CHAPTER 4

Filtering Ideas (Most Bang for the Buck)

In a large organization, there can be a large number of ideas resulting from different collection mechanisms (be it contests, brainstorming, or twenty-first-century suggestion boxes). At large organizations, an innovation contest with a month-long entry window can result in hundreds, if not thousands, of ideas for increasing profits. Similarly, enterprisewide brainstorming sessions result in a large amount of ideas collected.

Some of the ideas may be good ideas. In fact, some can be billion dollar ideas. But the timing needs to be right, as well as the client environment. Early in my career, I was at a new product brainstorming session and there were plenty of good ideas brought forward.

I was working with a telecommunications firm, and one of the contributors was an avid fisherman. He had lots of great ideas to make better fish-finders, but there wasn’t much of an appetite to move forward with any of them since the company was a B2B company, and the fish-finders were meant for a B2C market.

Another idea that arose that day was a video on demand type service. It was the early ‘90s, and there was no real Internet at that point. Cable companies, however, were showing movies on certain channels, but wanted a piece of the video rental market. People who wanted to rent videos at that point had to go to their local video store and choose a VHS copy of the video they wanted to rent. Since it seemed like a good match between consumers who didn’t want to leave their house to rent videos and cable companies who wanted to add the video rental service to their portfolio, a skunk works type project began to investigate the possibility for the technology that would later be called video streaming.

The video streaming project grew legs and became a piece of the product manager’s fabric. In time, however, the company was purchased for its avionics technology, and left the telecommunications and video streaming departments behind. Each of these departments became separate companies. The video streaming company was unable to compete on its own, while the telecommunications company lasted as long as its support agreements did.

This chapter discusses the various components of the triage stage. It discusses grouping, filtering, and tools to rate ideas and ends with details on business strategy. The inputs for this phase are the ideas collected from the collection phase, whether through a suggestion box, a brainstorming session, a hackathon, or an innovation contest.

The output of this phase is a reduced number of ideas that have been triaged and rated against a number of criteria. This reduced number of triaged ideas can then simplify the escalation stage, as discussed in Chapter 5.

Grouping

Hindsight is 20/20. The fish-finder and video streaming scenarios above look like the obvious decisions 25 years later. At the time, though, it seemed risky to move toward a video rental system when the organization had no experience in video technology. In your current position, with hundreds, or even thousands, of employee ideas to consider, how can you find the diamonds in the rough?

The second phase of transforming employee ideas into dramatic profits is the idea triage stage, as shown in the Infectious Innovation Process Funnel.

When ideas are coming from many sources, such as enterprisewide innovation contests or concurrent brainstorming sessions, there are undoubtedly many similar themes and maybe identical ideas. The idea triage stage allows the organization to group and prioritize the ideas that have been collected.

The first step in the triage phase is to bring down the ideas submitted to a reasonable number before an in-depth analysis can occur. Duplicate ideas should be filtered out. A well-run innovation system will have a database of previously submitted ideas as well, so duplicates of previous ideas should be filtered out. Although we are removing the duplicates from the active stream, a record of the idea should be stored as necessary. Similarly, ideas that are outside the organization’s normal boundaries should be eliminated. This may include ideas that involve criminal activity. Some of my clients are divisions of larger organizations, and their boundary ends where other divisions of the organization already offer the product or service being suggested.

A quicker method to determine duplicates is to first group ideas based on similarities. For instance, you could group the ideas that involve a specific feature enhancement. An example would be a cell phone manufacturer collecting several ideas around various product features. Ideas could be grouped into: microphone, camera, speaker, settings, battery, response time, outer shell, size, and so on.

This process may be accelerated by having employees pregroup the ideas when they submit them. This will reduce the effort of grouping after submission.

Filtering

Once efforts have been made to cull duplicates and boundary breakers, an idea analysis should be done so that management can prioritize based on certain criteria. Criteria will be specific to an organization.

The first key to filtering all the ideas is to rate them against a series of criteria. There are many criteria outlined here. Each idea should be rated against each of the criteria. The criteria listed here are not an exhaustive list, and additional criteria can be added that are specific to the organization.

The criteria to be measured against are as follows:

Relevance to Current Offerings

The bigger the ship, the harder it is to change its direction. So, it’s always a good idea to look at what direction the business is currently following. Google/Alphabet has put in its list of innovation strategies to follow the 70/20/10 rule. Its goal is to have 70 percent of its innovation efforts put toward business ideas that aid its current set of product and service offerings. Twenty percent of its innovation efforts are put aside for product and service offerings that are related to its current offerings, while 10 percent of its efforts are targeted to products and services that are outside its current offerings. In some circles, this last 10 percent may be called a “moon shot.” This is a good strategy to follow because it helps mitigate risks while allowing the organization to move forward on many fronts.

