Enhance your research and development process with the Business Development Funnel for Research and Development

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this video will be concerned with the innovation funnel essentially what we're going to do here is to look at the way in which innovative projects are selected and look at the ones which are rejected it's a very straightforward methodology we'd start with a large number of ideas and we filter out the ones that we want until we finally we get to the precise one we want which is the innovation that the business would carry forward so it's really a filtering exercise and indeed the name suggests that it's a funnel funnel means we start with a large number and we reduce it down to some specific number so here we're looking at innovative ideas and trying to select amongst a set of innovative ideas which one the the business will look at now the and the innovation funnel is a key concept which enables organizations to develop innovative products and processes it's a methodology it's a way of approaching the selection of an innovative idea it's often the case that a business may have several ideas and they have to select which one to carry forward they simply don't have the resources the manpower or perhaps the physical resource the capacity or even there is the financial resources to develop all of these ideas and besides which not all of the ideas will have the same degree of risk some of them will be riskier than others so the management of a business must select which one is going to be carried forward as I said earlier and this is the concept of the funnel all innovations that exist are there to meet a customer and market need so I suppose that is really the primary selection criteria there might be lots of ideas in front of the business but really which one is likely to address a need that the customers have and perhaps the customers have the need and the don't recognize it yet but once the product is developed but in front of them there would be a market it's often the case the customers have a demand for a product it doesn't exist which may sound crazy and indeed an economist will tell you that demand has to be effective it has to be real and backed by money and has to be perceived but sometimes in our heads we would like almost in a fantasy world to have a certain product that simply just exists a good example of this would be a microwave oven customers did not go round shouting about getting an oven that does not have a fire does not have an obvious heating mechanism that just heats up the food and does it very quickly but when the product was developed and put in front of the the customers the consumers in the market list they devoted so here was an idea which was totally innovative so innovations must be selected that are likely to meet our customers presence present needs are likely future needs the purpose is to create products and processes that can be converted to manufacturable or an economic for form it's also fairly obvious to say that any new idea should it should make economic sense it shouldn't be very complex or very expensive to me or perhaps very expensive to put on the market customers may be more reticent to purchase such an item they did not want to take a risk and if it's a totally new I dear they might want to see how it works out first and if it's a good idea then others will buy it and there will be a market presence for it and it will get good reviews in the magazines and in the journals and on the papers so there may be more encouraged to purchase it but the idea itself has to be capable of being produced it can't be a figment of somebody's imagination willful thinking that if only they had a process that would do something if only they had a machine that would do this there would be a fantastic product at the end we have to look at what actually exists not willful thinking so many organizations adopt the innovative tunnel to help them manage new product development now the funnel as I said starts with a set of proposals a set of innovative ideas and then it filters then it starts to reject them it rejects so much it say it keeps others and eventually it will reject some more and and eventually it'll get down to one or two but the whole process of filtering is done in a very rational way a very businesslike way they're not just jettisoned they're not just thrown away they are considered there is an arguments arguments for the development have put forward and arguments against the development are put forward and someone in the end has to make a decision yes this is a good idea or no it's not and that's the idea of this funneling process the principle of the innovation funnel involves the development of many products and service ideas so many ideas come forward perhaps just one or two perhaps even just one is selected these products or services are then refined through funnel each the edge of the funnel will eliminate products and services to arrive at the final product ready for development and launch so it's a very rational process it's not guesswork each proposal is considered the arguments for and against are considered as I said earlier and then a final outcome but they don't necessarily rush to the final one on the first troll of the idea is to first look at all of the ideas both of not do is look at all of the ideas and get rid of some at the first level and then move to a second consideration look at all of the ones that are left and perhaps get rid of one or two again and again go through the whole process until finally they get to the one that's left so if we consider a set of ideas there's just a pictorial representation of a set of ideas each of the these blue shapes is just there an ID a business idea and these concepts are looked at and they're screened meaning the management look at them then look at them carefully and look at what's what's in there then it goes to a second screen in any of them can see in the second screening there are less dots or less blue dots here so on the second screening some have survived sort of gone some will be thought of quite finally there is one already here on the second screening that's below the screen in other words it's it's highly recommend that it goes forward this is a quite a star performer but