How do successful leaders identify market needs and create innovative products and services to meet those needs? They start with ideas. Ideas potentially come from many sources and need to be nurtured effectively to succeed.
The June 2007 Harvard Business Review includes an article by Morten T. Hansen and Julian Birkinshaw titled The Innovation Value Chain. The innovation value chain presents innovation as a “sequential, three-phase process that involves idea generation, idea development and the diffusion of developed concepts.” Each stage of the value chain is critical to the mature development of ideas into products:
- Idea generation: Innovation starts with good ideas. Ideas generally come from three areas: internally (within the team), cross-functionally (from different teams within the organization), and/or externally (from customers, partners or other sources external to the organization).
- Idea conversion: It’s one thing to generate ideas, but if they are not converted into products (or features or services) they will not benefit the organization.
- Idea diffusion: Once ideas have been examined and developed, they still need to receive buy-in (both from within and without the organization).
The following table shows critical tasks managers must do to successfully turn ideas into products customers want to buy:
Subsequent posts will focus on each phase in more detail, what happens when one or more of the phases is neglected, and how organizations can fix problems in any stage.
The Product Management Perspective: Product managers play a key role in gathering ideas, converting them into products and distributing them to their markets. The more they focus on proven processes to guide them, the more predictable will be their success. It’s critical that product managers not only understand the theory behind innovation but also understand how to implement it.