Product innovation has been described as the way out of today’s difficult business environment. However, the rate of success of development projects, in particular white space or disruptive innovation projects remains too low. We believe that a reason for the low success rate is the erroneous application of methods designed for incremental innovation like Stage Gate to projects with high levels of uncertainty. In this presentation we will discuss the different types of development projects based on degree of uncertainty, and the creation of different project tracks. Projects are managed using different tool sets based on the best fit between information available and decision making needs.

1. Beyond Stage Gate A New Approach For The Management Of Innovation Processes Jose A. Briones, Ph.D. @Brioneja

3. Review of conventional Stage-Gate

4. Classification of Innovation Projects

5. The Spiro-Level approach

8. Success rates of innovation projects can be as low as 2.5% but rarely exceed 20% depending on when we define a project launch

9. Effectiveness of product development process is broken

10. We can no longer throw Ph.D.’s at a problemProblem

12. When do I use each tool?

14. Innovation Twitter: @Brioneja www.Brioneja.com

15. Classical Innovation Process Idea Generation Idea Selection Project Management Twitter: @Brioneja www.Brioneja.com

16. Two Types of Innovation Incremental or sustaining Occurs in linear fashion Radical or disruptive Occurs in non-linear, discontinuous or iterative fashion Twitter: @Brioneja www.Brioneja.com

18. Short term versus long term?

19. Product versus platformOrkut vs. Facebook - 2004

20. Classical Innovation Management Standard processes for innovation management reflect the linearity of incremental innovation Stage Gate Waterfall Do not work well in disruptive or radical innovation Twitter: @Brioneja www.Brioneja.com

21. 12 Identify the source of the following quote: ‘I am become death, destroyer of worlds’

22. 13 Mediocrity "I am going to come to you with a contrarian view of innovation, deeply researched, with more than $7-million worth of data behind the assertion that the Stage-Gate model as we know it today is…going to guarantee total performance mediocrity for your businesses. Larry Keeley, president of Doblin, Inc April 2006

23. 14 Suitability “The Stage-Gate system is not suited to the task of assessing innovations whose purpose is to build new growth businesses, but most companies continue to follow it simply because they see no alternative” Clayton M. Christensen

24. 15 Classical Stage-Gate Process Source: Product Development Institute, Inc. Project is managed in a linear fashion “The Stage-Gate system assumes that the proposed strategy is the right strategy, the problem is that except in the case of incremental innovations, the right strategy cannot be completely known in advance” – Clayton M. Christensen

25. 16 Xpress and Lite Variations of Stage-Gate Source: R.G. Cooper, Stage-Gate International These modifications still use a linear approach to innovation project management.

26. 17 Modifications to Stage-Gate: “Spiral Development” Source: R.G. Cooper, Stage-Gate International Iterations occur within a stage, with no mechanism to start over

27. 18 Modifications to Stage-Gate “Simultaneous Execution” and “Stage Overlapping” can also be used to address some of the Stage-Gate deficiencies, but are not enough to overcome the restrictions of the linear approach.

28. Disruptive Innovation Classical Business Management Iterative Estimates Flexibility Virtual teams Efficiency Forecast Progress Measurement Resource allocation How Do We Reconcile Conflicting Requirements For Disruptive Innovation? Twitter: @Brioneja www.Brioneja.com

30. Customers can only provide feedback on incremental modifications on what they do know

32. Incorporate classification via level of uncertainty in your project portfolio management

34. 23 Classical Product Development Classification Adjacent Markets vs. Blue Ocean New Market Existing New Existing Product Conventional product development categorization fails to acknowledge the differences in available information within each space

35. Stepping Stones High Medium Low Positioning Options Platform Launches Project Classification Scouting Options Technical Uncertainty Enhancement Launches Low Medium High Source: The Entrepreneurial Mindset Market Uncertainty Projects are classified by how much we do NOT know Degree of uncertainty defines the track they take Twitter: @Brioneja www.Brioneja.com

36. Spiral Approach Time Spiral has 3 levels Axis = Resources and Time High uncertainty projects start at level 1 Move from learning/discovery to definition/forecast 3 2 1 Resources Twitter: @Brioneja www.Brioneja.com

38. Different Tools Selected

39. Level 1 tools feed subsequent levels

40. WHEN Vs. WHICHTwitter: @Brioneja www.Brioneja.com

41. The Spiro-Level™ 3-D Approach to Innovation Resources Launch Quadrant IV Quadrant I Roadmap/Timeline Idea Generation Level 3 Risk Analysis VOC 2 Customer Testing 1 Time Time Technology Assessment Supply Chain Analysis Business Case Value in Use Analysis Regulatory IP Strategy Prototype Development Quadrant II Quadrant III Resources Twitter: @Brioneja www.Brioneja.com

43. Expectations must be different

45. Transform options and stepping stones into platforms

48. The analysis is repeated at each level, but the tools used for each level are different.

49. Level 1 uses tools more suitable for high levels of uncertainty, i.e. Discovery Driven Planning, Probabilistic Decision Analysis

57. Manage different types of projects using the appropriate tools

58. Maintain the right framework to track progress and resources but provide the flexibility that innovation projects need for success This approach has already been successfully used to create a disruptive innovation product for the construction industry

59. 38 Epilogue by Clayton Christensen “We keep rediscovering that the root reason for established companies’ failure to innovate is that managers don’t have good tools to help them understand markets, build brands, find customers, select employees, organize teams, and develop strategy” “Some of the tools typically used for financial analysis, and decision making about investments, distort the value, importance, and likelihood of success of investments in innovation” “There’s a better way for management teams to grow their companies. But they will need the courage to challenge some of the paradigms of financial analysis and the willingness to develop alternative methodologies”

60. Conclusion This framework for innovation projects provides The flexibility needed for successful innovation projects in any industry The metrics needed for proper measurement of progress and resource allocation. Twitter: @Brioneja www.Brioneja.com

62. Twitter: @Brioneja

63. Brioneja@spyrotek.com

64. www.Brioneja.com