The Innovation Process: A Step-by-Step Guide

Industry Advice Business

Seventy-nine percent of executives surveyed by the Boston Consulting Group ranked innovation as a top-three priority at their company. Yet despite its perceived value, how to successfully bring a new product or service to market is still a mystery to some entrepreneurs and executives. In fact, research shows that 40 percent of new products and services fail.

Turning an idea into reality requires establishing an innovation process. That process forces you to think through different steps to ensure you’re solving the right problem, regularly gathering customer feedback, iterating when necessary, and securing the right resources and methods to fully realize the innovation.

“The innovation process is broken into phases,” says Tucker Marion, an associate professor at Northeastern University’s D’Amore-McKim School of Business. “Large companies will tend to have more phases. The more complex a product gets in a regulated industry, the more complex the innovation process gets.”

In the automotive industry, for example, some manufacturers’ product development process will feature 10 or more distinct phases. Despite company size, however, there are three key phases in the innovation process that every organization typically cycles through, according to Marion:

  • Discovery
  • Development
  • Commercialization

Here is a closer look at what should occur during each phase of the innovation process.

Step One: Discovery

The discovery phase is the one companies should spend more time and resources on. It’s during this phase that ideas are generated and vetted by potential users, and where teams work to discover whether they’re tackling the right problem.

“Where you have a gap right now is to do the upfront better,” Marion says. “That entails giving employees the skills to better understand opportunities, to apply different methods of getting information from potential customers, and to achieve better ideas. Simply put, you want to vet more of the best ideas and kick their tires, so to speak.”

This is where ideation techniques, such as brainstorming and prototyping, can be used to a company’s advantage. Ideation—the creative process of generating new ideas—is an important part of the design thinking process, in which organizations focus on uncovering the non-obvious pain points their customers are experiencing and developing new products, services, and business models aligned to their needs.

One effective and efficient way to kick off the discovery phase is with an exercise on divergent and convergent thinking. During divergent thinking, there’s a free-flow of ideas; employees are encouraged to propose and explore as many possible solutions as they can. From there, the team works to “converge” on the concept they think will most resonate with customers and best achieve the company’s business goals. During convergent thinking, teams will often democratize the process by asking each member to vote on the three or four ideas they think have the most potential.

Once concepts are solidified, the goal is to develop a prototype—even if it’s just with paper and pen—that the team can put in early adopters’ hands to test. Based on their initial feedback, companies might then build a minimum viable product (MVP), or the most stripped down version of a product or website featuring only the core functionality. By creating an MVP, users can better visualize how the product might work and provide feedback earlier on that the team can use to iterate from. The process enables companies to develop and test concepts in a rapid way for a low cost.

While the terminology might be new, the concept of an MVP is not. Take Henry Ford and the Wright Brothers; they all used iterative prototyping to accelerate the development of their respective innovations. Yet with the propagation of more bureaucratic product development processes, Marion says, and the need to move innovation from idea to development, the discovery phase has become one of planning and analysis, thereby pushing prototyping to the development phase.

“We are encouraging firms to put early prototyping back to where it belongs: in discovery,” Marion explains. “By the end of the discovery phase, if I did my homework right, I’ve already tested early prototypes with customers and have a good idea of what my business model is. That’s going to better set me up for this development phase.”

Step Two: Development

With the idea solidified and an MVP established, companies can move onto phase two: development, “where you start to spend real money on design and engineering,” according to Marion.

The development phase has changed dramatically over the last 10 to 15 years with the introduction of collaborative and digital design tools and rapid prototyping. Distributed teams, innovation ecosystems, and open innovation efforts enable agile design iteration, faster development cycles, and increased levels of product complexity and performance.

For example, an engineer developing a new bracket for a jet engine can rely on real-time design analysis to make the part stronger and less prone to failure. They can then leverage design tools to optimize the bracket for additive manufacturing, including the 3D printing of final production parts. This can lead to radical designs that couldn’t have been achieved with conventional design and manufacturing methods.

Companies can also partner with firms like Forth, which crowdsources experts to help solve design problems, to gain additional feedback and industry expertise.

“The benefits of leveraging leading edge digital design, collaborative tools and services during the development phase are substantial,” Marion says. “This trend will continue as artificial intelligence brings design tools’ intelligence to the next level.”

During the development phase, depending on your product or service, you also might be:

  • Identifying and selecting new suppliers
  • Creating the manufacturing and supply chain plans
  • Establishing a software development kit for third-party vendors
  • Developing relationships with channel partners

Throughout the process, you should still be gathering consistent customer feedback.

“You should be trying to push for as much validation and feedback in each of the stages as possible, because it will inspire the next phase,” Marion explains. “The later you do iteration, the more expensive those changes become. It’s more efficient and less costly to make changes early in the process. Over-iteration and extending design changes can lead to a detrimental effect we term ‘back-loading.'”

Step Three: Commercialization

At the end of the development phase comes commercialization, where you’re bringing your product or service to market. The commercialization process is broken into phases of its own—from the initial introduction of a product or service to its mass production and adoption. As you move through each phase, you’ll receive additional customer feedback and will need to regularly refine your offering.

Marion recommends companies explore extended pilot production. Although the launch will be slower, the strategy provides teams with more time to vet any problems and enables them to gain real-time information on market acceptance.

“Sometimes this can be an extended beta, as Google did with Google Glass—and good thing they did, because the result was that the product wasn’t introduced in volume,” Marion says, “or as Tesla is currently doing with the Tesla Model 3. Yes, they are having manufacturing constraints, but I would argue that it’s best for them right now.”

To successfully commercialize your product or service, you’ll also need to set a price for the offering and establish a marketing plan. How will you increase awareness and create customer loyalty? That marketing plan should be adopted across the organization to avoid any communication breakdowns between the marketing and sales departments and the research and development (R&D) or information technology (IT) teams.

Only 39 percent of respondents in a McKinsey survey said their companies were good at commercializing new products or services. When asked what their biggest challenges were, they pointed to the relationship between R&D and marketing, highlighting a misalignment of human and financial resources, as well as a lack of processes for manufacturing and introducing innovation.

Establishing an agreed upon go-to-market market strategy is critical during the commercialization phase. The more streamlined the approach, the more effective the launch, and the more likely it is your product or service will be well-accepted by the market.

Managing the Phases

While there’s no magic timeline for when you should move through each step, it’s recommended you spend more time upfront undergoing the discovery phase.

“Managing the phases is important,” Marion says. “History shows us that front-loading the process is a good thing.”

Today, companies are able to quickly iterate and validate their products or services. With that ease, though, can come delays, according to Marion.

“You can’t push that off until the end,” Marion says. “You want to maintain a discipline and go through each of the phases as well as you can.”

Marion emphasizes the need for project management—a key component of Northeastern’s business programs.

“With all the new collaboration tools, our students need to be immersed in how to manage projects effectively in today’s global environment,” he says. “Planning is the easy part. Executing is the hard part, and it’s an essential part of the innovation equation.”