New Product Innovation in a Large Corporation

I have spent almost 15 years of my career working in R&D in large organizations. A big chunk of that time has been in new product development work of some form so I have quite a bit of experience working within the constraints of the modern large corporation. While there are big differences between the large corporation and the small business/start-up world, the key drivers are the same. Reducing innovation cycle times and doing innovation with limited investment are the order of the day. Moreover, the importance of fitness with customer CTQs in new product development is no different for the 5 person start up or the 60,000 employee 100+ year old corporation. With that in mind the following are my thoughts on how to optimize innovation with respect to those three drivers from the specific perspective of the modern large corporation.

I thought it best to start by mentioning my number one most important innovation optimization pro-tip that directly impacts all three key requirements:

· Whenever possible Identify a customer/client partner to work directly with on any innovation project from day 0. The partner should not just be in name only but an active participant in all phases of the project from conception to commercialization. They should be the target customer of the innovation and its first buyer and biggest fan. The innovation request and maybe even the technology concept itself could originate with the customer. In some cases, the customer/partner might even contribute a great deal of the bench work. Obviously this type of scenario cannot work in all instances but it can in many if not most. Everybody wins when these arrangements are properly set up and a successful product is the end result. In a large corporation these sorts of partnerships are often easier to get off the ground since lack of financial resources/capital investment/people are usually not showstoppers. Moreover large companies typically have large, loyal customers with whom they have built deep relationships at both the professional and personal level. Therefore finding an innovation partner and/or innovation product target is often easier. Partnering with another large corporation is not always the best approach however and in many instances working with a small business or start-up is more advantageous. In this case the partner will most likely not be a customer of the innovation but they will have a very large financial interest in its success and will usually have a nimbleness and agility that the big guys just can’t match.

  1. Minimizing development cycle time:

· Identify and target for acquisition and/or partnerships technologies that are mature (i.e. already out of the research phase, well into development, and potentially very close to already commercial ready offerings)

· Use external resources to the maximum extent possible for the “hard” stuff (i.e. let the university researchers and start-up companies do all the whiz bang stuff, inventing new technologies, publishing the papers, presenting at the conferences, getting the patents, etc.). Only look to acquire/partner with entities that are willing and able to lay all the groundwork for you. This obviously relates to the point above. If your large corporation does not have an R&D group or pure R&D functions this will be your default position.

· If work must be done internally assemble a dedicated, fully staffed, well resourced, team of experts to do it, then support the heck out of them. Take the time to write a project charter, establish reasonable milestones/objectives and timelines, then hold the team to them. When milestones are not met projects need to be killed and resources shifted to the next project(s). Teams should have full time, 100% dedicated personnel. The 0.5FTE person here, 0.25FTE person there approach rarely works in my experience. Better to have a 1 month project with 3 people/3 FTEs than a 6 month project with 6 people each with 0.5FTE assignments. This may seems to contradict the objective to minimize development costs however, to the greatest extent possible, these teams should be given extreme latitude and deference when it comes to spending money on items they deem necessary to deliver on the established milestones. Of course each project needs a budget but unwillingness to buy a needed piece of lab equipment should not be the reason that milestones are not met.

2. Minimizing development costs

· Take full advantage of internal corporate resources/development efforts. In a large corporation the various business units often do not know what technologies/new product concepts each other have in their respective pipelines. Occasionally there will be a fortunate coincidence where a particular technology developed in one business unit will have applications in another. Obviously for this to happen there needs to be ongoing and active communication among the various businesses units with respect to their new product development efforts. Depending on how the financials are structured it may be that a particular business does not have to spend a dime upfront to get access to a commercial or near commercial ready product. One possibility to make the transaction equitable is an agreement on profit sharing between the BU that developed the technology and the one bringing it to market.

· Provide seed funding to universities/start-ups etc. working on technologies that might be longer horizon/higher risk but potentially large reward. The basic idea is to throw around 2k-10k grants (usually really open ended in term of how the money can be spent) to build relationships, get foot in the door and first crack at, really exciting, novel, potentially ground breaking technologies. For 90%+ of these nothing will come of it but the 1% that do succeed can be game changers. Of course programs like this require internal efforts within the corporation to actively search for possible recipients of these grants. However, they do not necessarily need to be formalized or have dedicated staff. Making it known among the various research groups in the company that this is an option they should keep an eye out for can be a very effective way to find worthy grant recipients. Alternatively, they can be advertised passively and awarded through competitions, grant application process, etc.

· Use graduate students/university labs as much as possible. Graduate students work cheap, are typically extremely dedicated, and often times have the brightest minds. If a quick hit possible technology is identified but nobody in the company has the bandwith to work on it farm it out to a university graduate school. Of course these agreements can get complicated and university licensing departments can be as greedy as the average corporation these days they can be useful tools for fast, inexpensive, decent quality work on defined projects

3. Fit with customer requirements (CTQs)

· See my number one most important pro-tip again

· If direct partnerships with potential customers are not an option than open, honest, frequent communications with the intended customer(s)/customer segment(s) is/are needed. Of course this is a truism but hiding things, being cagey/less than honest about eventual pricing, or steps required, or potential flaws/downsides will always come back to bite you in the end.

· Get the innovation into the hands of your target customer(s)/customer segments as soon as possible even if only a prototype or in less than optimal format. Do not wait until you have a finished, final, flawless product to introduce something new and innovative to the market. First, I can virtually guarantee it will not be flawless, nor will it fit every customers exact needs no matter how much you try to optimize it. Getting the innovation into the hands of the users sooner rather than later helps you see the flaws sooner, gives potential customers a vested interest in seeing it succeed, and builds robustness. Yes there are risks to this approach and you obviously can’t do this with just any customer. It should be reserved for those with which you have a special relationship. The technically savvy, the risk takers, the envelope pushers and most importantly the ones you trust to understand the concept of prototyping and the new product development cycle.

Written by

Research scientist (Ph.D. micro/mol biology), Thought middle manager, Everyday junglist, Selecta (Ret.), Boulderer, Cat lover, Fish hater

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