The Process of Innovation

Innovation is the glue between invention and investment, and transforms ideas into businesses. The process of innovation shapes your idea into something people will value and ultimately purchase.

The innovation process cycles through 4 key steps:
1) Ideas and Solutions
2) Business propositions
3) Business feasibility
4) Business planning

1. Adapted from:
Faley, T (2007). Innovation Process. Ann Arbor, MI: University of Michigan
Price, J (2007). New Venture Creation. Ann Arbor, MI: University of Michigan
The Process
of Innovation
November 2014

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What is “innovation”? It depends…
Innovation is one of the most overused words in business
world. As of 2014:
@
20 million+ ‘innovation’
search results from Google
65,000+ “innovation”
books on Amazon.com
It describes everything from incremental improvements in
technology to revolutionary changes that impact society.

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Innovation is the “glue” between invention and
investment
Invent
•Create new ideas and
concepts
Innovate
•Match inventions with
people’s problems to form
solutions
Invest
•Commercialize solutions
via businesses
“Research is the
transformation of money
into knowledge.
Innovation is the
transformation of
knowledge into money.”

Dr. Geoffrey Nicholson,
3M

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The process of innovation transforms ideas
into businesses
Ad-hoc
Gut-feel
Disorganized
Opportunistic
Fortunate
Individual
Structured
Disciplined
Organized
Purposeful
Planned
Scalable
Invention Innovation Investment

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The Process of Innovation
Is the business
proposition strong
enough to justify
moving forward?
Is the
business
feasible?
Ideas and
Solutions
Business
Proposition
Business
Feasibility
Business
Plan
Is the idea strong
enough to justify
moving forward?

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The Process of Innovation
Ideas and
Solutions
Business
Proposition
Business
Feasibility
Business
Plan
•Persona
Mapping
•Technology
Mapping
•What is the
product or
service?
•Who are the
users?
•Why will they
use the
product?
•How does your
business make
money?
•Industry
•Market
•Product
•Company
•Team
•Investor Pitch
•In-Depth
Planning

7. The Process
of Innovation
Step 1) Ideas and Solutions

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The Process of Innovation
Ideas and
Solutions
Business
Proposition
Business
Feasibility
Business
Plan
•Persona
Mapping
•Technology
Mapping
•What is the
product or
service?
•Who are the
users?
•Why will they
use the
product?
•How does your
business make
money?
•Industry
•Market
•Product
•Company
•Team
•Investor Pitch
•In-Depth
Planning

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The first solution is rarely the best
solution…
Idea /
Invention
Concept
Technology
Map
People
Personas
Community
Map
Affects
&
Effects
Perceptions
&
Valuations
Outcomes &
Results
Potential Solutions

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Deconstruct an idea to discover affects
and effects
Idea /
Invention
Concept
Technology
Map
Describe the idea:
•What does it do?
•What is special about it?
•What does it compare to?
•What is its effect?
•What allows it to do have an
effect?
•What is essential for it to do
what it does?
•What are the limits of what it
does?
Begin

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The best “market research” models how
people think and choose
People
Personas
Community
Map
Describe the community:
•Who are the users, experts,
and influencers?
•What are their needs?
•What outcomes do they
desire?
•What experiences do they
desire?
Begin

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Link technology & community to uncover
novel solutions to people’s problems
Idea /
Invention
Concept
Technology
Map
People
Personas
Community
Map
Causes
&
Effects
Perceptions
&
Valuations
•Effects of technology push versus market pull
•Results where most value is likely to emerge
•Limits of technology and markets
•Combinations of multiple technologies and/or markets
Outcomes &
Results

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Refine the idea until it is strong enough
to merit deeper investigation
Causes &
Effects
Perceptions
&
Valuations
How can we
do “it”?
Who will value
what “it” does?
Remember, all innovations begin as inventions, but not all
inventions are innovations.
Similarly, commercialization starts with innovations, but not
all innovations can be commercialized.

14. The Process
of Innovation
Step 2) Business Proposition

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The Process of Innovation
Ideas and
Solutions
Business
Proposition
Business
Feasibility
Business
Plan
•Persona
Mapping
•Technology
Mapping
•What is the
product or
service?
•Who are the
users?
•Why will they
use the
product?
•How does your
business make
money?
•Industry
•Market
•Product
•Company
•Team
•Investor Pitch
•In-Depth
Planning

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Creating the business proposition is
iterative
Crafting the business
proposition establishes the
path to commercialization
•What is the product?
•Who is the customer?
•Why do they buy?
•How do you make money?
Business
Proposition
Business
Influences
Business
Offering
Solutions

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Formulate an initial Business
Proposition for your “solution”
What is your product/service?
•What does your business do?

Who are your target customers?
•Are their needs compelling enough to justify buying the
product concept?

Why will your target customers use your product?
•Value proposition to the user?

How does your company make money?
•Company’s value capture mechanism
•Is the product pricing consistent with the value created
for the user?