It is also easier for shareholders to follow the organization’s strategy if most of its innovation efforts (70 percent) are being focused on current products and services.

Effect on Profit

Another grouping an organization can use to filter employee idea contributions is to look at the effect on profit. What effect will the new idea have on revenues? Small, medium, or large? Or will it have an effect on reducing costs, and, if so, how big an effect is expected? The definition of small, medium, or large is relative, and may be different for each organization. It can be either a percentage or a fixed number, for example 30 percent or $250,000.

Size of Change

A possible determining factor on whether to move forward with the idea or not is the size of the change. Are there large changes anticipated? For instance, will a brand-new sales and marketing team be needed to address a new consumer segment? Or are the changes more of a medium or small nature? Each of these terms is relative to the size of the organization making the change. When this factor is combined with the effect on profit, the filtering decision can be made much easier. If, for example, the size of the change is large, while the effect on profit is small, it’s probably not the optimum idea to move forward with. However, if the size of the change is small, while the effect on the profit is large, good things can happen.

Speed of Launch

Some innovations can take a fairly long time to launch. For instance, autonomous vehicles have so many legal and insurance obstacles to overcome, that their future is still many years away. Other innovations can be done fairly quickly. For instance, changing a customer service process may be straightforward enough to be done within six months. Speed of launch can be a contributing factor to prioritizing ideas. The speed should be broken down into quick, medium-term, and long-term launches. The time frame for each factor would depend on the size of the organization. Typically a quick launch would be in the nine- to twelve-month range, while a medium-speed launch would be in the one- to two-year time frame, and a long-term launch would be more than two years.

Customer Demand

Another factor when prioritizing new ideas is customer demand. Is there any proof that customers are in search of this new innovation? Explosive innovations are often something the customer needs without the customer knowing that they need it. For example, when Uber came along with their ride-sharing service, most customers were quite familiar with the cost of taxis and the regulations that the industry had invoked to protect consumers. While customers may have had a demand for less expensive taxi service, the paradigm had not shifted away from taxis when Uber came on the scene.

So customer demand may be a hard thing to judge. It should, however, be factored into the equation when prioritizing new innovations, especially if customer feedback has indicated that this innovation will address something that customers desire.

Every organization has a customer feedback mechanism, which can be used to gauge the demand for certain innovations. When I consulted for an educational institution for public servants, there was considerable feedback regarding some of the service issues. Any innovative ideas put forward to address those issues were given first priority.

Costs of Entering the New Market

Some organizations look for innovations that have a high barrier to entry, since that will keep out the upstarts and bootstrapped companies. Are patents required? Are the costs high to enter the market? If the costs to enter the market are high, larger organizations have a better opportunity to capitalize than small companies without the disposable funding.

Meanwhile, other organizations consider it advantageous to consider innovative ideas with low up-front costs to enter the market and determine viability of the new products and services.

The levels of rating the costs of entering the market will depend on the size of the organization doing the rating, and the desire of the organization to move into new markets. Whatever the dollar values are, the costs should be rated as small, medium, or large. For example, a small cost may be under 2 percent of revenue. Medium costs may be 2 to 5 percent of revenue, and large costs may be over 5 percent of revenue. At this point, the costs are only estimates for the most part. A more accurate costing will be done in the escalation phase.

Competition

The amount of competition in the market for the new idea may be stiff, slight, or nonexistent. At this point, the rating is only an estimate. Competition may seem nonexistent until further research is conducted, especially if it’s an area outside the organization’s current focus.

Last year I purchased a new car and loved the unique color of that model. I thought I would easily identify my car in any crowded parking lot. After purchasing the car, I realized the color was not as unique to that model as I originally thought. Driving home one night, I saw five identical models with the same color!

Departments Affected

Some organizations choose to rate new product or service ideas based on the number of departments affected. Silos still exist, and getting interdepartmental cooperation is much harder for some companies than others. If this is a possible issue at your organization, list this as one of the criteria, and rate this as small, medium, or large. Small can indicate self-contained changes are required, while large can indicate many departments are affected, and medium is somewhere in between.

Speaking of silos, some of my clients have not been able to move forward with major initiatives because of the silos. One client had been formed by an amalgamation of provincial organizations with a common purpose. While there was a leader to unite the country, there were also leaders in each of the provincial departments, some leaders being stronger than others. Along with strong leaders in each province, some provinces felt superior to others because of their size. When major initiatives were attempted for the entire country, there were often slowdowns or blockages brought forward by the silos created. This was a major detractor for innovation here.

