In a world where the success of your business depends on consistently saying “yes” to a few bright ideas and ”no” to most others, how do you know which ones to say yes to?
The ability to identify the next best idea determines the future of a business. But what is the next best idea? The next best idea will help realize your company’s vision, leverage an emerging technology to disrupt the industry, become your primary revenue driver or bring in operational efficiencies delivering a competitive advantage.
The innovation framework
The innovation framework acts as a yardstick to help you recognize if your organization must work on an idea or give it a pass. The framework provides a score out of 100, with 100 being the most appropriate idea to work on and zero being the least appropriate. When you have ten ideas and you wish to determine which is your next best idea, the framework is the goto solution.
fish out the best ideas that solve a business problem
Strategic alignment: how well does the idea support the enterprise's or digital organization's stated strategies?
Customer need - how well does the idea address a known customer need or pain point?
Profitability - if fully deployed, how much does the idea potentially increase enterprise revenue or profitability?
NPS - if fully deployed, how much does the idea potentially improve enterprise net promoter score, strategic discussions and workshops with C-level executives (fortnightly or as needed)?
Internally unique - are there no currently deployed or current development projects similar to the idea?
Externally unique - are there existing competitors?
Technology fitment - does the idea extend the company's knowledge of new technologies or methodologies?
Deployability - how practical is it to fully deploy the idea? Consider scalability, investment, regulation and organizational impact.
Fig.1 Innovation framework
How does the framework work?
The framework consists of the seven criteria outlined above. Against each of these categories the idea is evaluated and given a value of Low, Medium or High. These values are converted to numbers and brought to 100 by providing different weightings based on what your organization thinks is important. For example, if fulfilling a customer need is more important for your business over profitability, greater weight is given to customer need. This is why each organization's innovation lab needs to build their own customized innovation framework and update it periodically to maximize the impact of their ideas.
These are the categories that most organizations use:
For your ideas to have maximum impact, it must align with a company’s strategic focus areas. For example, if your company has identified 'increasing mobile app adoption by 10% before the end of the year,' as a strategic focus area – the idea of gamifying customer mobile apps becomes more valuable than redesigning customer profile screens. Ensuring strategic alignment also makes it easier for an idea to receive funding. Most importantly, when the idea is implemented, it contributes to fulfilling the company’s strategic promises.
The Harvard article titled 'Why most product launches fail' details a startling statistic. About 75% of consumer-packaged goods and retail products fail because there is no customer need for the product introduced. This reemphasizes the point; ideas must solve a real customer problem.
The failure of Google Allo, a messenger app is an example of how even good products can fail if they do not meet customer's needs . The team behind Allo wasn’t sure if they needed a Facebook messenger style multi-client messenger or a WhatsApp style messenger where the account is tied to a single mobile number. When they attempted to do both, it led to a situation where neither existing Facebook messenger users nor existing WhatsApp users felt a need to use it.
Users did not use the messenger because providing a mobile number does not automatically import SMSes, a core feature of most leading messengers. To make things worse, Google introduced a standalone text message application making users wonder why Allo even existed. Customers left Allo and it was eventually shut down in 2019. Analysts pointed out, with Hangouts already present there was no need for a similar product. Allo remains a classic case of not knowing the intended purpose of the product being built.
Ideas with revenue, but no profit kills organizations. Many VC funded startups build revenue generating products without a path to profitability. After conceiving an idea, a back-of-the-envelope profitability analysis is a must. It ensures the idea is not being built simply because a new technology is available. But over-calculating this step might also kill good ideas. It is sufficient to know how ideas will become profitable and when fully implemented, if a business can drive an idea to create profitability.
Net promoter score
Established by Bain & Co, a net promoter score (NPS) helps companies measure customer satisfaction and customer loyalty. Every idea must improve a company’s NPS to be effective. Ideas with a direct impact on NPS must be prioritized. Even though NPS is a lagging indicator of customer pulse and comes with its own challenges in collecting data accurately, it helps understand if the idea could improve the NPS and how. If your company does not track NPS, look at customer reviews to know if there is a problem worth solving to make customers' lives better.
When it comes to innovation, uniqueness is overrated. If your idea is the first of its kind, evaluate why no one else thought of it first. Chances are there are regulatory hurdles, high barriers to entry or no customers/takers for the idea. Analyzing these things give clarity on what the idea can achieve. After all this could be a breakthrough idea that will carry forward the organization's vision. And, if the idea has such potential, it is given a higher rating.
If the idea is unique to the organization, one may want to check with leadership on why it has not received more attention from the organization. For example, until recently most retailers did not want to work on computer vision for the recognition of customer segments in stores fearing a privacy backlash. Ideas need to make a business impact over and above being unique. If an idea has the potential to disrupt then chasing it could be a game changer. But if the idea’s time has not come yet, it's important to wait for the market to mature accordinly.
There is a growing consensus of every relevant idea having a connect to technology in someway or the other. Knowing how your idea would sit in your existing technology architecture and landscape is critical to furthering an idea to production. For example if your underlying systems are legacy systems, building a standalone digital native feature would be akin to placing band-aid over a fracture than giving it a long-term and sustainable solution. When an idea opens up a discussion around investment in new technology, it should also align with other criteria like profitability and strategic fitment.
Deployability refers to functional and tech feasibility and the scalability of the idea. A highly deployable idea could be a potential low hanging fruit for your business.
Functional feasibility: is the idea sitting well with the rest of your business functions and creating synergies? Or is it a standalone solution?
Technological feasibility: would your tech stack or architecture support this new idea?
Scalability: will the idea proposed scale across the targeted end-users?
Fig.2 Factors affecting deployability of an idea
Functional feasibility: knowing if the idea is functionally viable determines if the solution makes business sense. If the idea actually adds functional value to the customer beyond solving a customer problem, it points to the potential success of the idea. For example, adding physical bluetooth beacons inside the store helps retailers better understand where customers are within the store. This information is then used to provide location based content, promotions and product information. But if your core customers are from a demographic who do not use mobiles while shopping in store – blue tooth beacons have no practical value to the retailer.
Technological feasibility: checking technological feasibility helps determine if the underlying technology driving the idea is mature enough for adoption. For example, the idea of supply chain route optimization (traveling salespersons) leveraging quantum computing can save millions in freight cost on paper; but quantum computing is currently very limited in its availability and thus is not technologically viable until the technology matures.
Scalability: highly scalable ideas acquire new customers or increase service revenue without having to rebuild the solution. Most software-only solutions are scalable while ideas that involves a process change or additional hardware are difficult to scale.
Innovation requires rigor, extreme agility and the ability to quickly fail and learn. The innovation framework helps companies keep existing products top-notch by sustaining innovation and hunting for the next billion dollar opportunity guided by strategic interest to realize the org vision. Companies that focus on their next best idea will emerge as market leaders by consistently using disruptive innovation to kill their own products and make better ones. Build your own innovation framework to achieve success in your digitally disruptive journey.
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.