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Create influence diagrams for the
business by mapping the market
Causal loop diagram of a model examining the growth or decline of a life insurance company
https://en.wikipedia.org/wiki/Causal_loop_diagram

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Business influences define the offering
as a Feature, Product, or Business
Feature = Licensing or joint ventures are most likely business outcome
•Can’t acquire complimentary assets
•Don’t control ancillary IP

Product = Product development effort that gets acquired is most likely business outcome
•Market channel is unavailable
•“Product” must be sold with other products (i.e. bundled)
•Supply chain is non-existent or monopolized

Small / Niche Business = Assets that get acquired by large business the most likely
business outcome
•The market small or narrow
•Product line extensions non-existent or limited
•Limited ability to cross into other markets

Large business = IPO or acquisition is most likely business outcome
•Control of Assets
•Viable Supply Chain
•Growing primary/secondary markets
Feature, Product, Business (Faley, 2007)

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Is the business proposition strong
enough to merit deeper investigation?
Perceptions
&
Valuations
Causes &
Effects
Business
Proposition
Overlapping the technology,
community, and influence
“maps” provides a clear
picture of the business
landscape.
Refine the potential solution
and business proposition by
iterating through the
process, knowing that you
may have to revisit the
technology and community
maps to “regroup”

21. The Process
of Innovation
Step 3) Feasibility Study

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The Process of Innovation
Ideas and
Solutions
Business
Proposition
Business
Feasibility
Business
Plan
•Persona
Mapping
•Technology
Mapping
•What is the
product or
service?
•Who are the
users?
•Why will they
use the
product?
•How does your
business make
money?
•Industry
•Market
•Product
•Company
•Team
•Investor Pitch
•In-Depth
Planning

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Business feasibility from a market,
industry, and product perspective
Market
Attractiveness

(Potential expansion
to new segments, etc.)
Target Segments,
Benefits,
& Attractiveness

(Personas, Needs,
& Wants)
Industry
Attractiveness

(Porter’s 5-forces,
etc.)
Sustainable
Advantage

(Product
Differentiation,
Intellectual Assets)
Market Domain Industry Domain
Macro
-
level

Micro
-
level

The New Business Road Test, John Mullins © 2003.

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Market
Attractiveness

(Expanding to new
segments, etc.)
Target Segments,
Benefits,
& Attractiveness

(Personas, Needs,
& Wants)
Industry
Attractiveness

(Porter’s 5-forces,
etc.)
Sustainable
Advantage

(Product
Differentiation,
Intellectual Assets)
Market Domain Industry Domain
Macro
-
level

Micro
-
level

Business feasibility from a company
and team perspective
The New Business Road Test, John Mullins © 2003.
TEAM
DOMAIN
Cohesive
value chain
Ability to
execute
Missions,
aspirations

25. Step 4) Business Planning
The Process
of Innovation

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The Process of Innovation
Ideas and
Solutions
Business
Proposition
Business
Feasibility
Business
Plan
•Persona
Mapping
•Technology
Mapping
•What is the
product or
service?
•Who are the
users?
•Why will they
use the
product?
•How does your
business make
money?
•Industry
•Market
•Product
•Company
•Team
•Investor Pitch
•In-Depth
Planning

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Start with the investor presentation and
use the graphics as exhibits in the plan
Leverage the content retention hierarchy to make your
presentation memorable
Increasing Retention

•Generic Text
•Text with clearly marked headings
•Bullet points
•Tables
•Graphs
•Diagrams & pictures

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Key elements of an investor
presentation (pitch deck)
Solution
•Value proposition / Advantages
Business Model
•Value Capture Mechanism / Value Chain
Market / Industry
•Users / Size / Segmentation / Growth rate / Stage of development
Competition
•Relative comparison and competitive positioning
Marketing and Sales
•Go-to-market strategy
Operations
•Company-building timeline / Key value-building milestones
Finance
•Historical results / 5-year projections / Key milestones / Capital requirements
Management
•Bio’s of Key personnel / Org charts

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Key elements of an investor
presentation (pitch deck)
Solution
Business Model
Business Proposition
(Steps 1 & 2)
Feasibility Study
(Step 3)
Business “Planning”
(Step 4)
Market / Industry
Competition
Marketing & Sales
Operations
Finance
Business Management

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The business plan is a living document
Business planning is an ongoing activity. You’re never really
done.

Keep your plan alive by reviewing it regularly. Start each
review by listing the assumptions in your plan and how well
they’re holding up.

At this stage, the goal isn’t to finish a business plan…the goal
is to quickly adjust it as you move forward.

31. This publication provides general
information and should not be used or
taken as business, financial, tax,
accounting, legal or other advice. It
has been prepared without regard to
the circumstances and objectives of
anyone who may review it; therefore,
you should not rely on this publication
in place of expert advice or the
exercise of your independent
judgment.
The author makes no representation or
warranties of any kind regarding the
contents of this publication, and
accepts no liability of any kind for any
loss or harm arising from the use of the
information contained in this
publication.
The views expressed in this publication
reflect those of the author and
contributors and does not guarantee
that the information contained in this
publication is reliable, accurate,
complete or current. The author and
contributors assume no responsibility
to update or amend the publication.
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Joel Wenger