To win in Industry 4.0, manufacturers need to change their approach to innovation. In particular, they must shift their focus from improving existing products and processes to developing genuinely new ones that target an unmet need in the market or value chain.
As for how they do it, the best way is to view innovation as a journey – one that begins with ideation but goes on to feature a series of continuous, iterative steps all pointing toward the same ultimate goal: commercialization.
One firm that knows all about that journey is business innovation and product design company Nottingham Spirk. They have a methodology that has seen the firm commercialize around 95% of its new product innovations, a figure that towers above the manufacturing industry average of 5%.
So, what’s the secret behind their success? What exactly does their methodology look like? And, crucially, how can manufacturers use it to turn their own ideas into real competitive advantage?
Through our work together, these are the eight steps we have found to commercialize innovation:
- Understand the “noise” in the system. Too many manufacturers still get caught up in developing ideas without any real concept of how, why or where they will make a difference. This is a recipe for failure. Before the ideation process even begins, it is vital to invest the necessary time and resources into understanding the “noise” in the system. In particular, this means figuring out whom the innovation is targeting – customers, dealers, a parts distributor, employees, a combination of them all? – and identifying their precise pain point that you are trying to solve. Only then can you be sure your innovation journey will set off on the right track.
- Run a divergent innovation session. Feature targeting a group of around 10 people from different areas of the organization (think marketing, sales, design, engineering or any others who have insight to share from a unique perspective). This is a highly creative, no-holds-barred session. Rather than answers, what you are looking for here are as many ideas as possible. But it is also not a free-for-all. By now, you have already done the work to understand the pain point and stakeholder segment being targeted, so all concepts suggested should focus on this.
- Hold a convergent innovation session. This is the filtering stage during which the myriad concepts brought up by the divergent innovation session are consolidated and evaluated in more detail. The task here is to separate the ideas that are either impossible and improbable from the one (or more) that stands the best possible chance of making it all the way through to commercialization.
- Build a works-like prototype. This is what Nottingham Spirk calls a “Frankenstein prototype,” one in which aesthetics and design are set aside in favor of developing the core nuts and bolts that can turn the new product into a functional reality. The aim here is to demonstrate that it is indeed possible to address the pain points at hand.
- Develop a looks-like prototype. Here, the designers get involved, packaging the idea into something that will be visually and stylistically capable of cutting through in the market. If it is a product, this means getting consensus on the look and feel. If it is an experience or process, it involves understanding the different stages and technologies required to support it.
- Combine into a full prototype. At this point, steps 4 and 5 come together, combining the works-like prototype with the looks-like one. As well as evaluating the concept in its entirety, now is the moment to run focus groups and testing sessions with the relevant stakeholder segment. Capturing and, crucially, acting upon their reactions can help you shape and improve the prototype before committing resources to making more.
- Start scaling. Once you have addressed any issues or concerns that arise during the full prototype trials, it is time to create a larger lot size – normally around 10 to 12. As well as allowing you to perform more testing, this offers a chance to discover what is needed to deliver the product or process at scale. After all, being able to produce, store and distribute it promptly and cost effectively is key to long-term commercial success.
- Conduct a soft launch. Before going into widespread release, it is highly advisable to launch your innovation with a more targeted customer segment or in a specific location. This is a step many manufacturers miss but one that can actually make or break the journey to commercialization. Why? Because it is a final chance to test (and refine) its usability, price and effectiveness without the potentially negative financial and reputational effects of launching unsuccessfully to the mass market.
Assuming the soft launch goes well, it is then a quick step to a full-scale unveiling. But even this is not the end of the process. The critical role of research, data analysis and live customer feedback continues, allowing you to keep refining even after the product or process goes live.
It is vital to note too that this journey to commercialization is not one that can happen in a matter of weeks. More often than not, it takes around 12 months of constant, disciplined effort – all with the singular aim of getting the product to market. As Nottingham Spirk Co-president John Nottingham puts it: “Often the most difficult transition for companies to make is rethinking their process around innovation. They have to be laser-focused on commercialization at all times.”
Above all else, it is this mindset shift that manufacturers must seek to embrace. Now is the time to establish a total end-to-end innovation process that also includes new digital technologies in manufacturing. This change will not be easy. But if the next 100 years are to be as transformative as the last, it is nonnegotiable too.
The views expressed by the presenters are their own and not necessarily those of Ernst & Young LLP or other members of the global EY organization.