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creating an innovative portfolio of intelligent products and services

Capgemini
13 Jun 2022

We are often presented with examples of innovations – the iPhone’s user interface, Netflix’s recommendation engine, Tesla’s Autopilot – as if they were dreamed up one day by a corporate genius. What we see less often is the mechanisms that lead to these: the culture, specialist skills, and the failures and lessons learned along the way.

Some innovations spring from a moment of inspiration, most are the result an ongoing commitment to people, process and technology. The real genius of people like Steve Jobs or Reed Hastings is not that they had good ideas, but they created environments where such ideas could become reality.

A company moving from physical products to intelligent ones needs to nurture a portfolio of innovations. There is no one-size-fits-all, but there are lessons from companies that do this well, and those that don’t.

The traps that stop you innovating

Before looking at best practice, consider the traps that block innovation. These need to be resolved before you start.

The biggest risk is a culture where staff and leaders are entrenched in their thinking. They see the status quo working, and want to keep going. They are either uninterested in change, or apply old thinking to new problems.

Microsoft provide a salutary lesson, and an optimistic one. As the world’s largest software company, it was well placed to dominate mobile. But it couldn’t get out of old thinking. It built its smartphone operating system based on its PC expertise, whilst Apple built the iPhone around user need. Microsoft failed here. But then, when many had written it off, it changed leadership, strategy and culture and began innovating with speed and agility – launching a string of sucessful cloud products and services. Now it is back on top.

Create a culture of innovation

For the most part, the best corporate innovations are those that support the existing offer, whilst opening new revenue streams.

A good example of getting this balance right is Coca Cola’s Freestyle custom drink maker. It’s a digital offer that supports the existing product line to creates richer customer experiences. It also gathers data on customer preferences that supports traditional R&D. Phillips Hue smart light bulbs are another example.

These types of innovations come when companies create innovation spaces that are distinct from the core business, but maintain overlaps. The core of this is the right people.

You will of course need people to manage your whole portfolio. But any individual idea chosen to take forward will its own team. Turning an idea into a profitable revenue stream needs a business case, enabling technology, and user experience. Any team must have right mix – strategists, engineers, creatives, designers, and managers – to bring all of these together.

This probably means new talent; people who bring new ways of thinking and understand how new technologies such as 5G, AI, or VR can help reinvent or digitise products.

But it also means looking at your existing staff – or inviting them to submit ideas – and bringing ambitious people across into innovation teams. They know the existing products, how they are used, what is missing. Some aviation businesses, for example, are sitting on a goldmine of jet engine data – they will need existing staff who understand what they have, and data and AI experts to understand what can be achieved.

This overlap also keeps communication channels open, so innovation is not seen as ‘other’. This is critical when you hit on a sucessful innovation and need the core business to start selling it. Good innovations fail when they are forced on a business that is not ready for them.

The innovation process

People need to be backed with processes.

Innovative companies create bench time for teams to come up with lots of ideas, as well as mechanisms to capture wider ideas from across the businesses.

For those worth pursuing, the usual first step is to setup a small team of 2-5 people to develop it into a real concept: research the need, create a prototype, validate, and write a business plan.

If it shows promise, setup an internal venture to progress it towards commercialisation. It’s important to set milestones and realistic time boxes. Creativity takes time, but constraints force people to come up with an answer. And ideas that don’t work should be culled quickly. Aim to succeed, but fail fast.

A portfolio of up to 10 projects is usually good for a mid-sized company, but pick a number that gives you several shots at success but feels manageable.

As ideas become viable products, make sure the core business has the tools, technologies, and skills to sell, support and update it.

One example we worked on is VRCare, a distraction therapy for pain relief. This started when a team member came across research on distraction therapy for burns. VR seemed to offer an opportunity. The team came up with a proposal, presented it to the company, and were given a small budget, people, and eight weeks. They built a low-cost prototype device capable of operating in a wet environment for burn debridements, a VR game, and ran a small study with a hospital that showed a drop in pain.  The complete product is now open source and available to everyone.

These portfolios need to be tracked, following the curves of time and investment, progress and revenue. There is no fixed formula for when to allocate more resources, and when to pull out, but informed decisions need to be made based on data and judgement.

Move fast is a safe environment

Disruptive innovation is not a moment of genius, but the result of a well-managed portfolio of ideas, with rigorous processes that allow them to progress within a stable business environment. That needs dedicated teams with the right mix of skills to understand user needs, deploy technologies, and build a business case. It needs processes to spot bad ideas and invest in good ones. And it needs open lines of communication between business units that allow the best ideas to eventually migrate smoothly to the core business. That is what has distinguished the great corporate innovators of the last 20 years.


How we can help

We can support your innovation teams through expertise in product design, user experience, new technologies (including AI, VR, 5G), product validation, and by providing an outside perspective to help frame the business case for new innovations.