Idea Generation

The PIC should then direct the search for new-product ideas. Idea generation should be systematic rather than haphazard. Otherwise, although the company will find many ideas, most will not be good ones for its type of business. A company typically has to generate many ideas in order to find a few good ones. A recent survey Irproduet managers found that of 100 proposed new product ideas, 39 begin the product development process, 17 survive the development process, 8 actually reach the marketplace and only 1 eventually reaches its business objectives.7

To obtain a flow of new-product ideas, the company can tap many sources. Chief sources of new-product ideas include internal sources, customers, competitors, distributors and suppliers.

product innovation charter (PIC) A new-product strategy statement formalizing management's reasons or rationale behind the ./inn's aearchjbr innovation opportunities, the product/market and technology tofoc-iis upon, and the goals and objectvoes to be achieved.

idea generation The systematic search for new-product ideas.

3M: Championing Innovation

Marketing

I liffhliffht

I liffhliffht

Championing innovation; JMn innfroation track record is hard to beat.

Neva-Product Development process

to go round laboracory groups and assess the commercial potential of their new-product programmes. Often they come across developments in one lab that can be helpful to another,

The company knows that it must try thousands of new-product ideas to hit one big jackpot. One well-worn slogan at 3M is 'You have to kiss a lot of frogs to find a prince.' This often means making mistakes, but 3M accepts blunders and dead ends as a normal part of creativity and innovation. Its philosophy seems to be Tf you aren't making mistakes, you probably aren't doing anything.' In line with its tolerance of failure, 3M's employees are allowed to perform their work in their own way and be allowed to make mistakes -what we call worker 'empowerment' today. As it turns out, 'blunders' have turned into some of 3M's most successful products. There is the familiar story about the ehemifit who accidentally spilled a new chemical on her tennis shoes. Some days later, she noticed that the spots hit by the chemical had not become dirty. Eureka! The chemical eventually became Scotehgard fabric protector.

And then there's the one about 3M scientist Spencer Silver who started out to develop a superstrong adhesive; instead he came up with one that didn't stick very well at all. He sent the apparently xiseless substance on to other 3M researchers to see if they could find something to do with it. Nothing happened for several years. Then Arthur Fry, another 3M scientist, had a problem - and an idea. As a choir member in a local church, Mr Fry was having trouble marking places in his hymnal - the little scraps of paper he used kept falling out. He tried dabbing some of Mr Silver's weak glue on one of the scraps. It stuck nicely and later peeled off without damaging the hymnal. Thus were born 3M's ubiquitous Post-it notes, a product that now has sales of almost S100 million a year!

3M recognizes that to maintain its formidable reputation for innovation, management must keep alive its traditional innovative culture. It must be willing to engage in self-criticism and benchmarking against other companies to ensure that it continues to create products that become winners in the marketplace. Staff must keep close to customers and be given the freedom to 'bootleg', and communication channels around the company must remain open, with cross-functional teamwork upheld to ensure inventiveness is maximized, not stifled. Reward systems must recognize group efforts, given that getting inventions and new ideas to market invariably requires extremely complex corporate teamwork. 3M acknowledges that there is no room for complacency if it wants to remain a corporate superstar.

SOURCES. Martin Diokson, 'Back to the future'.Financial Times (30 May 1994), p. '3M, 60,000 and counting', The Kciinnmim (30 November 1991), pp. 86-9; Russe! Mitchell, 'Master ill' innovation: ho\v 3M keeps its neiv products coming', Knsmess Week (10 April 19S9|, pp. 58-64; Joyce Anne Oliver, '3M vet enjoys taking risks, knocking clown barriers'. Marketing News (15 April 1991), p. 13; Kevin Kelly, '3M running scared? Forget about it', Business Week (16 September 1991), pp. 59-62.

• Internal Sources

Many new-product ideas come from internal sources within the company. The company can find new ideas through formal research and development. It can pick the brains of its scientists, engineers, designers and manufacturing people. Or company executives can brainstorm new-product ideas. The company's salespeople are another good source of ideas because they are in daily contact with customers. Formal or informal suggestion schemes can also be used to tap staffs ideas. Toyota claims that employees submit two million ideas annually - about 35 suggestions per employee - and that more than 85 per cent of these ideas are implemented.

Almost 28 per cent of all new-product ideas come from watching and listening to customers. The company can conduct surveys to learn about consumer needs and wants. It can analyze customer questions and complaints to find new products that better solve consumer problems. Company engineers or salespeople can meet with customers to get suggestions. General Eleetric's Video Products Division, Sony, Toyota and many other effective innovators are known to have their design engineers talk with final consumers to get ideas for new products. Many new ideas come from simply observing consumers.8

Honda's highly acclaimed City model was conceived in this manner. Honda sent designers and engineers from the City project team to Europe to 'look around' for the best product concept for the City. Based on the British Mini-Cooper, developed decades earlier, the Honda team designed a 'short and tall' car which countered the prevailing wisdom that cars should be long and low.

Observing the growing market potential in Third World countries, Boeing sent a team of engineers to diose countries to study the idiosyncrasies of Third World aviation. The engineers found that many runways were too short for jet planes. Boeing redesigned the wings on its 737, added lower-pressure tyres to prevent bouncing on short landings, and redesigned the engines for qiucker takeoff. As a result, the Boeing 737 became the best-selling commercial jet in history.