here we've got in this case we've got 7 7 blue dots on the second screening so they're considered at that level the rigor of the screening may vary the first screening may be just looking to see if they're realistic and see if there is a market or if it's light you succeeded it may be just the management having a meeting to discuss various proposals the second screening may be more detailed involving some research either we go down to the third screening another third screening you can see there's only about three left and now we've we've moved from a large number on the first round filtering it down until finally we get to be the final level the third level lets our funnel all we've done is we've funneled the idea is downwards and out of this final three the final product should drop now it sounds a very simplistic idea but it's useful to articulate it it's useful to go into the whole process with an idea of how going to go forward and this is how management would go forward they need a new idea they needed a new product they need to refresh their product line they have various proposals that need to move to the final one which one are they're going to put their money on which one are they going to develop and this is the process they may go through so on the first screening this stage involves thorough investigation market research and data analysis and the following must be taken into account what new opportunities exists for new product lines for expansion so they're weighing all the time here's an idea this is how much it will cost this is what the likely market is going to be what are the risks what happens if the market is not what we anticipate if it's slightly less how much do we need to sail to bring sell to to break-even a lot of considerations but it's a lot of experience people within the business and perhaps some market research has suggested and some data analysis of that research a lot of thinking goes on to try and refine the raw data look at the current market situation look at what customers of mine look at the trends in the market look at the fashions of the market and it doesn't matter really what we're talking about here they're almost fashions and all of them we could be talking about her industrial machinery well industrial machinery has changed phenomenally over the years a lot of it now is computer-aided a lot will look different it'll have different ways of doing it machinery itself will be subject to innovation so we talk about fashion we normally think about it in terms of clothing fashion items but it could be fashion in cars or fashion in machinery industrialists want machines but not just functional but they've got years ahead of them they are they are quite sophisticated and to some extent also the management may be quite proud of the fact that their organization has state-of-the-art equipment all of it is adding into this idea of the fashion the initial screening is the process which where initial ideas sometimes very rough ideas are set out proposals just thinking out loud suggesting ideas and it's looking at possible new avenues for the business perhaps to to start a new product line related to what they are doing currently but at the same time a variation it's a product development and these are set out and against the product development idea is is the idea of getting machinery to to work towards generating a tangible outcome so that would be typical for screen activities the top of the funnel and as the top of the funnel is fed with many different products and ideas these are these chrome from the organization knowledge base now the knowledge base would be the customers feedback from customers that's a very important source of knowledge for any business what are the customers saying what do they think do they agree disagree with the like to see changes doing market research in other words but also looking at the competitors because the competitors are not standing still they're bringing out new ideas and changing the product line and so the competitors will also be engaged in this process so it's a whole dynamic process market dynamic process where the competitors are changing the products the customers are feeding back what they would like and all of this has been fed back to the organization who's got to make a decision about where to make the investment it could come from research now research could be in a sense more so a soft research the softer side more more done more more gently done and it could be a research just through focus groups or talking to customers or a cook the fundamental research fundamental research means a new material has come on the market a new source of suppliers come on the market a new machine that could be used to build this product it has become possible or perhaps there's a set of machines now possible for their organization to acquire and to configure to make the product in other words the organization must keep abreast of what is happening in terms of prod development machine development what's happening in the market what the competitors are doing what customer feedback is it must keep up to date with all of that it may have partners to help it in doing this some organizations work closely with other organizations in their supply chain an organization supplies particular raw materials and will have a vested interest in that company doing well so there may bring forward ideas and say look we supply the raw materials but why don't you make the following new products there's a source of ideas so it could be that the organization has partners organizations that it deals with and some companies may also have an involvement with colleges and universities where students come up with ideas and feed those ideas to the organization not all of the ideas will be accepted some of them may sound a little crazy but some of them might be worth considering and out of those the funnel suggests maybe one or two might be worth carrying forward look at the experience of the management the management if it's good management will be aware of what's happening in the market look at the trends in the market but will also have the experience of knowing what is likely to succeed and also looking at the proverbial bottom line looking at how much does it costs going to cost to develop this