GUEST POST by Robert F. Brands

What is the ultimate purpose of Innovation in a business? The end goal is Return On Investment (ROI) for all Stakeholders. After all, the objective of the New Product Development process is to turn ideas into money. ROI comes in the form of increased shareholder value, new products and new features – everyone wins, including your employees, your customers and your stakeholders. So to move your company forward and stimulate profitable growth, it’s important to give every member of your organization the proper motivation.

In Robert’s Rules of Innovation, Net Result and Reward is about motivating your people with the right incentives. Motivation does not necessarily mean rewarding with money, and quite frankly it is about recognition for a job well done. Give your NPD team incentive to produce innovative ideas. What type of rewards can you give your team, beyond bonuses? Here are some ideas for non-financial motivation.

• You want your employees to feel a sense of loyalty to the company. Reward high performance with opportunity – to sit on a panel, a team or attend a business conference.
• Recognize a job well done with an award program. Give an award to a NPD team member who has achieved a great accomplishment.
• One of the best ways to highlight an innovation champion’s achievement is to give them exposure. Introduce them to a client, or invite them to lunch with an executive of the organization or face time with the boss.
• Simple praise will boost morale (so long as it is deserved)! People like to know that their success was noticed by the head of the company.

These non-financial rewards can benefit an organization by increasing an employee’s loyalty and commitment to the company, boosting company morale and reinforcing ideal outcomes in the future. Motivating employees to reach their top performance is a win-win situation for everyone involved and equates to Innovation ROI. Actually a Nov. 2009 study by McKinsey concluded that recognition and these types of rewards were appreciated more than just financial rewards.

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GUEST POST by Robert F. Brands

No matter if it’s a test score, sports game result or a sales figure, what we measure is what goes down in history. After all, “what’s measured is treasured.” It’s human nature to look back at past results as a basis for comparison and for improvement in the future. For this reason, it is absolutely essential to carefully observe and measure performance in the New Product Development (NPD) process. In each of the different stages of the process, keep track of how much time is being spent so you know if you are ahead or behind schedule compared to past NPD cycles.

What gets measured is what gets done. Therefore, it’s necessary to set leading and lagging indicators for how the NPD process is going. Leading indicators such as the number of new ideas in the database, number of projects in the hopper, patents applied to, and amount of time and resources spent are all important information that give you insight on the NPD progress. Lagging indicators could include number of new products introduced, patents granted, new product sales in the first three years after launch, and how close your team is getting to the goal of introducing “at least one new product per year.”

By the way the traditional measurement of % of R&D spend is no guarantee for success!

Things will not always go as planned so now is the opportunity to make corrective actions. By measuring performance, you will be able to address your team on what’s working and what’s not for continuous improvement.

Success in product development is seen as one of the top indicators of the future performance of a company. To sustain innovation, companies need to continuously improve their new product development capabilities. Quantitative and qualitative measurements of New Product Development will lend insights into a company’s strengths and weaknesses.

Measuring performance doesn’t stop after your product is launched. Now it’s time to measure the fruits of your labor. Some very important and telling information can be collected during the first three years after the launch of a product. In a survey of 200 companies that design and develop new products, they shared these key performance indicators.

1. Measure Research & Development spending as a percentage of your total sales.
2. Look at your total number of patents filed, pending, awarded and rejected.
3. Track your total R&D head count, hours or days spend.
4. Measure the current year percentage of sales due to new products released in the past year, past three years, and past five years.
5. Count the number of new products released.

These metrics should be examined after every New Product Development cycle so you are clear on your spendings and ROI for each product. Look at your ratio of new product sales compared to total sales. Now you have a basis for comparison and can set a target goal for the next new product. This management by objectives style uses ongoing monitoring and is an effective method for keeping the NPD team focused on achieving goals. By looking at opportunities in the New Product Development process to increase ROI, companies are able to improve performance and ultimately, increase shareholder value.

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Feels Like the First Time

by Robert F. Brands with Jeff Zbar

When was the last time you experienced your product like it was your first time?

Product development is a process of cycles – followed by closure. We innovate and create a new concept. Assemble teams to research, develop, manufacture and market the product or service. We then ship it to market.

