Lean Innovation: Implementing business innovation faster and more efficiently
In business innovation, the concept of lean innovation is based on a simple philosophy: More resources do not automatically lead to better innovation. In the lean innovation approach, budget constraints become the driver of a company’s idea management and innovation management. Innovation processes are deliberately kept lean. In this article, you will learn how to apply the principles of lean innovation to your business and projects. And why excessive innovation budgets often have the opposite effect to what they are intended to have.
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Lean Innovation Principles
Lean innovation takes the complexity out of idea management and innovation processes. Lean thinking – i.e. concentrating on the most important things – is at the centre of attention. The underlying principles can be divided into four groups:
- Strategy and performance: Clear innovation strategies, focus on customer benefits, creation of an innovation roadmap.
- Strengthening innovation teams: cross-functional collaboration, strengthening knowledge and teamwork, developing creative skills.
- Efficient processes: Simple and clear innovation processes, use of methods such as open innovation and co-creation to win external ideas.
- Continuous improvement: Continuous improvement system, internal communication and reward for change and transformation.
In this article, you will discover three examples of how you can apply different lean Innovation principles in various areas.
Lean innovation in marketing
An example: You are planning a nationwide advertising campaign for a new product. With the help of an excessive advertising campaign, your product is supposed to become well known. Let’s assume you are not following a lean innovation approach and you have 10 million euro at your disposal. What are you thinking of?
- Extensive market research to test the campaign,
- the production of a high-quality TV commercial,
- running an expensive campaign on Facebook,
- high spendings on influencer marketing.
What do you do when your budget is cut by 99%? Instead of 10 million euro you now only have 100,000 euro at your disposal. Now you’re in the same situation as a start-up company. You challenge is to achieve great success with few resources. The solution: Lean innovation approaches.
In an ideation session, you start to think about different forms of growth hacking: the production of unconventional videos that are simple, cheap and effective and spread via YouTube, online images with funny slogans that people pass on, and spectacular PR campaigns. Will you be less successful with the lean innovation approach? Or even more?
The traditional cause-and-effect principle is sometimes completely turned upside down in the process of generating ideas. Usually we are used to achieving an effect X at a cost of Y. If you send 20,000 advertising letters to customers, 500 react at best. If you send 40,000 letters, 1,000 react etc.
Automatically you think: If you increase the budget for a certain measure, you automatically achieve a corresponding effect. With lean innovation approaches, however, it’s the other way around. It may be that a campaign costing 100,000 euro is much more effective than one costing 10 million euro.
Lean innovation in R&D
You want to develop a new product. You allocate your teams 10 million euro and one year time. How long will it take? Pretty much exactly 13 months. And the costs are at least 11 million euro. Why? Your development team does not think lean, inexpensive and fast, but first of all establish complex development processes, customize workflows, draft calls for tenders and look for external partners.
- Why launch a low-cost ideas competition with students from the local university when there are 10 million euro to spend?
- Why establish small, fast and effective test methods based on lean innovation principles when large, thorough and slow approaches can also be paid for?
- Why attract potential partners with smart rewards and a performance bonus when generous daily rates can be financed from the budget?
- Why look around on the market to discover whether intelligent solutions already exist that can be integrated when the money is there to make your own developments?
Lean innovation in the field of product innovation follows a simple pattern: How can we fail quickly and cheaply? How can we gain as much insight as possible from initial mistakes? And how can we transfer these findings to the next stage of development as quickly as possible?
Lean innovation in management
Let’s say you could spend five million euro a year on consulting fees and afford dozens of analyses on your corporate challenges. Why engage in lean innovation? Why ask your employees and encourage them to aggressively search for inefficiencies in processes or new business opportunities? Why take your own risk when there is plenty of money for consulting fees? The same applies to IT: why develop a lean, low-cost approach using lean innovation principles when money is available for a large, expensive and comprehensive solution?
Apple uses lean innovation principles: insiders report that the company sometimes stops promising projects because they don’t want to grant too much money. Executives have to abandon an existing project to leave room for a new one. Apple wants to prevent employees and managers from accumulating large budgets which would be inconsistent with the principles of lean innovation.
Budget cuts can stimulate creative ideas
When you establish lean innovation principles, you literally take money away from your employees. Not generally, not personally, but as a catalyst in the innovation process. When a team has completed a task with a budget of 50,000 euro, take away 20,000 euro and say: “There is definitely a cheaper and better way. Apply lean thinking.” Your employees will probably look at you as if you turned into an alien overnight. “You can’t do that!” Yes, you can. With lean innovation thinking you drastically increase your prospects for successful innovative approaches.
We have experienced innovation processes that have become bigger and bigger and more and more complicated. The administration of the budget finally took up a considerable part of the work: Meetings, agreements with participating agencies, tenders, discussions with the purchasing department, the selection of various service providers, a supporting analysis and so on. Often it was about products that could have been tested with little effort within a few days. At a tenth of the costs and with fast, visible results. That’s when lean innovation thinking becomes relevant.
The Innolytics® innovation software supports lean innovation
Take the test! Review all essential innovation activities in your company. Ask yourself: “What would happen if I cut the budget here by 40 to 80%? Would it stimulate the creativity of employees in their search for unconventional new solutions?
With lean innovation you just spend money on very promising ideas and projects. Look at it the other way around: Wouldn’t it be annoying if one day you realize that all the new ideas for which you have provided a lot of money were strangled by this very money? Try to think lean. And to follow the main principles of lean innovation.
Lean Innovation Tool: Innolytics® Innovation
Innolytics® Innovation software supports you with a lean innovation platform for an affordable price. Start innovation projects in the shortest possible time, develop innovation processes via drag and drop functionalities, invite employees and customers to lively idea campaigns and feedback. Implement innovation in all business segments faster and leaner.