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Innovation Ends With The First Sale, Not The Proof of Concept

May 1, 2015

The hi-tech furniture, scratched up modern hard shapes, and pale colors, looks like it belongs in a loft, not the back area of a suburban HQ. What was once an Innovation Lab, with its look and feel and budget, was shut down after spending over $20M and achieving a few proofs of concept and nothing else. Some employees left; others retooled themselves back into the areas from which they came. Physically, only the furniture, reused as needed piece-by-piece, remains. Mentally and culturally, what remains is the feeling “we can’t innovate here.”

Many companies think they go all out on innovation, setting up a lab or allowing individual groups to ideate and then build an early prototype for further refinement and analysis. What they lack is action orientation, substituting instead the typical control oriented series of PMO-Police like stage gates. Would GE have embraced Edison’s electric light bulb if he were only an employee and not the founder? After all, he didn’t fill in the requisite Vision/Concept Analysis template. As he once said, “I was too busy inventing it.”

Overly survival focused employees, not willing to chance a career ding, take a cautious approach, building early-stage Proofs of Concept suitable for testing and refinement, calling this the end of the faster paced innovation process. This works in a slower paced business climate, but where technology is involved, from Financial Services to consumer electronics, producing a Minimum Viable Product, and getting it out to market produces better results. It also makes it harder for competitors to outflank you. I was once on a highway discussing how to improve innovation velocity when the client’s competitor’s 18-wheeler whizzed past us, delivering our next stage product 6 months ahead of us.

Who provides an excellent example of how to combine innovation and tangible products?

DARPA, Defense Advanced Research Projects Agency, didn’t invent the Internet so they could figure out what it was good for; the end-goal was the Cold War’s need for survivable Communications, Command and Control (C3). Same for GPS – it was the innovative solution to a very pragmatic military need as putting $12 Billion of satellites into orbit and then finding a Use Case is unadvisable. To this day, every DARPA innovation program delivers a finished product, not a POC or whitepaper for others to refine. They employ an ‘end-game’ process, throwing the typical ‘Present State-Ideation-Future State’ process on its head to become ‘Future State-Anticipated Needs and Techniques-Focused Ideation to Get There-Present State & Potential Reuse’.

The DARPA innovation model, as we apply it to our clients, is based on 5 concepts:

What exactly are you trying to accomplish? When does this go into Production?
This can take time to think through which you might say slows innovation, but what it does is focus activities on only those potentials that a normal person can understand. DARPA looks for, and then focuses on, ‘golden nuggets’ and not pans of sand, water and hopefully some gold mixed in.

How is it done today and what are the current limitations?
What is truly new and how does it remove current limitations? What is reusable and what has to be invented, and how long will that take? Is this an enhancement or an innovation? Is there disruption? Would it force your competitor to look at their warehouses and wonder how to liquidate all that inventory?

If successful, what difference does it make and to whom?
Will it make their lives better by a factor of 10X or 100X? If not, are you aiming too low? How will it go to market and by whom? Can our existing sales force sell this without significant retooling?

How early into the program can we hold a mid-term test to validate the hypothesis, and if it fails, cut losses fast and redirect the team and funds?
This is the last stage of acceptable failure. The final exam is always a full-scale version, Rev 1, 1st Fungible Product. DARPA does not shrug its shoulders, or sweep under the organization carpet, failure at the end – heads roll. This tends to keep everyone honest about progress and hurdles.

How will we monetize this?
All too often, we develop features and functions without paying attention to monetization. In addition to the business model, can we build or source this innovation at the right price and timing?

R&D is about new concepts, processes, and materials; innovation is problem-solving. Prudence and forethought are essential, but over-reliance on prototypes over fungible products is, as the former head of DARPA said, “a great strategy for not losing and a lousy strategy for winning.”

Richard Eichen is the Founder and Managing Principal of Return on Efficiency, LLC, , focusing on companies, initiatives, and products where technology is the primary means of delivery and revenue. He is one of their senior Turnaround, Transformation, Program Rescue, and Innovation Process leaders. As a Change Agent, Trusted Advisor, Program Leader and Interim Executive, Rich has over 25 years hands-on experience reshaping companies, Operations, IT/Systems Integration and strategic initiatives. He can be reached at, and followed on Twitter, @RDEgrowroe

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