And then… What?

We leave it out there for consumers to embrace, or ignore. Meanwhile, as our products mature on the store shelves of the marketplace, we mentally have moved on to the next next thing.

Instead, we should revisit our product to gain a fresh perspective.

The CBS Television show Undercover Boss follows the adventures of executives who embark on an undercover mission “to examine the inner workings of their companies…Working alongside their employees, they see the effects that their decisions have on others, where the problems lie within their organizations and get an up-close look at both the good and the bad while discovering the unsung heroes who make their companies run.”

When was the last time you were an undercover or boss or prospect? As the CEO or Chief Innovation Officer, when did you last sample your wares, walk your store, demo your product or read your user manual? Playing the role of a “cold prospect” often gives a new point of view on even the most mature products.

Innovation Manager-as-Mystery Shopper touches on several of Robert’s Rules of Innovation. It allows us to Observe & Measure our products first hand. We take Ownership of our product lifecycle to an entirely new level. It may even encourage fresh lines of new product development. Hopefully, it encourages us to think about ways to train and coach other innovators – and even our customer-facing employees – on the finer points of the product, service or company mission.

Want to play mystery shopper or prospect?

1. Call your customer service or main office line to make an appointment or reach an individual. Do you get trapped in phone bank hell? Is it easy to “zero out” to a receptionist? I recently spoke with a physician who lamented it taking him almost an hour to get lab results over the phone – from his own office. “Welcome to our world,” I chided.
2. Record and listen to your customer service rep encounters. If your organization actually records customer phone calls (you hear it all the time, “This call may be recorded for training purposes…”), listen to the calls. Find high and low points. Look for ways to improve the user experience.
3. Walk the aisles. Watch your salespeople or retail associates in action. How responsive are they? How effective are they at engaging the customer? Are they up-selling where possible? Stanley Steamer maximizes up-sell opportunities once they’re in a customer’s home.
4. Keep a notepad handy. Be on the lookout for fresh ideas about process or product innovation.
5. Assemble or use your own product. Are your instructions clear? Does “Ready to Assemble” really mean ready to assemble?

The saying, “You never get a second chance to make a first impression,” may be only part true. Being an undercover prospect may give you that second chance to see your product like the first time – and innovate anew.

Editor’s Note: Bonus points if you can name the link between the subtitle and the picture. 🙂

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GUEST POST by Robert F. Brands

What defines successful Innovation?

Innovation is the process of using intellectual capital to create new products or services that generate positive business results in the form of financial returns. Discovering new findings then spurs more innovation which leads to further financial returns, and so on.

Innovation is successful when positive outcomes result in return on investment (ROI). That is why Value Creation is so important. Adding perceived value to a new product or service will drive ROI. The value proposition is the key to successful innovation. Develop an innovation with high perceived value to your customer, and strong sales will follow.

It’s all about understanding your customer and giving them what they want. Customer input and feedback is key. Look at Ford Motor Co. for example. The car manufacturer observed and listened to their large customer and prospect base on what they wanted in a car. They launched the “Your Ideas” initiative that invited people to make suggestions for improvement in all areas of comfort, convenience, connectivity, performance and safety. The result? Ford added iPod, MP3 player and USB connections, touch screens, voice activated communication systems, intelligent push-start buttons and more. Sales are soaring – not because of the traditional four wheels and performance but because of value added features. Ford Motor Company now has one of the highest customer satisfaction rating among all major automakers.

When was the last time you tried or experienced your product or customer experience? Create value and not just onerous processes. Consumer input should be considered at multiple stages of your new product development process in order to increase perceived value. Enhanced product value means higher margins, greater returns, improved loyalty and increased stakeholder value.

Finally, when you find that delicate balance between cost, manufacturability and consumer perceived value, be sure to protect your intellectual property (IP) portfolio through patents. Invest the time and money into constantly updating patents and managing your product or service portfolio because it will lock in the value of your Innovation IP.

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GUEST POST by Robert F. Brands

R&D, Marketing, Sales, Finance, IT – you’re familiar with the most common departments within a standard company, and have likely been involved with one or more. You know it can be a real challenge for unalike minds to understand where each other is coming from regarding any number of topics within a project. As an owner, you have to be the champion – the true driver of the process in order to create cross-divisional cohesion removing the silos.