Another client was much smaller, but the silos were just as strong and as hard to work through. It was an educational institution with separate departments for operations, education, finance, and IT. When there was a companywide initiative to centralize and automate the collection of data from all systems for reporting purposes, each department had its own objectives and would not compromise for the common good. Working together didn’t work. Leadership tried many things to move the initiative forward but only achieved success when one department was put in charge.

Organization-Specific Criteria

Every organization has additional criteria that they may choose to use to rate the ideas submitted. These criteria may be location specific, industry specific, regulatory affairs related, or based on a number of other issues. Ideally, an organization is committed to going through the process of transforming employee ideas into profit-generating returns, and learns over time which criteria have the greatest impact on the success of the transformation within the organization.

Prefiltering upon Submission

Aside from grouping, a good idea to accelerate the filtering is to have employees prefilter the ideas when they submit them. This will reduce the effort of filtering after submission. It becomes less a matter of rating the criteria, and more a matter of verifying the submitted ratings. The downside of having the submitters do the prefiltering is that the ratings may be inconsistent. Some submitters may interpret the criteria quite differently than others.

Rating the Ideas

To prepare for a more thorough analysis of idea submissions, the remaining ideas that survive the triage stage should have a rating system in place against the major criteria. Then, the decision makers will have an easier time deciding which ideas should move into the business case and/or pilot phase.

Depending on the tools at hand, there should be a table or spreadsheet that lists the various ideas against the criteria mentioned previously. A possible table created for a cell phone company might look something like this:

#	Idea	Relevance	Effect	Size	Speed	Demand	Costs	Competition	Departments
1	128MB pixel camera	L	S	S	M	S	S	Slight	S
2	Waterproof shell	L	M	S	M	S	M	Slight	M
3	Free delivery	L	S	S	S	S	S	Stiff	S
…

Research done on each idea would depend on the number of ideas submitted, and the number of staff dedicated to the Infectious Innovation Process triage stage. The more accurate the information, the better. However, since most organizations have limited funds available to perform the triage, this rating is only intended to be an estimation exercise.

Once the table is complete, weighting could be added to the equation. For instance, if each of the eight categories were to be given equal weighting, then each criterion would be worth 12.5 percent. However, your organization may consider customer demand and speed of launch to be extremely important while costs and relevance may be less important. In this case, customer demand and speed could be given a weighting of 20 percent each, while costs and relevance would be given a weighting of 5 percent each.

This would then make the above table become as shown on page 59.

The next step would be to convert the ratings (small, medium, large, nonexistent, slight, stiff) into numerical values (1, 2, 3). The value of 3 would equate to the most desired rating, 2 to the next most desired rating, and 1 to the least desired rating. This does not always correspond to the same rating. For instance, when Relevance = Large, large would be considered a 3. However, when Costs = Large, large would be considered a 1.

Further translating the values in the chart above to numerical values, and then taking the weighting into account, a scoring system can be used to come up with a total score for each new idea, as shown on page 60.

This leaves scores of the three submitted ideas between 1.975 and 2.1, which could then be used as a general guideline to present to senior management in the escalation phase.

While this scoring mechanism can be used as a general guideline to decide which ideas should be escalated, all the scored ideas should be presented to senior management. When senior managers consider different ideas, they may have a particular affinity for one area of interest over another, which is not apparent when the scoring is performed.

A client I worked with recently on an application portfolio management project was using a similar scoring mechanism to determine which applications were worth investing in and which should be eliminated. No matter how the weighting and ratings were positioned, one senior manager’s pet applications always ended up in the elimination bucket. He refused to accept the scoring, and would not eliminate the application despite its weak score.

#	Idea	Relevance	Effect	Size	Speed	Demand	Costs	Competition	Departments
	Weighting	.05	.125	.125	.2	.2	.05	.125	.125
1	128MB pixel camera	L	S	S	M	S	S	Slight	S
2	Waterproof shell	L	M	S	M	S	M	Slight	M
3	Free delivery	L	S	S	S	S	S	Stiff	S
…

#	Idea	Relevance	Effect	Size	Speed	Demand	Costs	Competition	Departments	Score
	Weighting	.05	.125	.125	.2	.2	.05	.125	.125
1	128MB pixel camera	L=3	S=1	S=3	M=2	S=1	S=3	Slight =2	S=3	2.025
2	Waterproof shell	L=3	M=2	S=3	M=2	S=1	M=2	Slight =2	M=2	1.975
3	Free delivery	L=3	S=1	S=3	S=3	S=1	S=3	Stiff=1	S=3	2.1
…

The lack of senior management support for the scoring system of innovation ideas runs a similar risk. Since senior management support is so important, as will be shown in Chapter 5, all ideas should be presented, with recommendations for what might be considered the best based on the scoring system.

