 Bibliography and references

9 Appendix Contents

Table of figures

Fig. 1-1: Problem in Innovation Life Cycle Process - usage of experience

Fig. 2-1: House of Innovation by A.T. Kearney

Fig. 2-2: Idea Management Process

Fig. 2-3: Product/Process development Process

Fig. 2-4: Launch/Continuous improvement

Fig. 2-5: Increase of speed in development

Fig. 2-6: Delay of market launch

Fig. 2-7: Overriding of costs and time in innovation purposes

Fig. 3-1: Central benchmarking purpose

Fig. 3-2: Five-Phase concept of benchmarking

Fig. 5-1: Applying internal benchmarking in the innovation life cycle process

Fig. 5-2: Method for transferring experience

Fig. 5-3: Bringing experience in the Innovation Life Cycle Process

Fig. 9-1: Example of possible overall internal benchmarking results

Fig. 9-2: Example: Lessons learned portfolio

Fig. 9-3: Example: Clustering of topics

Fig. 9-4: Structure of a “one pager”

Abbreviations and Definitions

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1 Introduction

This paper ‘Innovation&Experience - Lessons Learned and internal benchmarking in the Innovation Life Cycle Process’ should foster the motivation and awareness for improving the whole innovation life cycle process by using available experience and knowledge in an organisation.

1.1 Motivation

Generally there are still too few examples of high-quality innovation management performances among companies to compete successfully in global markets. This was an outcome of an initiative for innovation professionals supported by the European Commission named Europe INNOVA.^[1]

Many issues which became apparent are related to the innovation life cycle process. One main problem area is for example methods for sharing information. Moreover, the involvement of different groups to generate new ideas and suggestions for improvements are not managed adequately and lessons learned are not communicated across all hierarchy levels and project members. Furthermore there are too few projects based on lessons learned which would generally help to save costs by not making the same mistake twice.

Therefore this paper will address one of these issues during the innovation life cycle process - doing the right things right by means of the lessons learned and internal benchmarking.

1.2 Problem definition

Companies need to innovate to survive and create advantages in today’s fiercely competitive environment. Rapidly changing markets require adaptive business processes. Standing still is no longer an option. Enterprises can remain competitive with successful innovation management.

To ensure a steady flow of innovations, companies have to continually and systematically manage them. One key part is the innovation life cycle process which takes a view on the entire procedure from idea generation all the way to launching innovations and continuously improving them.^[2]

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Fig. 1-1: Problem in Innovation Life Cycle Process - usage of experience^[3]

In figure 1-1 the importance of using lessons learned in the whole innovation life cycle process is visualised.

As described before a lot of companies have shortcomings in this process due to missing involvement of different groups to generate new ideas and suggestions for improvements. Therefore it is essential to identify, understand and develop methods and practices using references. This could mean identifying strengths and weaknesses using benchmarking methods and improving things by means of lessons learned.

This paper addresses enabling factors for innovation management such as knowledge management. In this way, it builds an understanding of the importance of lessons learned and internal benchmarking in innovation management.

1.3 Objectives

The goal of this thesis is to illustrate the importance of lessons learned and benchmarking. To accelerate the competitiveness through innovation, this paper should support companies in search of possibilities of using existing experience in the life cycle process by giving a prime introduction of how lessons learned and also internal benchmarking could be theoretically applied to gain profit in this process.

Secondly this thesis aims to identify possibilities to combine internal benchmarking with lessons learned to improve the innovation life cycle process. It shows how benchmarking and lessons learned could improve the innovation capability to boost innovation with experience.

It is not a goal of this thesis to give a detailed overview of innovation management itself and neither the innovation life cycle process. Furthermore it will not give a ‘how to do approach’ for companies in practise.

1.4 Target audience/group

Policy makers, such as project managers, innovation managers, knowledge managers and so on, need better insights about the barriers and drivers that influence innovation management proficiency to develop effective policies and interventions.