First and foremost, never underestimate the importance of selecting associates who are passionate about your product (or service) and effort. Hiring employees who truly believe in your product and company possess an innate form of motivation, and are far less likely to derail your efforts if they aren’t being rewarded or recognized on a constant basis. Passionate associates always strive to give their top effort towards the cause. Choosing all employees this way will ensure that you’ve got a team that is ready and willing to cooperate.

1. Assign specific tasks to a dedicated “owner.” Your associates will perform best when they feel as though they are essential members of the team. Not only is delegating crucial for organizational purposes, it has the welcome side effect of making each and every employee feel “special,” an invaluable reward all its own. This will also increase overall understanding and alignment by having defined innovation and mutual understanding of customer needs and wants, not just departmental needs. If you make each employee responsible for a specific task, each will feel like an equally vital part of the process, helping to create cohesion.
2. Set specific goals: As the leader, it is up to you to create commonality and a common goal like “at least one new product per year.”
3. Create common incentives: Create a common bond by having like objectives and incentive payouts for good results, like offering a new product sales bonus as a percentage of turnover.

Creating cohesion across all departments within your company is a challenge every business owner faces. But if you follow the aforementioned innovation rules, you are guaranteed to encourage mutual respect and cohesion among members from all divisions. For more additional tips on how to create the best possible team for your company, look for Robert’s Rules of Innovation.

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GUEST POST by Robert F. Brands

Some ‘Improvements’ Demand Serious Questions

by Robert F. Brands

Next time you fill up at the pump, check for a new sticker: “Contains up to 10% Ethanol.”

It represents “innovative” efforts by Big Oil, Big Agriculture and Big Government to make a dent in America’s consumption of greenhouse-gas producing fossil fuels – and foster a move toward renewable, green energy.

Transforming corn into ethanol for use our vehicles was sold as a win-win. We boost business for farmers and create energy independence (at up to 10% of each fill-up at a time) – both concepts Americans can rally around.

But what hidden truth lies within the message borne by that sticker? What real consequences exist in this transformation?

Some would argue that this innovation actually does more harm than good. If that’s the case, it wouldn’t be the first time. As I’ve written before in this blog, “…innovation for innovation’s sake can come with negative consequences. Remember ‘New Coke’? (Although I liked it…) It became a short-lived disaster for Coca-Cola Co.”

But this may be far worse than lousy-tasting pop, for several reasons.

First, ethanol appeared to be a viable solution – at least when corn prices were stable and ethanol comprised no more than 5% of each gallon of gas. But now, ethanol is being moved up to 10%, and corn prices have and are continuing to rise globally, in no small part because the use of corn for fuel has helped drive down supply and drive up demand – for fuel, food and feedstock. Bloomberg’s BusinessWeek just had an article on the inter-relation of crops, shortages and prices. With up to 40% of U.S. crops steered toward fuel use, prospects for improvement are not promising.

Some have linked corn shortages and the inability to afford even basic foodstuffs, in part, to the revolutions unfolding in the Middle East. As one columnist wrote, “In short, in exchange for not reducing greenhouse emissions, ethanol reduces the availability of food to the poor” .

Second, ethanol is less efficient than gasoline. Recently a German automotive magazine AutoBild published a report that for every 250 miles driven, a vehicle needs an extra gallon of ethanol-laced gas. With a gallon of gas already topping $3.50, this innovation could get painful.

Moreover, mechanics are finding that ethanol gums up fuel injectors, decreasing fuel efficiency, boosting fuel consumption – and requiring more frequent (and expensive) injector maintenance.

Third, the use of corn to fuel cars – in turn – only fuels further favorable economics for corn farmers, who received $27 billion in subsidies [Read more]. This is the same industry that at the recent Daytona 500 race, encouraged some of the about 200,000 spectators to wave green “American Ethanol” flags. Frankly, am afraid they didn’t even know what they were supporting.

Neither do we.

