Innovation in 3 Steps — Core Lessons from SAP
Thursday, July 3, 2008 at 01:03AM Innovation continues to be a hot topic in the business press. That's not terribly surprising, because no matter how much cost you squeeze out of your processes, you've got to innovate to grow. Unfortunately, a lot of companies just flat out get Innovation wrong. Sometimes they over-structure the process, creating byzantine forms of corporate bureaucracy that on paper promote Innovation and in practice stifle it. Sometimes they under-structure the process, letting too many engineers pursue too many ideas that the engineers think are grand but aren't correlated to market needs. And sometimes they manage to get it right by creating a process with "just enough" structure to collaborate with markets to identify unsolved problems, evaluate these problems using an appropriate level of detail, and then prioritize them with internal and external stakeholders using powerful business-centric, "Web 2.0" tools.
In this post I'd like to highlight our experiences with the SAP Collaboration Workspace as their process is a terrific example of just how straightforward innovation ideation should be. Use this simple picture as your guide.
Step 1: Identify Unsolved Problems
All Innovation stems from understanding a problem well enough to solve it in a new and novel way. The best way to gain this understanding is to get out and collaborate with people outside your company. Cast a big net. Include customers, non-customers, channel partners, former customers, people in adjacent markets, and so forth. Challenge your assumptions about who is, who isn't, who should, who shouldn't, and who might be your customer. Don't just ask them about their problems. Direct questioning is not the way to identify unsolved problems. Collaborate with them to understand their world, on their terms, from their perspectives. This is human-centric, qualitative market research. Use Innovation Games® to help you.
SAP does this masterfully using a variety of techniques. They use Innovation Games® such as Spider Web and Prune the Product Tree in their eSOA initiative to better understand customer needs regarding their eSOA platform. Their DLI (Design-Led Innovation) process, which includes Innovation Games® as a tool for SAP employees, is highly regarding for its focus on understanding customers. The result of Step 1 is a set of understandings that SAP employees use as fuel to generate a portfolio of problems and proposed solutions.
Step 2: Evaluate Your Problem-Solution Portfolio
The next step in this process is to critically evaluate your problem-solution portfolio. Evaluating the problem includes determining if the target market is sufficiently large to justify pursuing the solution. Evaluating the solution involves a critical assessment of your organizations ability to profitability implement the proposed solution. This is typically an internal process, in which you should leverage quantitative methods to help make appropriate business choices based on a sober analysis of the best facts that you can assemble. For example, at this point you might be able to reasonably estimate costs and market size, but not so reasonably estimate price points, yields, or other critical data. That's OK. I've been amazed at just how far a team can get on a small investment on evaluation. SAP's approach to this step is to leverage internal Subject Matter Experts (SMEs) to evaluate the problem-solution pairs on such dimensions as feasibility, cost, and market applicability. The goal is to remove those problem-solution pairs that cannot be profitability serviced. The resultant list of potential projects is then ready for the next, and possibly most rare, step.
Step 3: Collaboratively Prioritize Your Problem-Solution Portfolio
The final step in this process is to once again go outside your organization to gain their insights in the collaborative prioritization of your problem-solution portfolio. In this case you want to leverage business-centric, Web 2.0 tools.
SAP uses their Collaboration Workspace as a primary vehicle for collaborating with customers to prioritize their problem-solution portfolio. This platform, built on top of the Jive Clearspace offering, provides such commonly available tools as wikis, document sharing, commenting, and groups that enable SAP and SAP's market to elaborate, clarify, and otherwise gain deeper insight into the problems and solutions proposed by SAP. In addition to these commonly available tools, SAP has integrated Enthiosys' Buy a Feature online game to enable large numbers of customers to collaboratively prioritize their problem-solution portfolio. By using Buy a Feature online, SAP understands both the priorities of their customers and the reasons these priorities matter. The data obtained by Buy a Feature online can be further analyzed to gain insights into market segment preferences and feasibility. Of course, the customer-prioritized list is just one input that SAP uses to make their final choices on which projects to pursue in their project portfolio. However, customers can rest assured that when SAP makes choices that may be different than these customer-generated priorities, they're made for very good reasons that are themselves explained and elaborated with customers.
Taking Action
While generating the ideas for Innovative products and services is a fun job, we find the greatest enjoyment in actually creating and delivering these services to the market. SAP's track record in delivering innovations to the market is unsurpassed, and it is among the many reasons they're the worlds largest enterprise software company.
There you have it. Innovation in three easy steps. What's holding you back?
To learn more about the Collaboration Workspace I invite you to read:
Richard Hirsch's blog: https://www.sdn.sap.com/irj/sdn/weblogs?blog=/pub/u/10448
Dennis Howlett's blog: https://www.sdn.sap.com/irj/sdn/weblogs?blog=/pub/wlg/10117
Reader Comments (1)
I'm always delighted when I see "innovation" begin with "finding problems." So often those talking about innovation are starting with technology. You write, "All Innovation stems from understanding a problem well enough to solve it in a new and novel way." Indeed.
Thanks for sharing,
Steve