This thesis intends to help key drivers of companies to lead and push innovations and to show how much benefit could be gained by using experience, which is already available, to improve the innovation life cycle process. It is expected that a general knowledge in terms of innovation management is present as this thesis will not go into great detail describing the innovation life cycle process or even innovation management.

By making the reader conscious to the importance of motivation and awareness of applying lessons learned and internal benchmarking in the whole innovation life cycle process this thesis counts as a cornerstone.

1.5 Results expected

By analysing the potential of improvements through lessons learned and internal benchmarking in the innovation life cycle process, shortcomings should be reduced and a boost of innovation should be the result.

Using the improvements found with lessons learned and internal benchmarking could help companies in the near future, to reduce the time to market as well as improve the motivation in the project team as everyone could contribute and give their inputs for improvements in every step of the life cycle process.

This paper should be the cornerstone for further investigations and could be used as basis for more detailed research.

The next chapter shows why innovation management is the key driver for growth in regard to an economic success. Further on it will describe the innovation life cycle process, which has already been mentioned several times in the introduction.

2 Innovation Management - the key driver for growth

This chapter describes briefly why innovation management is so important today and additionally illustrates the innovation life cycle process.

2.1 Basics

Innovation is from the economic point of view the intention of organisations to improve the economic success on the market or to establish internal qualitative enhancements by making alterations.^[4]

The management of innovations by means of systematic planning, execution, navigation and supervision of innovation activities is inevitable for effective and efficient idea generation. It is therefore responsible for progression of organisations in dynamic markets and competitive environments and need to be applied as a key driver for growth.^[5]

Generally it is distinguished between product innovations and process innovations. Innovation decisions are complex from process and also product point of view due to it is being a new concept. In addition mostly they hit upon barriers and conflicts, so there is the need to have promoters who push innovations inside companies.^[6]

These promoters should benefit from this thesis as it shows how to do the right things correctly by means of lessons learned.

The House of innovation by A.T. Kearney^[7] (see fig. 2-1) covers all dimensions of Innovation Management including: Innovation strategy, Innovation organisation and culture, Innovation Management processes, as well as enabling factors for Innovation Management.

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Fig. 2-1: House of Innovation by A.T. Kearney^[8]

It is important to focus on every part of the House of Innovation to realise successful innovation management and to have a thriving business. Listed below are the separated parts in brief:^[9]

- Innovation strategy relies on future trends of the market and competitors
- Innovation organisation and culture aligns the whole company
- Life cycle process ensures a well-stocked idea pipeline and a well organised development process which leads to new and successful products on the market
- Enabling factors are used consequently to reach the innovation goals

In the following part of this paper the innovation life cycle process is described. It is one key part of the House of Innovation by A.T Kearney. The life cycle process ensures an idea pipeline and a well organised development process which leads to new and successful products on the market.^[10]

This means it leads from Idea Management via Product/Process/Service/Business Model Developments to new and successful launches on the market. In the next chapters it will be shown how enabling factors like knowledge management, especially the usage of lessons learned, could support this process.

The innovation life cycle process is shown in more detail in the next part of this chapter.

2.2 Innovation Life Cycle Process

To explain the flow of this process, this chapter is divided into three sections. This implies it will demonstrate the point’s idea management, process/product development and launch/continuous improvements.

2.2.1 Idea Management

Idea management is seen in literature as a logical development of a suggestion system with the aim of a systematic coordination linked to strategic ideas with other operational instruments of rationalisation and innovation advancement. Idea management is a concept, which combines various creativity-promoting methods into a comprehensive system. Nevertheless, it should be noted that currently there is not a generally accepted definition of idea management in innovation management literature.^[11]

Usually the trigger for innovations can be divided into three main points. Firstly a trigger can be an external trigger by means of problems on the market which lead to search activities how to satisfy e.g. customer needs.

