The success of the Market Readers strategy depends on managers making sure the right products hit the market at the right time. So the initial process of selecting which projects to focus on is critical: Here, the key capabilities include forecasting — and planning for — project resource requirements, and rigorous decision making involving portfolio trade-offs. At the Parker Hannifin Corporation, a diversified manufacturer of industrial equipment, this understanding led to the implementation of a highly disciplined stage-gate process for green-lighting projects, embedded in every division in the company. Parker Hannifin treats its general managers and their staff as venture capitalists who are being asked to invest the company’s money in certain projects. The rigorous value screens that the company has developed as part of this process have enabled management to filter out the good projects from the bad much more successfully than before.
For companies like Visteon, an equally critical capability is engagement with customers to prove real-world feasibility throughout the product development stage. By working actively with automakers, says Visteon’s Yerdon, “we’re taking a substantial amount of risk out of the system. Rather than coming up with an idea, building it, and then bringing it to a customer, only to find out they don’t want it, we’re much better off working together and more openly.”
In the next year or so, Asia will become Visteon’s largest market — a remarkable achievement for a company that started out as a spin-off of the Ford Motor Company. As Visteon continues to expand from its longtime base in North America, its capabilities in reading different markets accurately and collaborating with original equipment manufacturers in each market will become even more essential, and thus having in-region engineering capabilities will become increasingly critical.
Technology Drivers begin with a different approach to ideation, using their technological prowess to develop products their customers may not know they need. That’s why the ideation stage is so critical for these companies. They must pursue open innovation processes that capture as many potential ideas as possible, all the while avoiding being hobbled by a “not invented here” attitude. They must also constantly scan markets for new technologies that might further their pursuit of new ideas. In addition, Technology Drivers must ensure that their technical personnel have time to ideate: This is the rationale for Google’s well-known “70-20-10” rule, which directs engineers to spend 70 percent of their time on core business tasks and 20 percent on related projects, but allows them to spend 10 percent of their time pursuing their own ideas.
Technology Drivers can take different approaches to the ideation stage. The German technology giant Siemens AG, for example, spends 5 percent of its overall R&D budget on planning for the long term, which involves developing detailed technology road maps within individual business units, as well as longer-range scenarios of future technology trends at the corporate level. This dual process has generated perspectives that have enabled the company to expand its large health technologies business into new areas such as personalized healthcare. And Siemens works hard to track the payback from its centralized innovation office in the form of actual new products launched.
The Masco Corporation, an $8 billion building products company, is more freewheeling in its ideation; Masco seeks to be ready to leverage new technologies no matter where they can be found. A few years back, company representatives noticed some interesting technology at a trade show — a wireless, battery-less switch, which they were sure would have applications in the home. “We vetted the technology, brainstormed specific applications for the home, and developed a pilot,” recalls Thom Nealssohn, manager of innovation implementation services at Masco. “Every time we showed it to someone, we learned a little bit more, and that gave us the fuel that we needed to go back and make it better.” Masco launched a new line of innovative programmable lighting products based on the technology — Verve Living Systems — in 2009.