Eight key tests to rank and prioritise innovation ideas
When it comes to innovation, governments, big businesses, startup entrepreneurs and even individual investors all make choices on ‘what will work’ under a cloud of uncertainty.
We all try to pick winners, but we don’t all do it well.
For an organisation that has committed to building and progressing a portfolio of innovation projects and initiatives, it is a matter of prioritising work and investments, choosing the initiatives to take forward, and project managing them in a firm and disciplined way.
There are many ways to decide on which ideas should – or should not – go forward, and there is no golden bullet.
Supporting the concept of identifying and nurturing innovation through structured frameworks, we’ve identified a set of eight key tests that every proposed innovation should be evaluated on.
Businesses can use these tests to rank and prioritise innovation ideas at each stage of the research and development process, and the tests can be periodically reapplied to a portfolio of ideas as the research, development and commercialisation processes continue.
The eight tests
This structured approach across a range of innovation projects can be an effective screening process that results in a project shortlist and an innovation portfolio of activities.
- The function and value test
Will the innovation fundamentally serve a required need and be fit for the purpose that is intended? Will the value that is delivered be superior to existing offerings or solutions in the marketplace, such that customers will consider switching? Or if it is a process innovation, will any extra cost lead to net benefits?
- The market and marketing test
Will the innovation appeal to customers and can we find an effective channel to distribute our product to the marketplace?
- The operations and scale up test
Can the product or service being developed be effectively mass produced? It is not good enough to just rely on a pilot or prototype – the new innovation’s design must be sufficiently robust that it can be mass produced without compromising quality or productivity.
- The management and key personnel test
Do we have or can we recruit the human resources required to scale up and commercialise this innovation?
- The financial test
Will this innovation, whether it’s a product, service, new process, new technology or even a new business model, provide a financial return on our investment? Any calculations need to be adjusted to take into account the project risk.
- Intellectual property control and access test
Do we have full control of all intellectual property to be used in this innovation, or are we transgressing on the intellectual property of others? An intellectual property strategy is crucial when developing your innovation.
- Strategic alignment test
To what extent does the innovation fit and align with our organisational strategy and its priorities? Does this new product or service fit within, or sensibly extend, our existing portfolio of marketplace offerings, and do we have capabilities to produce, market, sell and distribute it, or to effectively outsource those activities?
- Sustainable development and ESG
Does this innovation at least meet minimum – and ideally much higher – standards of environmental and social sustainability? Will the innovation be attractive to consumers who are increasingly mindful of environmental and social factors when choosing products and services?
Good businesses already use many of these tests when developing new products. For the private sector, the sharp edge of commercial focus is a blowtorch. They have an efficient set of forces that ensure they use their innovation dollar more effectively. They have to perform.
However, applying a structured framework can help organisations protect and support how they approach innovation decision-making, and effective professional development can help these organisations build and sharpen this kind of disciplined thinking.
“Structured frameworks give teams a fair and transparent way to compare ideas and make decisions when facing uncertainty – rather than simply backing the loudest voice or the most senior person in the room,” says Owen Shemansky, Director of Melbourne Professional Education at the University of Melbourne.
“Professional development helps frontline staff and leaders learn how to apply a framework consistently when time, money and attention are limited and when not everything can be done at once.”
Shared decision tools make it easier to focus effort on the ideas with the highest potential and to put the brakes on weaker ideas sooner, rather than later.
Featured in this article is Professor Danny Samson and Owen Shemansky