Ultimately, innovation is about true value creation , whereby the ultimate balance is achieved between the expectations of industry or special interests – and consumers. Otherwise, if not adjusted for mutual gain, this form of innovation creates more hardship for the poor and inefficient and higher costs for all.

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GUEST POST by Robert F. Brands

What exactly is new product development? Does the “product” actually have to be a product? Or can it be a process? Does the idea have to come from the C Suite? Or can it be a suggestion from the factory floor, the retail showroom, the Idea Box or a customer tip?

How do you treat ideas once they land in your organization’s “idea hopper”, and how wide is your idea funnel?
Answer these questions, and you’ve placed your finger on the pulse of how your organization embraces new product development.

New Product Development (NPD) best blossoms in that place where creativity commingles with structure – where fresh thinking is fostered in a nursery of structured liberation. Think of ideas as if they were offspring: They should be free to roam and explore, but they need fences – structure – in their lives to ensure safe maturation in a controlled environment.

The same is true for NPD – regardless of whether products are widgets for sale or processes envisioned to improve the organization. A formalized new product development process will guide your organization towards Innovation through steps and “sub-steps” to help you make a Go / No-Go decision.

A carefully designed business process will take you through all the steps of new product development including idea generation, concept development, prototype development, and scale-up to launching and tracking. And remember that good “products” don’t all necessarily have to result in revenues; they can enhance processes, that in turn, can boost profitability.

Finally, is your organization prepared to measure the results – not of the new product, but of the process itself? Do you have a system in place to gather, measure and share both the success and the stumbling blocks? Are you prepared to ask yourself, how did the process work?

The truth is, future success can be closely tied into past accomplishments – if you’re willing to ask the right questions, create the right environment, and learn along the way.

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GUEST POST by Robert F. Brands

Experimentation + Risk (+ Failure)

by Robert F. Brands

Innovation rarely occurs by accident, but is the result of calculated effort, work and risk taking. In the face of failure, it requires one to try, try and try again.

Thomas Edison went back to the drawing board more than 6,000 times before finding the right material to create his incandescent light bulb.

Six thousand times. Do you have that kind of innovative stamina?

Innovation is an experiment of sorts. It requires a culture of risk, opportunity and challenge. Moreover, for an organization to benefit from innovation, leaders and team members alike must welcome – and grow from – failure.

Innovation can only be achieved by taking risks. It may mean failing more times than succeeding in order to reap the sweet fruits of your labor in the end.

Rather than view failure as inherently bad, successful innovation requires that executives and teams commit to learning from each experiment gone bad – and incorporate those teachings into the next endeavor.

Because of a high failure rate, organizations pursuing the practice of Innovation must have a tolerance for failure. Not every idea will win. But each failure must be perceived as valuable in the trial-and-error process as a team seeks improvement. Tolerance for failure must be encouraged, as well as enthusiasm for risk taking. Without risk, there can be no reward.

To create a culture of innovation, organizations should:

• Encourage well reasoned risk taking. The pursuit of innovation isn’t some fool-hardy flight of fancy. Encourage – or insist upon – a plan to be presented first, to ensure understanding and buy-in across the affected organization. Know your tolerance for risk and failure in the pursuit of innovation.
• Test. True innovation requires thorough testing in pursuit of success. Testing, measurement, and an accounting of what’s been learned – even in failure – brings measurable outcomes from successes and failures alike.
• Trust. Do you – as a CEO or team leader – trust your people to pursue new ideas on behalf of the company? Build a culture of trust in the individual’s pursuits – so long as safety measures are in place to safe guard against failure damaging the organization.

Most of all, avoid letting a failed concept kill your team’s motivation. Every idea should be given positive acknowledgment, every failure should be studied for “what went wrong,” and every success should receive appropriate reward. By providing your team with a culture of Innovation, their risk taking abilities will improve. And, as was the case with Mr. Edison, they eventually will see the light borne from their successful innovations.

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GUEST POST by Robert F. Brands

The end of the year is a great time to reflect on your companies Innovation performance. Did you deliver your innovation goals, maybe the “one new product or service per year”? As a business leader, what are your New Year’s resolutions for your company? As you think about the future of your company and how to make your business grow, implementing sustainable innovation should be your top priority for 2011. Innovation is the lifeblood of any company and the only way to stay ahead of the competition.