and what's the likely return will it make a profit will it enhance the product line or if this new product is going to replace an existing product which forest will it replace and how much revenue were which markets will be affected as a consequence it's all down to the experience of the management and what they decide market analysis is very important market analysis means going to the customer on a more or less continuous basis having feedback from the marketing manager the marketing director the marketing team about their contact with the market and what their customers saying and involving customers if at all possible through focus groups through some sort of input mechanism to have customers suggesting what they might want to have as a new product or what variations to the existing product will help them so the purpose of the stage is to collect as many ideas as possible for screening suitability that's screening one click as many ideas as possible just put everything out there but everything out for consideration it must ensure that the products ideas and processes are in line with the organization's strategy and objectives don't just put every idea out put all relevant ideas out I should say in other words it's collecting a lot of ideas but they all fit with the theme of the business what what are what are the skills and competencies of the business what AM what machinery in capital and how is the business constructed and configured all of this must be taken into account and if the product fits with what the company can do and can do presumably with as little as as little investment as possible in other words by reconfiguring machinery and turning personnel over to looking at this new product if that can be done quite cheaply it will become a much more attractive product but looking at the initial set of ideas just quick scan of the first set of ideas would suggest which ones could be put into the proverbial hat for a consideration which ones could be put into that group for consideration so you're you're looking at a set of ideas which fits what the company does currently they're not in a different completely different area of the market requiring specialist machinery specialist staff specialist training new marketing they're essentially within the same areas the companies working there are variations at the screening level the first level screening the product offerings are very broad as I said the next stage begins to screen and refine the process so we moved to screening - this is the refining process the development of selectable suit of suitable products or selected suitable suitable products so you can see from the diagram that screening - is reducing the number there's more focus now so this is the stage this is the first stage of screening all ideas products and processes and projects so it's it's now getting down to all of the ones which had a question mark at the screening one they've gone not considered anymore now it's more focused hid is taken into consideration and assessed to ensure that they are feasible to ensure that they can be done they're not just fantasy these have to be looked at very seriously to make sure that company can do how's the the company got the capacity to do would have the staff of the training have they got the right machinery in place if it's manufacturing haved about the right personnel of the but the right systems it goes through have to got the right organization i've got the right administration go through everything but at this stage it's getting serious because now they're focused in arm a few ideas that are all of them quite possible that what the need to do is select the best one so those that idea matched the company goals and objectives is it realistic and achievable as I said it can't be fantasy it can't be some wonderful product that the company does not have the resources to develop it this has to be really and is it cost-efficient does the company have sufficient resources and capabilities to further develop the idea so it's cost-efficient isn't it in other words is it realistic again it's really the same point two and three here are very similar it could be a good idea but perhaps the company simply doesn't have the resources to develop it so that needs to be looked at so screen into the most feasible and attractive opportunities and ideas are passed through the funnel for conceptualization time costs and resources are allocated to further develop the idea and this would involve prototyping so the artistry screening - was an idea for a new product it's out of this reduced set of ideas but now there might look at prototyping at building an example if it's a physical product build an example it's not to be very sophisticated it could be just the right size shape talk about its functionalities give the the decision makers something tangible to look at if it's a service illustrate the service how it was likely to succeed what the market would be is in that what the costs of developing it would be what would be the overall resources of the business visa V the resource impact on the business I should say visibly what's likely to come in the size of the market so look at advertising how would the product be launched it's not just good enough to say the company's got a great idea and it's built a great product if the customers don't know about it it's not gonna happen it may happen over a long period of time because of word-of-mouth but company perhaps can't stand around waiting for but that to happen it's a long time so they might have to look at more aggressive projections of the product more advertising perhaps and there are different types which they could look at of course the idea has to be tested it has to live up to what the company claims if the company says this product will last a year they've got tested they gotta make sure that their claim is realistic ideally the company should work out that this this product will last two years so the complain it'll last a year so they're not going to alienate the customer I having a product failing in the first couple of weeks it has to be tested it has to be tested against the claims will it do what the company says it will do will it actually deliver so there's a testing that needs to be done at screening too and look at the patch