Secondly it can be triggered by internal triggers such as business activities, which lead to innovation activities then. The third trigger for innovations is a crisis. That means if there is a crisis situation, companies are more open for taking risks and focus more on resources. Furthermore they concentrate more on the problems and try to find solutions.^[12]

The quality of new ideas is influenced positively by the participation of many employees of a cross-functional team with diverse occupational and intellectual backgrounds. In such teams, the amount and variety of information available to members is increased, enabling the creation and consequent evaluation of different ideas from different perspectives.^[13]

To describe the relation between creativity and innovation ability the next statement could be used: Innovative ability = idea creation + idea realisation. A lot of companies neglect the importance of idea generation and struggle only with idea realisation. In the last years a lot of creativity techniques have been developed. Hence, these methods and tools should be used more often to activate also the part idea creation.^[14]

Nevertheless, it should be pointed out, that it is not indented to focus on these methods here, although it is quite interesting and important for the idea generation process or even idea management.

At any rate, below you can find a picture where the process of idea management is shown in an overview.

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Fig. 2-2: Idea Management Process^[15]

The input for this process is obviously the market and customer needs. This presumes of course that the innovation strategy is defined, so companies need to figure out, what type of innovation initiative they are going to pursue, what growth options are best and who in the value chain should be targeted to maximise value creation in the market.^[16]

Afterwards it is essential to obtain from customers the information that is needed to discover opportunities and to create valued product or service solutions. In other words, it is to obtain the customer’s requirements which leads to generating ideas and find solutions for problems.^[17]

The rating of ideas should be done on predefined criteria which could include e.g. customer satisfaction, the importance for the customer and technical feasibility. It is important that it is aligned with the company’s strategy. Finally the selection of the best and most promising ideas can be done.

If this is done it leads then to the next step - the product or process development process. So to sum up the input for idea management are customer needs - whoever the customer might be - and the output is one promising idea which goes into development afterwards.

2.2.2 Process/Product Development

As mentioned before the input for the process “product/process development” is an idea, which is the outcome from former idea management process.

The present section will deal with the big blocks of the development process. Generalising, it can be said that product development has the phases shown in Fig. 2-3. This will be described in the following text.^[18]

The start up decision usually comes from the previous idea management process where the output is a promising idea.

A challenge is to select and focus on the ones that will yield the desired corporate result, which means revenue generation, cash flow, profit, long-term growth, strategic positioning and satisfying operational requirements. The question if it is achievable, desirable and agreed-to need to be addressed.^[19]

Afterwards in the process/product development process the first step is to specify and define the product or process, meaning the idea. As you can see in the figure below the development process goes from specification and definition to the output which is here called pre-production or eventually pre-launch phase in a process development step.

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Fig. 2-3: Product/Process development Process^[20]

The specification definition is usually led by the design department and should be done in close relationship with the customer and marketing. In the part conceptual design the overall characteristics and the lay-out of the product will be defined. The conceptual design is broken down to detail drawings, material specifications and production plans in the phase detail design. Afterwards the first physical products are developed and final appearance, feasibility and problem solving is done together with production in the trial phase. In pre-production short series are produced by standard manufacturing means for the final fitness of machines, production systems, jigs and tools.^[21]

Though it is not mentioned, between each phase there is the need for reviews or methodical check outs to assure that information is passed correctly through each step. This ensures that every department which is involved, understands and translates correctly the requirements from the previous and also the next step.

To translate the customer’s requirements throughout the process to the final product a clearly structured information flow needs to be applied.

Problems and drawbacks are derived from the characteristics of working by functional departments, reporting through the hierarchy pyramid, etc. Each department works in an isolated way, with very low communication with other areas and the knowledge is based on a very limited portion of the overall product to be developed and of the whole process. Because of this, it is important to apply lessons learned after each step and translate important experience to the next departments and also to different hierarchy levels.

The next part of this chapter focuses on the last step of the innovation life cycle process, that is to say launch and continuous improvement.

[...]

