Product-design and -development companies are under intense pressure to create innovative products and services. Many design teams, particularly at established companies that specialize in industrial products, are attempting to adopt agile practices to compete with the smaller startups that adopted those methods at their inception.
But for established companies, achieving large-scale agile practices doesn’t happen overnight, and to maintain competitive advantage with agile startups, product design and development teams can benefit from two approaches to accelerating innovation that integrate easily with their established activities and operations.
1. Tapping an innovation ecosystem: Pitch Night
Many companies are interested in boosting their design and development offerings but lack the in-house resources to generate new ideas. Companies in this position can essentially create “pop-up” innovation events by hosting a “pitch night” where startups compete for prizes to solve a product-design or -development challenge that the host company can use to inform its own process.
As recounted by McKinsey & Company:
For a tier-one industrial supplier, a pitch night led to the creation of an advanced-analytics engine used to improve the design of industrial transmissions. The supplier began the pitch-night process by issuing four use cases to a wide range of startups and calling for them to outline potential solutions. It chose 100 or so intriguing responses and brought in those startups to make four-minute presentations to a jury of the company’s CEO, chief digital officer, selected board members, and business-unit heads. In the contest related to smart industrial transmissions, the jury identified an especially promising solution from a small group of data scientists who had been spun out of a university. That team was given a commission to spend eight weeks creating a minimum viable product (MVP). The MVP worked well enough that the company calculated that it would have a payback period of just three months and could be scaled into product improvements worth some €500 million in annual revenue.
2. Capitalizing on collaboration: Innovation garages
As pitch nights make clear, creative collaboration—both formally structured and organically occuring—is the key driver of innovation. One reason startups tend to excel at innovation is that their relatively small personnel numbers allow for constant collaboration in response to shared, timely awareness of customers’ needs. In more established product-design and -development companies, however, many of the innovation efforts occur as departmentally partitioned, multi-staged, linear processes that preclude integrated understandings of what customers want, resulting in task redundancies, or designs or even manufacture of products that miss the mark.
For more established companies, creating and capitalizing on cross-functional teams holds the solution to achieving the diversity of collaboration at which startups often set the standard. One version of this kind of cross-functional team is found in the formation of an “innovation garage,” a self-contained cohort with minimal overhead tasked with rapidly generating new ideas. By definition, an innovation garage includes people from any department that would normally participate in any way in product-design and -development: data science, engineering, finance, operations, sales and marketing, and so forth. This cohort’s proces is adjudicated by agile practices and by expert practitioners: a product owner, who determines who sets the parameters for new products, and a scrum master, who oversees and manages the iterative prototyping process.
Leaders need to understand that the garage isn’t a showroom, but a collaborative work space for focused innovation. Further, the generativity of garages can be enhanced by suspending the bureaucratic processes to which other aspects of the business are subject that typically slow down or stall innovation efforts. Once a garage is up and running, the product owner can collaborate with strategists in the core business to expedite design projects most aligned with business objectives. This often entails developing a system for collecting and evaluating the viability of new ideas and how they factor in relation to commercial models.
While these two approaches aren’t ideal for every business, they do allow better-established companies that have yet to effect large-scale agile operations to leverage the strengths of startups toward achieving competitive and profitable innovations.
At Pivot, we’re industry leaders in innovative product-design and development services with a proven track record of over forty years of expert experience in partnering with entrepreneurs and established businesses alike to bring new products to market and to achieve agile operations. Contact us today and see what we can do for you.