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Communication: Knowledge share The Innovation Funnel

The innovation funnel

In order to manage the new solution/idea development (NSD) process, many companies today employ the model of an innovation funnel. The basic idea is that a marketer or R&D department starts with many ideas that need to be examined and winnowed down, then shaped into concepts and tested until a final solution or idea is selected and launched.

Below are the main parts of the typical innovation funnel in more detail:

• Opportunity assessment: Here the organization analyzes – through market data, customer knowledge or other information sources – what kind of opportunity exists for new services or new value or a line extension.

• Insights-based ideation: Based on what kind of opportunity is a proper fit for the company’s strategy, the next step is to ideate different kinds of products or offerings that could capitalize on this opportunity.  This is an internal collaborative process that draws heavily on insights about the market and the target customer and could take the form of brainstorming, co-creating with existing member firms, and conducting market research such as surveys, focus groups, online communities such as those cross-border legal industry groups that exist on linkedin.

• Conceptualization: At this stage, the team designs actual concepts for the top ideas that came out of the ideation stage. This might include new services, advertising copy or different / evolved configurations of existing services.

• Evaluation and benchmarking: Next it’s time to go back to a sampling of existing member firms and test the different concepts. This can include choice modeling or even actual user testing (for example, in the case of web sites). Based on feedback from the tests, it may make sense to iterate on the concepts and then re-test.

• Go/No Go: After testing is completed and feedback is gathered on iterations, analysis reveals the concepts with the best chance for success. Executives must make a go/no-go decision on whether or not the new idea/solution should be launched, taking into account not only the evaluation and benchmarking results but

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also factors such as internal ability to execute, the ability to enhance brand differentiation and sustainability in an evolving environmant, does the added value derived justify an increase in fees.

• Launch: Assuming at least one concept is given the go-ahead, it is launched into the market! The idea has come to life.

Different versions of the funnel exist in terms of where inputs for innovation come from, but this is a traditional model. Over time other methods such as agile development and open development – both most widely used in technology innovation – have been introduced but the graphical representation of the funnel still remains popular. The simplicity of the funnel concept means it’s widely adaptable across different industries and types of organizations. In a time when we are awash in ideas and information – from internal resources to traditional market research, to social media data – marketers and product strategists are challenged to effectively and efficiently hone in on the best ideas.

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