This article is one of the most important of this open innovation series. So be sure to take notes, and don’t forget that you can make questions anytime for our team.
At this stage, we already have a structured portfolio of ideas organized in innovation horizons. What we need, then, is to understand which of these ideas can become products or services that will push up your business opportunities.
To do this, we need to evaluate three main factors:
- How much does the consumer (internal or external) need the idea?
- Does the company have the capacity to put it into production?
- What is the size of your value proposition for the user?
This phase is called “Opportunities in Development” and requires an innovation team to evaluate the feasibility of the proposed ideas. If the company does not have an innovation team ready, it can create temporary teams with the expertise needed to assess each group of ideas.
STEP 1: USER’S NEED
The first step of the innovation team is to evaluate how much the consumer needs the idea. An efficient and objective way to measure the user’s need is to make a scorecard – ranging from 1 to 5 – on the following points:
You can use different types of data to answer questions 1 and 2. Customer support and sales channels, for example, usually have rich information.
The innovation team must decide on the type of research. For example, when your top customers have a similar need for customer service via email, a next step might be to ask other customers if they also have that need.
More complex ideas or when the client/user has difficulty expressing what they need can require a more sophisticated investigative method. Here, the focus is not to discuss all research methods in-depth, so let’s just list some critical methodologies.
- Delphi Technique
- Nominal Group
- Group Discussion
- Voice of Customer
- Lead/User research
- P.E.S.T.E.L Analysis
The Innovation Intelligence platform helps you answer the last three questions objectively with data. It is possible to answer those questions because the platform’s core objectives are to help our customers understand market movements, emerging technologies, and technological trends and track who the investors, competitors, and customers are associating with a particular technology or solution.
Furthermore, the tool generates quality and ease to use information related to the speed at which it helps customers find these answers and delivers them an unparalleled competitive advantage.
STEP 2: DELIVERY CAPACITY
The second step in building the opportunity is to understand if the company can convert the idea into reality. Which means turning into “real opportunity,” a statement that already has its need confirmed.
We also will use the scorecard technique to understand the delivery capacity of the company. If this capacity is not enough, we need to know whether it is possible to develop it internally or look for startups to assist the company.
How to measure the company’s delivery capacity
We can measure the delivery capacity of the company by making a scorecard ranging from 1 to 5 points on the following topics:
Understand if the company’s brand positioning adheres to the desired audience. For example, it makes perfect sense for Shell to launch its network of electric vehicle stations, but it wouldn’t make much sense if they tried to enter the fashion industry.
The goal here is to analyze its business model and analyze whether some elements would bring a competitive advantage over current and future players in its value chain.
It is possible to mention numerous advantages: a network of partners, synergy with other products, combined offers, established distribution network, customer portfolio, synergy with the manufacturing process, or reuse of waste.
Technology, expertise, and partners
When the company has the talents and technology to build and deliver the solution, its innovation team can look to internal experts on the subject to better understand the challenges and who would be the people in the company who could help in the project.
A common challenge – hard to overcome, especially when the solution runs away from much of the company’s core – is the availability of people.
Although they are interested and willing to execute the project, they are usually already busy with other activities. Therefore, they will certainly not prioritize an innovation project in the validation phase of opportunities.
That is why, as A. G. Lafley says, companies with the culture of “we do everything indoors” are usually not the most innovative.
Talking to the company’s experts helps the innovation team keep their feet on the ground when looking for a service provider or an innovation platform.
STEP 3: VALUE PROPOSITION
The third step in building opportunities is to understand the value proposition of the idea for the client. This exercise is vital because it helps to position and price the solution when exploiting commercially.
For example, if two thoughts come to stall concerning necessity and delivery, the one with the highest value should prevail because it will be more profitable for the company.
How to evaluate the value proposition?
To measure the value proposition score, we will use an article from the Harvard Business Review (The Elements of Value – Eric Almquist, John Senior, and Nicolas Bloch – September 2016 ) that addresses the topic very well.
According to the article, there are four categories of the value proposition: Functional, Emotional, Life Change, and Social Impact.
For each category, there are value elements which must be worth 1 to 5 points. When the value is non-existent, it assigns the value of 1 point, and, where the value is vital in the proposed solution, assigns a 5-point.
Building and Prioritizing Opportunities
The result of this second phase is a matrix where it will be possible to evaluate the best opportunities. To build the matrix, you need to perform the following steps for each idea:
- Average the requirements score (x-axis)
- Average the score of the delivery ability (y-axis)
- Add all points of the value proposition (circle size)
After that, simply plot the results of each opportunity in the matrix below:
Below is an example of plotting opportunities. It is important to note that the matrix clarifies which opportunity to prioritize, discard, and investigate.
Also, the circle’s size represents the value for the client, and the color represents the activity innovation horizon.
Here is another element that helps prioritize an opportunity according to your strategic alignment.
Let’s do a quick analysis on the 1,2,3,4,5 and 6 opportunities presented above:
1 – Although the company has a high capacity to deliver the solution, it is unnecessary for the user and therefore has no value. In other words, she is a strong candidate to be unlisted.
2 – The user does not need it, and the company cannot deliver it, so you ruled out the opportunity.
3 – The opportunity has potential value, the company can deliver, although it’s not directly related to his needs. Considering that it is in the innovation horizon 1, the activity is highly compatible with the core offer of company products, generating synergy with sales and other areas. Therefore, this is an opportunity to take advantage. Allied to that, you should investigate further to improve the company’s ability to deliver and communicate its value to the user.
4 – It has a high demand for the user and has a lot of value in the offer. The issue is the low capacity to deliver it. In this case, the suggestion is to deepen the search in the startup ecosystem, investigate companies more early-stage, promote hackathons, and go to universities to talk to researchers. Because it’s a horizon 3, which is disruptive, if your company doesn’t investigate, your competitor will probably do so, which directly or indirectly will hurt your company.
5 – This is an opportunity in an adjacent market, with great value proposed for the customer, clear need, and delivery capacity. Without a doubt, you must embrace this opportunity.
6 – It follows the same reasoning as item 5, but it is a more disruptive opportunity.
The chart below shows the result of the analysis:
Using all those tools presented in this article, we were able to identify “Real Opportunities” and how to proceed to the next phase, which is the construction of compelling cases. So now, lowering the chances of doubt, you can execute the project.
Below is a summary of what we are dealing with in this article.
Don’t forget to check the past articles so that you can understand the whole process and have a successful open innovation strategy. Begin here. Also, make sure to request your demo on our front page.