Platt Perspective on Business and Technology

Keeping innovation fresh – 7: translating and transferring innovation from the innovation center to the production line

Posted in strategy and planning by Timothy Platt on February 28, 2012

This is my seventh installment in a series on innovation, and more specifically on serial innovation and the development of ongoing new sources of unique value propositions within an organization (see Business Strategy and Operations – 2, postings 243, 246 and 248-251 for parts 1-6.)

In Part 5: coordinately managing and maintaining old and new – 1 and its continuation piece: Part 6 I laid out the foundation to a strategically and operationally consistent approach for connecting innovation centers with the main business organization they are intended to support so their innovative output can be realized as finished products and services for real marketplaces and customers. I ended Part 6 by proposing a group or committee that would operationally connect the two sides to the overall business: a transition committee that would include members from both the research side and the product development, manufacturing and sales side. My goal here is to flesh out this organizational and functional model and both as to who would serve on this committee and what it would do.

And I begin this posting by citing a series on committee best practices that I recently ran in 15 installments in my Guide to Effective Job Search and Career Development – 2 directory (see postings 206-220.) In Part 1: introducing a new series I outlined in general terms what an effective committee is, and I built from there. In a real sense this series and this posting in it provide a validating example of the how and why of that, and I begin with the most essential feature as to what a committee operationally is.

A well run, effective committee has a specific charter – a specific and explicitly stated goal and purpose.
• And the charter spells out both the goals and priorities, and the core, essential details that the committee and its members are to work towards fulfilling.

In this case the charter for the transition committee is to:

• Effectively identifying innovations ready to move into the realized product development and production side of the business,
• Prioritize switchover from research to market-ready product or service, and production,
• And facilitate this transfer with a buy-in from both sides to move ahead.

Charters sometimes explicitly indicate a proposed committee’s expiration date too. Given the nature of its charter, a transition committee would continue on as a standing committee. And my goal in this posting is to flesh out some of the essential details that would go into operationalizing an effective transition committee charter with all of the rest of the basic machinery laid out in my committee best practices series applying to it in making that work.

• Start with determination of committee membership. A transition committee cannot work effectively if you do not have the right people on it, and having a genuine voice on it at that.
• What functional areas within the research center and the main production and sales oriented side of the business need to be represented? At the very least start with the table of organization there, though it may very well be necessary to include one or more people who have influence that cuts across the lines of function and authority too.
• Include a senior enough executive as the committee chair so that they can represent the business as a whole. This person should be in effective contact with management in both sides of this organization so they can present themselves as working in the best interest of both. That might mean someone with a title like the Chief Financial Officer or the Chief Strategy Officer, though for many organizations a senior executive such as the Chief Operating Officer might work very well too. A Chief Marketing and Communications Officer is less likely to have the type of reach across the divide between the research and innovation center and the main business but it is important to keep an open mind here and find the person who is a best fit where that might not be determined entirely by their core day to day responsibilities with the business. For information technology-oriented innovation, that might mean the Chief Information Officer – but once again, look to the person and their interpersonal skills and reach here, and not to their specific title. Their primary qualification should be in working smoothly and effectively with everyone in the room, and with the people they represent in reaching effective buy-ins and agreement.

Now let’s consider the flow of innovation that this group has to address, sort through, prioritize and pass along to the other side of the business or not.

• Every parent sees their baby as the most beautiful in the world and every inventor sees their breakthrough innovation as the most crucially important and valuable to the business.

I start out assuming every specific innovator might be right in their assessment there, but that it is still going to be necessary to select from among them for the here-and-now and with some innovations waiting and perhaps undergoing further development or refinement.

• How clearly oriented towards a specific, marketable implementation is an innovation that would go before this committee?
• Here, insight and input from this committee with its range of experience and perspectives might find an innovation as in-effect defining an immediately workable, marketable product or service. Or the committee might offer insight that could go back to the inventors and innovators to help them better present their ideas so that product development and production could work with them.
• Communication coming out of this committee would be two-way and take a positive approach, seeking to find realizable value out of every innovation offered – even if some would not work just now.

Cost considerations come in here too, and this is where expertise from Finance would prove essential. Acknowledging that numbers might not be fixed, and considering best, mid-range and worst realistic-case scenarios:

• What would be the anticipated costs from completing the process of bringing a specific innovation under consideration from the research potential-product stage to the actualized, marketable production stage?
• What timeframes would be expected here and how would costs be distributed across that period?
• How clearly is the potential market for this innovation understood? This is where marketing analysis and its committee inclusion are vital. What are the anticipatable costs and timeframes involved in building a market for this? I add that the more disruptively innovative the core innovation itself, the less certain any numbers will be here so the more important it would be to have those three scenarios. Fixed costs where they enter here, and known timeframes do not call for these three development and implementation scenarios the same way.
• How big is a market for this innovation likely to be, at least through the timeframe in which development and transfer to production costs would be amortized?
• What types of profit margins per unit and overall profits might be realized, and on what timeframe? Once again, focus on the timeframes in which you expect to amortize and cover startup costs for this.

This committee’s purpose is not to pick out innovations and proclaim that they do not see any current value in them so they should be dropped. And decisions of that sort, if any should be made within the innovation center itself.

• This committee should be a clearing house for bringing innovations that are ready for transition from the innovation center to the production and sales side of the business.
• And it should secondarily but also quite importantly provide insight and feedback, and expertise back to the research center as well as forward to the main business lines and with a goal of helping both – in doing their work and in working together.

I am going to turn in my next series installment to consider the issues of connecting these two sides of the organization more effectively. I am also going to discuss crowd sourcing for insight into real-world emerging market needs and wants, and the use of patent and trade secret approaches for safeguarding exclusivity. Meanwhile, you can find this and related postings at Business Strategy and Operations – 2 (and also see Business Strategy and Operations.)

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