As we have discussed previously, the impact of new products is the single largest contributor to the future revenue growth of an organization. While market intelligence, product development processes, strategic planning, and technology and resource management all have an impact on the sales of new products, the number one attribute responsible for new revenue growth is idea management.
While many would agree this is true, a major benchmarking study found that only 19% of businesses have an ideation system proficient enough to feed the development process. Furthermore, only 31% of firms have an effective method to select which ideas to actually invest in, and the best performing companies are four times more likely to have an effective ideation process than the poorest performing companies.
The research shows us that the best companies take the time and make the investments to generate the best ideas. But what are the best ways to generate these ideas, and where do they come from?
Robert Cooper and Angelika Dreher published a paper researching the sources of new product ideas in a survey of 150 firms. Their goal was to identify which sources were the most popular and, more importantly, the most effective in generating robust new product ideas. They analyzed 18 different sources of new product ideas to understand which methodology provided the most consistent results across all the firms.
The research identified eight VoC methods, six methods that fall under the category of Open Innovation, and four other methods that were neither VoC nor Open Innovation.
The concept of Open Innovation has become very popular as of late. The concept states that the firm should open their doors and minds to those thousands of people outside your organization who may have the next great product for your organization.
The researchers then mapped out the 18 methods in a graph that showed the percentage of times that companies used the various methodologies versus the effectiveness of each method. The popularity of each method was measured as a percentage of each of the firms that extensively used each method, and was measured on the horizontal axis. The effectiveness of each method was shown on the vertical axis, but only for users of that method. Some VoC methods were extensively used, including customer visits and focus groups, as shown in the upper right quadrant. Other newer methods, such as ethnography, were shown to be less popular. While many of the VoC methods were not used as often as the other nonVoC methods, the VoC methods were rated consistently more effective than the other methods by the 150 firms analyzed, and constituted the top five of all the methods researched. The following chart is a sample of the research conducted by Cooper and Dreher:
Figure 4.1: Ideation methods