From Funnel to Hall of Fail - These Tools Help You With Innovation Development

1. Phase 1: Derivation from the company strategy
2. Phase 2: Funnel & Portfolio
3. Phase 3: Build & Validate
4. Phase 4: Hall of fail and fame

Innovation is on everyone's lips these days: Based on job titles on LinkedIn, every second person appears to be dealing with innovations, and innovation labs are popping up like mushrooms. It seems as if "digital" has been replaced by "innovation". But what we see instead in many companies is a mix of design thinking sprints, culture change programs or hackathons. Many innovation labs, however, are discontinued after one to two years, as often little comes of them.

Nonetheless, innovation programs appear innovative to the outside. Companies reinvent their own brand and the appearance on the internet suggests great things. Marketing makes it possible. Tendayi Viki of Strategyzer says about what he calls Innovation Theater:

CEOs in an innovation lab are like millionaires who owns a football team: What they really want is to invite the media and show the cool employees in jeans and T-shirts for public relations. And thus, the results of such programs often limit themselves to good press articles, beautiful photos with many post-its and possibly also a new employee app for the canteen.

But what innovation should actually be is something different: Innovation should create something new (as the name already suggests) that makes a significant and measurable contribution to the company. The canteen app doesn't really count. Innovation must be a seriously taken part of the company, and all goals of the innovation program should be derived from the strategic goals of the company.

It's not about sticking colorful post-its for the intranet, but creating value for the company and society. This is the basis that justifies the project and clarifies the question of legitimacy and budget.

But what are now the four phases of innovation and above all: Which tools can you use for them?

Phase 1: Derivation from the company strategy

The path you take in the lab must not contradict other goals of the company. New hydrogen drives, when the focus is on electric cars, are as difficult as insect proteins in a company on the path to a vegan offering. If you don't want projects to be stopped because the focus is on other projects, innovators should clarify in advance what focus the management has in their strategy and what the success of the company is measured by.

Why? Because then all actors are incentivized to support the innovation project with energy and budget. Here are a few examples:

Involve related teams

Brand management, marketing and legal should not be surprised by the sudden advance of the innovation lab. Their buy-in is essential. Ideally, they know what the management has recorded and that innovative projects should best be supported on the way there.

The same applies to middle management: If the management loudly announces to the broad staff that they all should be more innovative, this still doesn't mean that the ideas of the employees from the store are supported by middle management. They often have less colorful goals, such as sales, lower downtime, increasing subscriptions, etc. Tendayi Viki describes this in his article In Defense Of Middle Managers Who Stifle Innovation. If innovative ideas, however, contribute to true company objectives, the signs for sustainable success are better.

Talk to budget providers

Budget providers are also part of it. Resources and budget for implementing the project are scarce in most companies in the long term. Especially when a project goes into scaling and investments are required. During my time as an innovation manager, I have already seen situations where a little budget was happily invested in a small innovation team and 2-3 hackathons. But when it comes to testing the idea developed in the hackathon on the market, expanding it and scaling it, decision-makers often get cold feet. The focus is often still on what the management actually set at the beginning of the year.

Whether marketing, legal, middle management or other involved employees: They support innovators when the management clearly stands behind the innovative projects and designs incentives so that innovation is taken seriously.

Worked out collaborative ideas

And how do you involve the management and set common goals for the innovation strategy? The answers couldn't be more diverse. A thorough analysis is the first step. To collect figures and facts, Google Trends, the SAP Analytics Cloud or other BI Tools, can be used, provided the data is available.

In meetings, I have had good experiences with leading the conversation via whiteboards. When the management starts drawing, things and commitment are created. If this happens digitally, whiteboard tools like MIRO, MURAL or Mindmeister can be used very well.

The key is not to simply present the idea, but to work it out collaboratively, so that employees and management are both inventors and supporters of the idea.

The tool Miro is very suitable with its whiteboard function to work out collaborative ideas.

Phase 2: Funnel & Portfolio

Now you have scrutinized the company strategy, derived innovation goals and set goals together with the management. This directive often makes it easy to write down the first ideas. Many arise directly in the conversation at the whiteboard. Other innovative ideas arise in conversations with innovators, possibly also from employees, and possibly also from the hackathons mentioned in this article. Other ideas are simply copied. After all, comes the famous innovation funnel! - But what exactly is it?

