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Innovating At The Pace Of The Internet of Things

Keeping Up With The Fast Changing World of IoT

At Davra we strive to innovate fast and efficiently but in a managed environment. When dealing with an emerging technology this can throw up plenty of challenges. Things change and move fast. You need a fine-tuned innovation framework that allows you and your team to move with the pace of change. Here I detail the framework we have developed at Davra to help us succeed in this.

Many organizations tend to focus only on the measurement of innovation inputs and outputs in terms of spend, speed to market and number of new products, and ignore the processes in between. To ignore the processes in product innovation can be detrimental to an organisation as the processes involved are extremely complex and involve many different activities, all which need to be managed. We divide our approach to innovation into seven key areas namely inputs, knowledge management, strategy, organization and culture, portfolio management, project management and commercialisation.

Inputs

Inputs management is concerned with the resourcing of innovation activities. The three key areas to measure are physical and financial resources, tools and people. Physical and financial resources can be measured quantitatively by looking at things such as R&D spend relative to marketing, sales and other departments. Systems and tools are a key component of innovation. If managers approach innovation with the correct tools many failures can be prevented. It is essential to commit enough resources to New Product Development (NPD) otherwise the efforts will be undermined. It must be possible to determine what proportion of available resources are being channeled into innovative activities as even the smallest project teams can face the challenge of supporting existing customers while trying to innovate.

Knowledge management

There are three key areas to knowledge management, namely idea generation, knowledge repository and information flows. Idea generation is a key function of an innovative organisation. We look to internal sources such as R&D team members and external sources such as customers, tradeshows, partners, etc. It is critical to give recognition to individuals where the idea originates in cases where it makes it through to implementation. Poor communication and knowledge transfer are some of the main problems with product innovation management. In a high-tech environment information needs to flow efficiently avoiding many of the bottlenecks that can occur within hierarchical large organisations. Handoffs and approvals slow down the build-measure-learn feedback loop and inhibit learning, therefore inhibiting the knowledge repository. You also need to validate your learning. As teams can often find themselves building the wrong thing the emphasis needs to be as much on learning and validating that learning as on delivering a product.

Innovation strategy

Innovation strategy is generally understood to describe an organisations innovation posture with regard to its competitive environment in terms of its new product and market development plans. There must be a strategic management capacity to deal with entrepreneurial behaviour. There is overwhelming evidence corroborating this theory when measuring innovation in companies who are regarded as leaders in innovation in that 80 percent have leaders who enforce the importance of innovation compared to just 8 percent in companies that are regarded as followers. Quantitative measures can be taken such as looking at the inputs to R&D and their magnitude relevant to industry rivals. Qualitative measures are needed to determine the managerial attitude towards innovation in the organisation including support for employees looking to find new and improved ways of doing things. Indeed a well-balanced board is a good measure, there should be a good proportion of directors from a technical background, a tech company led by CFO’s is not one where risk and innovation will be tolerated. Consistent and clear support for innovation is critical in a tech company as there is a need to create disruptive innovations on a continuous basis which is the only sustainable path to long-term economic growth.

Organization and culture

The work environment has a direct correlation to the level of innovation in the organisation and it is possible to create an environment where innovation can be encouraged. Culture and climate are linked where culture is made up of values, norms and beliefs and climate is made up of policies, practices and procedures and an individual’s culture influences the way he interprets the climate. A climate of openness and sharing should be encouraged and employees need to be motivated to participate in this climate. Many companies, however, have a fundamental culture flaw, a fear of failure which needs to be addressed by creating an environment where employees not only feel that it is acceptable to innovate but that it is expected of them. Google, for example, gives employees 20 percent of their time to work on new ideas of their own, initiatives like this help create safe zones for employee innovation. This tactic of creating safe zones can effectively address the issue of fear of failure. You need to keep the emphasis on experimentation so it is essential that the culture is developed so that teams can move and innovate at the speed of the experimentation system.

Portfolio Management

How effectively the R&D portfolio is managed directly correlates to an organisation’s competitive advantage. However a focus should be maintained on achieving a balanced portfolio of competitive advantages that customers are willing to pay for. The key question around an R&D portfolio is whether it is balanced in terms of short term and long term projects, whether the balance is right between high and low-risk projects and whether the balance is right between small and large projects. One of the key reasons for product innovation failure is poor portfolio management. Too often the portfolio does not have the correct balance and is not aligned with the business strategy. There is a need to regularly review the portfolio and make sure there is a healthy mix of short term and long term opportunities and also incremental and breakthrough innovations. Today’s innovators must learn to master a management portfolio of sustainable and disruptive innovation however it is inevitable with new ventures that there will be deviations from the originally planned targets especially in technology where there can often be rapid and unexpected changes in the portfolio and to deal with this an organisational structure, culture and discipline needs to be in place.

Project Management

Project management is the process of taking all the inputs and enablers to innovation to the point where you have a marketable innovation. Having an efficient process that can deal with the unpredictability and uncertainty around innovation is universally agreed to be critical to innovation. Project management encompasses activities such as project efficiency, tools, communications and collaboration. Communication and collaboration is critical both in terms of customer and internal communication within the team and cross-functions. You need to take a deeper look into time to market, product performance and design performance. Success should always be measured on results and not just activities as entrepreneurs need to be extremely results-oriented. It is imperative that good project management capabilities are in place as if the firm is incapable of project management there is a high risk that projects will run over time or budget. Entrepreneurship and management are two words that are generally not associated with one another as implementing traditional management practices early on brings with it fear of bureaucracy and stifling creativity. However, there is a requirement for a managerial discipline to harness the entrepreneurial opportunity that has been given.

Commercialization

The area of commercialization is often seen as a separate function to innovation and as a result, is the least developed area of innovation. The weakest area in resourcing new product development is marketing with 47.6 percent of businesses rating themselves very weak and only 15.2 percent rating themselves highly. This could explain why only 14% of ideas that enter the product development process are commercially successful. However, all the other stages of innovation lead to commercialisation and without this final step the result will not be a commercially viable product. The UK Department of Trade and Industry’s (DTI 1988) definition of innovation is the successful exploitation of new ideas. Exploiting an idea implies commercialising it. Marketing activities are needed to support the commercialisation of innovation such as market investigation, market testing, the voice of the customer, and promotion. The innovation process needs to take into account the business model and go to the market and not just coming up with a new product. The process of commercialisation needs to be managed and measured tightly as sometimes the inventor of a new product or feature will follow the product they develop as it moves from though different phases and end up managing the subsequent resources that are responsible for commercialisation meaning that inventor is tied up on commercialisation activities rather than creating new inventions.

Following this framework has led to an efficient innovation machine at the heart of all Davra’s technical initiatives. A culture of innovation that we have all bought into, an expectancy to move fast into new territory coupled with the technical excellence to execute has put us in good stead to keep apace with the fast-changing world of IoT. Contact us for more information on keeping up with the changes in IoT.