In the first part of this article series we argued that that the scope and nature of innovation is changing. Big Data, Social Innovation, Additive Manufacturing (3D-Printing etc.) Design Thinking, Lean Start-up, etc. are becoming Good Practice in innovation management. We argued that in “making innovation things right”, i.e. in the back-end of the innovation funnel, many firms have established strong procedures and Product Lifecycle Management systems. This is good, but not good enough to take a leading spot in the innovation race. The innovation race is won by doing “the right innovation things”, i.e. becoming more effective.
The term “Fuzzy Front-End” (FFE) has been established for the early stage of innovation which determines the innovation effectiveness and hence ultimately innovation success. We wanted to better understand where leading firms are setting their priorities in the FFE currently and where they see things going in the future. To answer this, we conducted a study. You will find the background of the study in part 1 and the main findings below.
Factors influencing the optimal design of the Fuzzy Front-End
Since the innovation game is changing rapidly and because the early phase of innovation is crucial for innovation success, firms need to constantly invest in developing their Fuzzy Front-End. There is, however, no clear-cut, one-size-fits-it-all approach to how this should be done. The “best” Fuzzy Front-End for a specific firm depends on external factors – the business environment the firm operates in – as well as internal firm-specific factors.
3 “hard factors” for designing the optimal FFE
In our consulting practice – and this has been confirmed by our study – we have found that firms operating in various industries design the Fuzzy Front-End differently. Even in the same industry one will find different designs of the early innovation phase.
We have found that there are 3 external / “hard” factors that firms consider when they design their Fuzzy Front-End.
- Industry clock speed – The faster the industry ticks, the bigger the “listening ears” and the “ideation platforms” need to be.
- Disruptive risk – The more the firm’s business is in danger of disruption – by Digital Transformation or by industry convergence – the more powerful the Fuzzy Front End needs to be in order to capitalize on opportunities and to read early warning signs.
- Innovation strategy – Depending on the firm’s innovation strategy, the FFE needs to be designed accordingly. Some important aspects in this context are: Starting point (Leader vs attacker); Number and nature of search fields; Where to innovate open / closed; Where to explore / exploit; Timing (Pioneer, early adopter, main stream); Principal innovation paradigm (e.g. Market Reader, Need Seeker or Technology Drivers).
5 cultural dimensions in designing the optimal FFE
On top of these “hard” factors, the firm’s innovation culture plays a decisive role in designing and developing the Fuzzy Front-End. We have found that in designing their FFE, firms are searching for the optimum in at least 5 cultural dimensions (think of each dimension to be a continuum between the values indicated):
- Rigidity in approach versus flexibility
- Formal interactions between innovators versus informal interactions
- Discipline versus creativity
- Limitations imposed on staff versus freedom to operate
- Process Management versus People Management
Current priorities in FFE: The reasoning behind our questions
In finding the current priorities in developing the Fuzzy Front-End, we picked some aspects that we hear over and over in client discussions:
- “We need new ideas” – New ideas or combinations of existing ideas are the starting point of the innovation process. In order to increase the chance for success, these ideas need to be linked to insights from the business environment. Our first two questions were aimed at this focal point. On top of the ideas for “bread and butter” innovations, many firms are working hard to find ideas that lead to breakthrough innovations – hence our third question.
- “We need to become better in the processing of ideas” – It is not healthy to take in more food if one’s digestive system is blocked. This is an analogy to firms saying that they are not looking primarily for new ideas but to improve the processing of ideas floating around. For this reason, we asked our fourth question.
- “We need more inspiration” – Nowadays it is Good Practice to have a number of channels for new ideas to come in to the organization. Of course, ideas can come from internal staff. But modern software tools, customers, start-ups / SMEs, academia etc. are also a rich source of new ideas in many industries. We put these considerations into questions 5, 6 and 7.
- “We need to better utilize the experts that we have” – More and more firms are using internal “seeker/solver” processes to crowdsource potential solutions to tough innovation challenges. We wanted to better understand the significance of our observations in our question 9.
“We need to accelerate the Fuzzy Front-End” – Typically, a significant portion of the time-to-profit for innovation ideas is spent in the FFE. We wanted to better understand whether firms try to reduce the lead time in the FFE more from a process angle or more from a resource angle. This brought us to questions 10 and 11.
- “We need to better understand the relevance of new technologies” – Some of our clients are testing whether software tools, processes and physical events could improve the assessment of the exponentially growing global technology pool. We have worked this thought into question 12.
- “We need improve in our culture” – Some of our clients are seeing real Management commitment and / or Best Practice sharing as the key driver to develop the FFE. We wanted to better understand this and formulated question 13 accordingly.
Current priorities in FFE: The results
And here is what we have found in our study sample:
FFE priorities by industry
- Discrete Manufacturing (e.g. machinery or consumer electronics) firms are mainly striving to use more and better innovation impulses. Their second priority is to aim at improving the processing of ideas and to improve structuring the FFE via well-defined processes.
- Consumer Packaged Goods firms are primarily working on using more and better innovation impulses and on improving the processing of the ideas to build on these insights. Additionally they are also trying to get better in structuring the FFE and in sharing Best Practices across the organization.
- Firms from Process Industries (e.g. Chemicals) are focusing on securing Management buy-in for innovation. With secondary importance they are trying to leverage their existing expertise base by running internal seeker/solver processes in order to solve tough innovation challenges.
- Life Sciences firms are confident that they have a world-class base of experts. For them, the key priority is to make their internal experts get to share best Practices. The second priority is to extend their innovation ecosystem and to search for new approaches in order to get more ideas from internal staff.
- Due to market disruptions for many Utilities firms, their main focus is on getting more ideas from internal staff and produce a large number of potential breakthrough concepts that may be the basis for future business models. Additionally, they working on improving the processing of ideas via structured processes and improve innovation effectiveness by active customer integration.