Some senior managers may choose to only focus on two or three variables mentioned, while others may want more variables to be considered. So present them all.

Business Strategy

A question that often comes up when first requesting new ideas for products and services, whether through an innovation contest or hackathon or brainstorming session or suggestion box, is how much guidance should be given to the contributors. That is, should the ideas being submitted have a specific objective in mind? For example, should a cell phone manufacturing company state something to the effect of, “We are attempting to corner the market on senior citizens. Please submit all ideas and show how they can be used to help us corner the market on senior citizens”? The quick answer is No, not usually.

While every business has a strategy, and it’s fantastic when new ideas are perfectly aligned with the strategy the organization is following, most companies ask for innovative ideas to expand their current strategy, and to look for future growth. Asking employees to focus their creativity in a certain area can be counterproductive. It limits the organization’s growth while possibly stifling the employees’ creativity.

The business strategy should be known, however, and ideas collected from employees should not immediately change the strategy. How does an organization come up with its strategy?

Whenever I’ve worked with business leaders on strategy, I’ve always emphasized the importance of keeping it simple. The ship is in motion, and there are normally just slight variations to make on an annual basis. While some organizations like to combine strategic planning with celebrations of the previous year’s victories and a team-building exercise, the selection of a new strategy should be fairly straightforward.

One of the tools I like to use is from one of my mentors, Alan Weiss. He uses this straightforward approach in his consulting work to help organizations select a strategy that is easy for everyone to understand while facilitating the ability to turn strategy into tactics.

The chart below shows a cross between products, services, and relationships and competitive, superior, and breakthrough.

	Competitive	Superior	Breakthrough
Products
Services
Relationships

From Process Consulting, page 134, Alan Weiss, 2002

During a strategic planning activity, I will ask my clients to first indicate where they are now with respect to the above table. The definition of the various terms on the left (products, services, relationships) will vary depending on industry. Companies offering financial services, for example, rarely have physical products. However, they do recognize the difference between an actual mortgage and a customer service process to help you apply and fill out the mortgage. Similarly, the difference between service and relationship may require definition. Using the earlier example of a cell phone manufacturer, the product would be the cell phone itself. A service would be a cell phone app the manufacturer may provide, such as mapping or music. The relationship would consist of how a customer would buy and use the cell phone, along with any customer service required following the use of the phone.

Warranties are an example of the difference in relationship for various cell phone providers. When my son’s BlackBerry required repair due to a defect several years ago, it was shipped to a BlackBerry repair center, repaired, and then returned. They gave him a loaner but he was without his own phone for two weeks. When he later owned an iPhone and brought it in for repairs (my son is tough on his phones), they immediately gave him a replacement.

The different categories across the top represent how the organization is seen in the marketplace. Competitive indicates that the organization is no better and no worse than the majority of its competition. Superior indicates that the organization is superior to the majority of its competition, while Breakthrough indicates that the organization is vastly superior to the majority of its competition. As time goes by, the ratings degrade from right to left as the competition catches up. That is, a product seen as a breakthrough this year will probably be seen as superior or competitive in the years to come as competitors catch up.

Once the organization has indicated on the chart where they are today, they are then asked to indicate where they want to be a year or two from now. If a company is looking for explosive innovation, then it is typically looking to have breakthrough products or services. On the other end of the spectrum, an organization may be looking for incremental innovation just to remain competitive.

After the organization has selected which strategy to follow, the gap between where they are now and where they want to be must be bridged. That’s where the tactics need to come into play, and accountability has to be delivered.

A business strategy is important for the forward movement of the company, and it is important for the cohesiveness of effort being applied in the various departments. But how does the Infectious Innovation Process affect the business strategy?

There is a possible relationship between the Infectious Innovation Process and the business strategy in several ways. Either the innovation ideas can help guide the strategic planning, or the strategic planning can impact the innovation ideas. If the ideas are reviewed before the strategic planning session, some ideas for ways forward can be presented at the session. Similarly, the strategy selected may impact which innovation ideas are selected to act upon, and which may be ignored for the near future.

Summary

Grouping

Filtering

Rating

Business Strategy