The Innovation Funnel

A funnel starts wide and gets narrower and narrower with length. This means that the mass of ideas is successively evaluated and sorted out. How? By setting up and testing hypotheses for success. I'll tell you more about evaluation later.

In practice, it has proven successful for the steps from the wide to the narrow funnel to be separated by clear criteria. One can also speak of a stage-gate process here. Each gate has a clearly defined condition. An idea can only reach the next stage if the condition is met. The number and definition of the gates vary from company to company. What they have in common, however, is that the product maturity and the market ready for purchase are specified over the stages. If you want to delve a little further into the topic, I recommend the book “The lean product lifecycle” from Pearson publishing for inspiration.

Efficiency is achieved in this process by linking each gate with clear conditions and benefits in such a way that these do not have to be renegotiated each time. The process is clear to everyone and repeated requests for consent are waived. Example: When the product launch is imminent, legal has previously set the conditions in the gate and assures support if the condition is met. The same applies to subsequent product teams and you can save yourselves tedious discussions.

The Innovation Portfolio

The portfolio also plays a role in the funnel: An innovation portfolio, similar to the investment portfolio, balances risks and ensures a good mix of risk and security. Portfolios are often divided into Horizon 1, 2, and 3 according to McKinsey logic. H1 is close to the core portfolio while H3 is rather the risky moon shot.

Ngji and Tuff in the Harvard Business Review say that a split of 70% in H1, 20% in H2 and 10% in H3 is an optimal composition. No innovation department benefits from a series of moon shots being taken into the process. The probability of success is low and the portfolio risk is high. What the right risk profile is remains to be seen.

Depending on the size of the innovation program, tools like Microsoft Project (rather complex) are suitable. For clear programs, the Microsoft Planner tool, which is included in Microsft Teams, or tools like Jira, Asana or Slack can be helpful for visualization, which idea is in which status.

Phase 3: Build & Validate

Now we come to the phase for which by far the most tools are available on the market: Build & Validate.

As described in the previous chapter, the aim here is to evaluate hypotheses of success. Let's start with a simple example of a hypothesis: 

Cyclists who ride their bikes to work in the morning are willing to swap the traditional bicycle tube for the harder solid rubber tire if this means they can avoid flats.

And how do you now test this hypothesis? Let's start with the simple thing: a survey. In practice, the usual candidates are often used, see Surveymonkey or Airtable. But also Hotjar offers options to generate short surveys via link or on a website. With Google Trends and the Google Ad Manager you can find more data on user search behavior.

Collect insights with shop systems and web shop software

Another possibility to collect insights offers website or shop systems, which offer the product as “coming soon” or even suggest that the product already exists. A number of interested parties who want to be informed on launch day and therefore opt-in for email is a good indicator for success. Tools like Mailchimp or other Email Marketing Tools make it possible. The success is still more certain when a guaranteed willingness to pay is proven, e.g. via pre-sales.

For building websites WordPress or WooCommerce, WIX, Jimdo or Softr are of course suitable. For a full package shop there is Shopify or other shop systems. Shopify offers far more than just a shop. Customer databases and newsletter campaigns can also be used for this purpose. Whether a product is really interesting for the consumer can be determined by Google Analytics or with the Adobe Experience Manager. Also Hotjar offers with screen recordings and heatmaps very interesting insights on how and how long visitors move on a product page.

Phase 4: Hall of fail and fame

So, now we have developed ideas matching the company strategy. We have set up hypotheses and tested them. To stay with the solid rubber wheel: We built a product page with WordPress, generated traffic via Google Ads and realized with Hotjar that consumers are very interested in the USP communication “no more flats”. Everything would be super if we hadn't also noticed that website visitors often close the tab when they reach the price section, don't read on and also don't leave their e-mail address for product launch notifications. In short: The tested price is a blocker.

If the product specifications can be changed, we restart the test with other parameters. But if we decide that such a product can never really be brought to market, we should pay the idea its last respects: We document for posterity in the “Hall of Fail” that it didn't work. Why? One of the biggest problems and inefficiencies of companies is knowledge management.

Projects are too often started in parallel or one after the other without sharing knowledge. Some companies rely on coffee corners, which are scattered around the campus and serve employees to exchange experiences. Other companies rely on software, such as Confluence, the wiki function of MS Teams or Notion. However it happens, it is worth collecting the insights gained so that the following innovators can benefit from it.

If the idea lands in the Hall of Fame, though, this must be celebrated. And there are also plenty of tools for this - hopefully analogue.