Customers, however, may not always know their future needs and wants. If Philips had questioned consumers in 1975 about what new technology they wanted, they would never have said a personal stereo - the idea would not have occurred to them. This is one of the reasons why Finnish mobile communications company Nokia employs a team of seven people around the world whose job is to think ten years ahead and dream up ideas. They have to anticipate future needs before the consumer has even become aware of them. They must also predict the innovations of their rivals, so that the company can be one step ahead. Every so often, the ideas team hold focus groups for ordinary users and ask them what they want from their phones when they are on the move. The users are offered a handful of new ideas and their reactions are videoed. The team always pay attention to the quirky suggestions because there is often a lot of truth in them. The company also consults anthropologists to help unravel consumers' reactions, and these generate leads which give the team something to build on. It was anticipating needs before they exist that brought about Nokia's revolutionary 9000 Communicator, which is the world's first all-in-one mobile communications device - a fax, phone, digital diary, calculator and palm-top computer aJI rolled into one. In time, Nokia claims that the handset will become a mobile office and multimedia communications device the size of a business card!9

Consumers often create new products on their own, and companies can benefit by finding these products and putting them on the market. Pillsbury gets promising new recipes through its annual Bake-Off. One of Pillsbury's four cake-mix lines and several variations of another came directly from Bake-Off winners' recipes. About one-third of all the software IBM leases for its computers is developed by outside users.10

• Competitors

About 30 per cent of new-product ideas come from analyzing competitors' products. The company can watch competitors' ads and other communications to get clues about tJieir new products. Companies buy competing products, take them apart to see how they work, analyze their sales, and decide whether the company should bring out a new product of its own. For example, when designing its highly successful Taurus, Ford tore down more than 50 competing models, layer by layer, looking for things to copy or improve upon. It copied the Audi's accelerator-pedal 'feel', the Toyota Supra fuel gauge, the BMW 528e tyre and jack storage system and 400 other such outstanding features."

• Distributors, Suppliers and Others

Resellers are close to the market and can pass along information about consumer problems and new-product possibilities. Suppliers can tell the company about new concepts, techniques and materials that can be used to develop new products. Other idea sources include trade magazines, shows and seminars; government agencies; new-product consultants; advertising agencies; marketing research firms; university, commercial laboratories and science parks; and inventors.

Idea Screening

The purpose of idea generation is to create a large number of ideas. The purpose of the succeeding stages is to reduce that number to a manageable few which deserve further attention. The first idea-reducing stage is idea screening. The purpose of screening is to spot good ideas and drop poor ones as soon as possible. As product development costs rise greatly in later stages, it is important for the company to go ahead only with those product ideas that will turn into profitable products.

Most companies require their executives to write up new-product ideas on a standard form that can be reviewed by a new-product committee. The write-up describes the product, the target market and the competition, and makes some rough estimates of market size, product price, development time and costs, manufacturing costs and rate of return. The committee then evaluates the idea against a set of general criteria. At Kao Company of Japan, for example, the committee asks questions such as these; Is the product truly useful to consumers and society? Is this product good for our particular company? Does it mesh well with the company's objectives and strategies? Do we have the people, skills and resources to make it succeed? Is its cost performance superior to competitive products? Is it easy to advertise and distribute?

Surviving ideas can be screened further using a simple rating process, such as the one shown in Table 14.1. The first column lists factors required for the successful launching of the product in the marketplace. In the next column, management rates these factors on their relative importance. Thus management believes that marketing skills and experience are very important (0.20) and purchasing and supplies competence is of minor importance (0.05).

Next, on a scale of 0.0 to 1.0, management rates how well the new-product idea fits the company's profile on each factor. Here management feels that the product idea fits very well with the company's marketing skills and experience (0.9), but not too well with its purchasing and supplies capabilities (0.5). Finally, management multiplies the importance of each success factor by the rating of fit to obtain an overall rating of the company's ability to launch the product successfully. Thus, if marketing is an important success factor and if this product fits the company's marketing skills, this will increase the overall rating of the product idea. In the example, the product idea scored 0.74. which places it at the high end ofthe'fair idea'level.

idea screening Screening new-product ideas in order to spot good ideas and drop poor ones as soon as possible.

Table 14.1

Product idea rafting process

Idea

Idea

New-product success factors

Relative importance

Fit between product idea m company capabilities; 0,0 0.1 0.2 0.3 0,4 0,5 0.6 0.7 0.8 0.9 1.0

rating

(Ax B)

Company strategy

and objectives

0,20

x

0.160

Marketing skills

and experience

0.20

x

0.180

Financial resources

0.15

X

0.105

Channels of

distribution

lis

x

0.120

Production

capabilities

0.10

x

0.080

Research and

development

0.10

x

0.070

Purchasing and

supplies

0.05

x

0.025

Total

1.00

0.740a

Note,: 11 rating stale: 0.00-0,40, poor; 0.50-0,75, fair; 0.76-1,00, good. Minimum acceptance level: 0.70.

product idea An idea for a possible product chat the company can sec itself offering to the market.

product concept A detailed version of the new-product idea stated in meaningful consumer terms.

product image The teoji consumers perceive an actual or potential product.

The checklist promotes a more systematic product idea evaluation and basis for discussion. However, it is not designed to make the decision for management.

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