Let’s take a look back at the Top Brand Innovations of 2010:

For example, probably the most Innovative company this year: Apple.

April 3, 2010 – Apple’s highly anticipated iPad launches in the U.S., selling 300,000 units that day with approximately 8 million units sold to date (CNET).

June 2010 – The iPhone 4 is introduced, featuring video calling capabilities and a sleek stainless steel design.

June 2010 – Apple updates its latest design of the Mini Mac.

September 2010 – Apple refreshes its iPod line of MP3 players to include a multi-touch iPod Nano, an iPod Touch with FaceTime video calling and an iPod Shuffle with buttons.

October 2010 – Apple introduces the new MacBook Air laptop with the iLife suite of applications and a Mac OS X Lion operating system.

After over 30 years in business, Apple continues to deliver a steady stream of new and refreshed products year after year. It’s easy to see why competitors have to be on top of their game to compete with Apple in the consumer electronics market. It’s Innovate or Perish.

Innovation is key in delivering profitable growth. In my book Robert’s Rules of Innovation, I give the imperatives for how to create and sustain Innovation, and share real life examples of what makes some New Product Development (NPD) teams succeed while others fail.

Don’t get left behind in the New Year; make sure your company has the roadmap to successful innovation implementation.

May your New Year be a happy one!

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GUEST POST by Robert F. Brands

When Smaller Isn’t Better

by Robert F. Brands

Bottled water consumers might have noticed lately the shrinking size of plastic caps. Conceived as environmentally friendly, they’ve been marketed as the bottled-water industry’s solution to plastic waste that otherwise would end up in a landfill.

In the meantime, the caps are too small for some consumers to use easily. They can be difficult to grip and remove or thread and replace, especially for an aging population. And if put on poorly, water leaks out.

So much for innovation.

In their pursuit of The Next Thing, some companies implement solution-in-search-of-a-problem innovation. To be sure, the bottled water industry is not alone. The iPod Shuffle debuted this fall as a one-inch-square micro device that won raves from its creators at Apple. It soon was panned by some reviewers and consumers as too small to easily navigate or control.

Even governments have faced similar issues. In Florida, for example, the move to reduce class size has left school districts struggling to meet mandates in the face of shrinking budgets. Lawsuits have been threatened.

As in the case of bottle caps, “smaller is better” has found root in the environmental cause. As a marketing exercise, it makes sense. Many consumers are alarmed about climate change. So they’re inclined to pay a little more for a “green” product. Or they might be sold on a product – like bottled water with smaller caps – in the hope of doing whatever they can to save the planet.

Yet with many such “solutions,” consumers should employ their Hype Meter and filter out utilitarian fact from superficial marketing fiction. Do smaller caps help? Should people use bottled water anyway, verses refilling sport bottles with filtered water? Do the batteries of electric vehicles create long-term issues once they’ve lived out their utility? Does the mercury found in compact fluorescent light bulbs render the products landfill and aquifer hazards?

I’m not questioning conservation measures. I, too, am concerned about Mother Earth. But consumers are beginning to question “green washing” – a marketing play on “whitewashing” over a product’s limitations or failings.

Sustainability is vital to our survival. Environmental awareness is important to a product’s or a company’s success. But for a product or company to move beyond the fad or trend, brand credibility has to be legitimate. Products must be user friendly. They must not stray from their intended purpose or utility.

In short, if the cap fails, or if the solution only causes bigger problems, does the blemish tarnish the entire brand? The key considerations for brand managers, then, are that…

• For green to be good, promises of sustainability must be sincere and well founded.
• Forget creating a solution in search of a problem – imagined or otherwise. As noted in Robert’s Rules of Innovation, ideation and new product development should strive to keep functionality in mind.
• Giving people a reason to question your integrity opens the door for competition to benefit. Remember, innovation officers’ mandates are to, among other things, to create value. You’ll best accomplish this by keeping customers’ real needs in mind.

Keep these central to your new product development initiatives and Mother Earth and the company’s bottom line and reputation may share equal, long-term benefits.

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