^[1] Cmp.: European Commission. Europe INNOVA paper Nr10 (2008): Insights on innovation management. Tangible results from IMP[3]rove. 1st edition. Luxembourg: Office for Official Publications of the European Communities. P. 7.

^[2] Cmp.: Diedrichs, Eva/Engel, Kai/Wagner, Kristina from IMP[3]rove European Coordination Team. Europe INNOVA paper Nr2 (2006): European innovation management landscape. Assessment of current practices in Innovation Management Consulting Approaches and Self-Assessment Tools in Europe to define the requirements for future “best practices”. 1st Edition. Augsburg: Joh. Walch GmbH & Co. KG. P. 10.

^[3] Own figure.

^[4] Cmp.: Gerpott, Thorsten J. (2005): Strategisches Technologie- und Innovationsmanagement. 2nd Edition. Stuttgart: Schaeffer-Poeschel Verlag. P. 37.

^[5] Cmp.: Vahs Dietmar/Burmester Ralf (2005): Innovationsmanagement. Von der Produktidee zur erfolgreichen Vermarktung. 3rd Edition. Stuttgart: Schaeffer-Poeschel Verlag. P. 2.

^[6] Cmp.: Posch Alfred/Tschandl Martin (2009): Innovations- und Wissensmanagement im regionalen Kontext. 1st Edition. Aachen: Shaker Verlag. P. 3 f.

^[7] Cmp.: Kearney, A. T. (2004): Creating Value Through Strategic Supply Management: http://www.atkearney.com/index.php/Publications/creating- value-through-strategic-supply management.html?q=house+innovation [14.03.2010].

^[8] Cmp.: Diedrichs, Eva/Engel, Kai/Wagner Kristina. Europe INNOVA paper Nr2 (2006). P. 10. (modified).

^[9] Cmp.: Diedrichs, Eva/Engel, Kai/Wagner Kristina. Europe INNOVA paper Nr2 (2006). P. 10.

^[10] Cmp.: IMP³rove® your Innovation Management: www.improve-innovation.eu [10.03.2010].

^[11] Cmp.: Brem, Alexander (2008): The boundaries of innovation and entrepreneurship. Conceptual background and essays on selected theoretical and empirical aspects. 1st Edition. Wiesbaden: Gabler GWV Fachverlage GmbH. P. 75 f.

^[12] Cmp.: Vahs Dietmar/Burmester Ralf (2005): Innovationsmanagement. Stuttgart: Schaeffer-Poeschel Verlag. P. 136 f.

^[13] Cmp.: Weinhardt, Christof/Luckner Stefan/Stößer Jochen (2009): Designing E-Business Systmes. Markets, Services and Networks. 1st Edition. Heidelberg: Springer-Verlag. P. 3.

^[14] Cmp.: Backera, Hendrik/Malorny Christian/Schwarz, Wolfgang (2002): Kreativitätstechniken. Kreative Prozesse anstoßen. Innovationen fördern. Die K7. 2nd Edition. Munich: Carl Hanser-Verlag. P. 5.

^[15] Own figure.

^[16] Cmp.: Ulwick, Anthony W. (2005): What customers want. Using outcome-driven innovation to create breakthrough products and services. 1st Edition. New York: McGraw-Hill companies. P. 1.

^[17] Cmp.: Ulwick, Anthony W. (2005): What customers want. P. 15.

^[18] Cmp.: Sorli, Mikel/Stokic Dragan (2009): Innovating in Product/Process Development. Gaining pace in new product development. 1st Edition. London: Springer-Verlag Limited. P. 11.

^[19] Cmp.: Annacchino, Marc A. (2007): The pursuit of new product development. The business development process. 1st Edition. Burlington: Elsevier Inc. P. 15.

^[20] Cmp.: Sorli, Mikel/Stokic Dragan (2009): Innovating in Product/Process Development. P. 12.

^[21] Cmp.: Sorli, Mikel/Stokic Dragan (2009): Innovating in Product/Process Development. P. 11.