The Product and Process Innovation chart analyses how quickly your organisation can make the most out of innovation before that innovation reaches the end of its Lifecycle. On the vertical axis is the rate (or pace) of innovation and on the horizontal axis is time. On this chart you plot two lines. Please see the hand book The Entrepreneurial Process for examples.
One is the rate of Product Innovation, which rates high on innovation when you start to develop a new product or service, but declines once the product is made. The other line, the rate of Process Innovation, shows the speed of Product Innovation.
The first prototype you make will be slow and cumbersome, but after you’ve made a few prototypes you’ll become increasingly efficient. The point at which the two lines intersect is usually the point where the organisation starts making positive cash. The quickest to the intersection often outlasts the competition.
Imagine that you have just developed a new surfboard. The first time you shape the board, complete the intricate design, finishing and testing will take a long time. This is the product innovation.
Your process innovation will be extremely low because the surfboard is a new design as it has never been made before. However, the product innovation will be very high, all those revisions, adjustments and tweaks!
When you are happy with the board’s performance, (not sure whether it is perfect) you will stop adjusting. Probably a jig will be made and then the ease of manufacture increases very quickly as production will become faster, because you will have developed shortcuts that produce the same results time and time again.
Consequently your process innovation has increased, yet because you are still making the same board, the product innovation will quickly decrease. After making the board for the twentieth time, you will find that you are able to make it without even looking at the design notes or paying much attention to what you are doing. At this point, process innovation has peaked, and you are unlikely to get any better at making the board so the product innovation has now stopped. Every new board (product or service) goes through a similar process.
On the Product and Process Innovation chart, you will notice the point where Process and Product Innovation intersects. This is the point that you want to reach as quickly as possible. This is the point where you start to make the real money. You have to ask yourself, ‘where or how can I apply innovation to reach this intersection faster?
You must be able to let “go” of the product innovation. There will always be a version two! So many great ideas, products and services never get to market because the owner, designer or entrepreneur is never satisfied, “it” is never perfect, regrettably they never go to market and never reach positive cash
There are three questions that must always be asked about innovation:
Is it achievable? Is it measurable? Is it repeatable?
When you develop new processes and product improvements, make sure you apply these tests. Innovation is not a one-off event. You need to be able to repeat it. Here are some strategies you can adopt to reduce the time spent on Product Innovation:
- Develop products that reduce manufacturing costs by lowering material content, enhancing the ease of manufacture or simplifying logistical requirements.
- Develop products that enhance product quality, and feature deliverability or lower switching costs.
- Develop product design so that the product performs sufficiently for its target market. Don’t include features that customers don’t want or need.
Here are some strategies you can adopt to reduce the time of Process Innovation:
- Use the Learning Curve to reduce material usage or reduce labor input.
- Develop processes to support greater quality control, more reliable scheduling or faster response times to increase buyer value.
A question that you need to ask yourself is, ‘is all this extra effort for little or no return worth it?’ In other words, has the Process Innovation peaked and the Product Innovation hit a trough? If so, it won’t be long until your competitors catch up to you, that is, if they haven’t caught up already. If this is the case perhaps it is time to begin a new Lifecycle by introducing a new product or process.
The strategy for the Product and Process Innovation tool is similar to the Learning Curve. It is aimed at reducing the amount of time you spend achieving your goals by moving the intersection of the lines closer to the starting point.
Minimum effort for maximum results.