ring sorry the packaging and the manufacturing of the product and make an assessment of its features how is it going to be delivered physically what how will be packaged and and where will be manufactured and what machines and what people and what skills and Florida logistics involved in this how how in a practical sense is this going to be done and all of this needs to be considered at the second screening and don't forget there are several proposals at the second screening it hasn't got rid of everything it's just reduced down the number from the first screening down to the second screening it's just reduced to numbers so there's a lot of work involved in trying to decide what needs to be done ultimately needs to be done so now we've passed through the second stage now down to the third screening so we've from the second stage some have fallen by the wayside some of them have gone they didn't meet the standards didn't meet the requirements of the business that were too expensive they're not appropriate because of marketing considerations or because there's a lack of skills or training or machinery or the investment was too much whatever the reason some have gone from the second screening down to the final screening now this stage involves further refining of the ideas and products before the final ideas or products are launched in the market now we're getting right down to these feel within her list that maybe it's only one or two to be able to make a decision to a binary decision or it could be three or four but not too many this is where there has to be very detailed consideration feedback from prototypes and customers and market research these are all useful here they all give an insight into what which one should be selected so these are valuable sources of information they final few products undergo stringent assessment and review before official launch on to the market so the company may select one of them but of course this depends on the resources of the company the company may be able to afford to have two good ideas perhaps on the final spin in the head for now they pick two which are really good they might want to launch the to depends on their resources and what risk that will put the company under will they'd absorb a lot of financial resources and make the company vulnerable in the event of a failure or a downturn in the market so to be prudent the company might want to go with one and keep the second one which is a really good idea as well keep that in reserve and that's for future development but it'll now make a decision based on this this final screening during the stage on suitable products are eliminated and the product that passed through the screening are then launched so the products that have come through usually perhaps one but depends that product will now be launched onto the market will be marketed and delivered to the outlets on the on the market so that customers may acquire the product based on feedback and testing the final decisions are made to either continue with a new product or discard it even at reading stage three having now carried on with this development they might have put a lot of resources into developing it and it might be an actual product developed now that's functional that works they may now want to take it out and get customers feedback and based on those customers feedback will then go through a full launch of the product but if the customers feedback are adverse they're not very positive then they may appeal the idea even at that stage even happen coming through the third screen in the second screening down to the final screening they might still want to kill off the product if the feedback was not enthusiastic so now we've got to the final stage they may want to have further evidence so feedback from evaluations and benchmarks costs resources manufacturing and margins they all play a role at this stage everyone's involved now the finance people will talk about the mark-up and what's going to be charged for the the different budgets will be set up distribution costs marketing costs manufacturing costs everything will now be considered in detail looking finally towards the final gross margin looking at what the company will get and looking at the the net return after everything is being paid what will the company come out with and if that looks good then a decision could be made to launch the product so now we've got the final product if it goes through all of those stages and don't forget that final product was back in screening one just one of the dots and screening one it's just stood the test has come through all the way it could be that the company starts at screening one with a lot of ideas and none of them stand up they could fail at any stage but companies go through this exercise on a regular basis some continuously to try and innovate and change and get a position in the market with a good reputation for the business for development a good set of products robust economic a good set of products which enhances the business but they will all come through this type of process the final product well with the decision to go ahead has been made the product is launched the product must deliver the expected objectives and outcomes to ensure the innovation was successful if it doesn't deliver the expectations it doesn't deliver outcomes you could say that the innovation was unsuccessful however the product may still be in the market it still may have a place in the market perhaps it just didn't live up to what was anticipated but if it if through the process of the innovation full funnel that these sort of these sort of criticisms or sorts of comment or analysis had thrown doubts on the way through perhaps the product wouldn't have been developed or perhaps it would have been developed in a cheaper fashion so that the company would simply add it to its product line providing it didn't damage the reputation of the business in the marketplace the added to the product line and make a smaller contribution but it really really can only be told at the final stage but it's finally put on the market for the customers to buy or not buy that's the idea behind the innovation funnel and that's all we're really not to deal with in this video so let's leave it at that and say thank you for watching