way to describe what people want and how to provide it.

Anything that can be made or done can be described. If you can describe it you can also describe

the ideal version.

The Ideal Product does What I want, When I want, Where I want, with whom I want, in the

way I want, for the price I want with no hassle.

If you step backwards from the ideal to what is available today, each of those steps is

an innovation. There isn't just one straight path to the ideal, and many of those paths

are dead ends. Predictive Innovation gives you a structured way to describe the entire

idea space showing you all those paths. Describing all possible innovations:

reduces risk increases profits

maximizes return on investment and allows you to calculate the Total Innovation

Value making it easier to choose and get support for good projects

The most common approach to New Product Development is to use a Staged Gate Process starting with

a huge number of ideas then filtering them down through a number of stages until what

is hoped to be a successful product is launched. Despite the typical Staged Gate Process having

7 stages the failure rate of new product launches is 40%, basically random. Despite 50 years

of attempts to improve Staged Gate the failure rate has remained 40%.

A study of 576 projects at 360 Fortune 500 companies revealed there was a huge difference

between the results of product managers at the same companies using the same process.

The bottom 1/3 had an average of $2 million profits with the 40% failure rate. The middle

1/3 had an average profit of $21 million again with the 40% failure but the top 1/3 had $189

million profits, 95 times as profitable as the bottom 1/3. Instead of a 40% failure rate

they had a 96% success rate. Clearly the top 1/3 were doing something very different from

the bottom and middle.

The best definition of innovation is: Profitably satisfy unmet desires.

Profitable doesn't just mean money. Consumers profit from using the innovation. They give

money to get their desire satisfied. Businesses profit monetarily. Charities profit from doing

good. Whoever is involved with an innovation all of them must benefit or it just won't

happen. Unmet desire is one that has not yet been

satisfied some other way. Innovation does something new or better.

To innovate you need to know what to do, how to do it and you must do it correctly. So

there are two basic types of innovation systems, thinking systems and doing systems. Staged

Gate is the most common doing system. Creativity is the most common thinking system.

Creativity is unpredictable, unreliable, unfocused, inefficient, highly emotional. Its often said

in brainstorming sessions to leave egos at the door which shows you how emotional it

is. Creativity is also person specific depending on people with special talent. Anyone can

do Predictive Innovation without being particularly creative.

Staged Gate manages the risk but you can see that the risk is caused by using creativity

for ideas. If you use a different Thinking System Staged Gate can focus on the risks

of doing and achieve the 6-Sigma results you want.

The Staged Gate Process using creativity starts with a large number of ideas and filters them

down. On average it takes 300 ideas to produce 1 product. That filtering process costs 9

times as much as developing a single project. When we analyzed innovation as a process we

discovered there are 7 Essential Functions to the innovation process.

Those steps are: Reveal emerging expectations, the things customers

demand in the near future Generate ideas that satisfy the emerging expectations

Convert ideas into designs Make new products or set up systems to perform

services Communicate value, both internally and externally

Deliver new product or service Get and use feedback that is meaningful, and

start again with generating ideas Notice that you don't need to reveal emerging

expectations again. Emerging expectations are the criteria for ideas and products. This

is what to measure and the current measurement. Since in the first step you defined the emerging

expectations you already know what customers will want, it is something closer to the ideal.

The ideal product perfectly satisfies all the criteria for a product. Each improvement

between the ideal and what is available today is an innovation. Feedback tells you how close

to the ideal your product is and how much closer is needed for the next improvement

to be accepted by customers. The second step is generate ideas that satisfy

the emerging expectations. There is such a thing as a bad idea. Any idea you spend time

or money on that doesn't profitably satisfy a customer's desire is a bad idea. If you

skip revealing emerging expectations then the ideas are a random mess and you end up

spending huge amounts of time and money sorting and testing the ideas hoping to find a good

one. If instead, you start by defining the criteria of the emerging expectations you

know what customer's will want so you can focus on generating ideas that match the criteria.

Predictive Innovation also gives you a structure for ideas so you can quickly identify the

right idea and all the related ideas. This makes it possible to choose the best idea

and have a sequence of future products related to that core idea.

Once you know what to make you need to know how to make it this is what you do when you

Convert ideas into designs. Even if customers want an idea if you can't profitably make

it then its not a good idea for you. Being able to solve the technical challenges so

that you can profitably make what customers want is essential to success.

After you have the design you must efficiently follow it. Making the product or setting up

the system to perform the services is where the doing system takes over. This is where

Staged Gate and other process control methods like 6 Sigma will help you the most. You will

still need a thinking system to improve your process and overcome unexpected challenges

and Predictive Innovation helps you there as well.

Communicating value is really done throughout the entire process. You must get approval

from stakeholders, funding for projects, and motivate workers in addition to selling to

customers. The criteria revealed with the emerging expectations provides you the tools

to effectively communicate value to everyone in their own language.

Innovation hasn't occurred until the customer has the product and is using it to satisfy

their desires. So you must deliver the new product. And finally you should get and use

feedback from all the steps. Knowing the criteria again is essential to asking the right questions

and determining how to measure the results. Without first revealing the emerging expectations

the entire process suffers. Using Predictive Innovation changes everything.

Instead of filtering down from a pile of random ideas you start with accurate criteria to

build up a family of successful products. This increases profits and reduces risk at

the same time.

Predictive Innovation Overview There are 6 dimensions to Predictive Innovation,

these are: Actors

Desires Scenarios

Alternatives Outcomes

Elements For Practitioner we will focus on Alternatives,

Outcomes, and Elements.

Every scenario has approximately 7 outcomes and each outcomes has 7 types of elements

with 15 types of alternatives. This makes the hypercube of the idea space.

15 Alternatives times 7 elements times approximately 7 outcomes produce approximately 735 types

of ways to innovate for any scenario. These are types so there can be multiples

for each type but there is at least one of each type, this defines the idea space.

The complete idea space must have at least one of each of the 735 types. Most products

don't properly satisfy one or more outcomes and only cover 3 elements with 1 Alternative.

This means that less than 1% of the idea space is covered by most products. That leaves a

huge amount of space available for innovation. By not covering the entire idea space a large

amount of the possible profits are ignored. Most products cover less than 1% of the idea

space and only 13% of the idea space is even explored. This is a huge area of missed opportunity.

That ignored space is not only missed opportunity it causes risk. That unexplored region is

open to competition, might have easier higher profit ideas that better satisfy customers

desires. If you remember the difference between the profitability of the different project

managers its very close to the same ratio. The reason the top 1/3 of product managers

are 95 times as profitable is because they reduce the risk and increase the opportunities

by covering the entire idea space.

Conclusion Describing all possible innovations:

reduces risk increases profits

maximizes return on investment and allows you to calculate the Total Innovation

Value making it easier to choose and get support for good projects