Manage your Innovation Pipeline exactly like your Sales Pipeline
Managing the Sales pipeline is a well-developed executive skill in any company selling large ticket items to business customers. Each sales person has to gather data and input their reports and forecasts. Some of the key actions in managing the pipeline include:
- Qualification questions have to be answered. Does the customer need our product? Do they have a budget? Are we in contact with the decision maker? Who is the competition? Etc.
- What is the dollar value of each item in the pipeline? What is the likelihood of closing the deal? What is the timescale? Estimates for each of these questions enable a total sales forecast to be assembled and reviewed.
- What are the barriers to each sale? What are the key actions planned? What additional resources are needed to win the deal?
- We look back at the history of the pipeline. What are the conversion rates from prospects to sales? Why did we lose the deals we lost? What is the sales velocity i.e. how long does it take to convert prospects into sales? What could we have done better?
- Every member of the executive team is involved and aware of the key issues. They contribute ideas and resources to help close sales.
The pipeline is regularly reviewed at executive level. It is an essential tool in running the business. Lessons are learned, and changes are made to constantly improve the sales process.
The pipeline of innovation projects for new and improved products and services is also strategically vital for the business but typically it is not treated with the same attention or importance. Let’s use a similar approach to the one above.
- Qualify. Is there a customer need for each innovation? Will they pay for it? Are we in touch with customers who can evaluate the prototype and give us feedback? What will this innovation compete with? Will customers like it? Can we crack the technology?
- For each item in the pipeline we need an estimate of its cost to develop and projected payback. This is reasonably straightforward for incremental innovations but particularly hard for radical innovations. Nonetheless estimates are essential. We can then evaluate the total projected impact of our innovation pipeline.
- What are the barriers for each project? What are the key actions planned? What additional resources are needed to bring this initiative to completion? What technology challenges do we face? Do we need external help?
- Again, we look back at the history of the pipeline. What are the conversion rates from promising ideas to implemented innovations? Why did so many projects not make it to market? What is the innovation velocity i.e. how long does it take to convert an approved initial idea into a new product or service? What is the failure rate at each stage in the gating process? What could we have done better?
- Every member of the executive team should be involved and aware of the key issues. But often they are not – they leave it to the Chief Innovation Officer or equivalent responsible person.
The innovation pipeline should be regularly reviewed at executive level but how often does this happen? Because the revenue impacts are hard to assess and the technical barriers are tricky the innovation pipeline review tends to slip down the priority list. We need to appraise it with the same rigour that we apply to the sales pipeline. We can then use the insights gained to constantly improve and speed up our development programmes.
Based on a presentation by Charlie de Russet, Founder of Idea Drop.
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Paul Sloane writes, speaks and leads workshops on creativity, innovation, and leadership. He is the author of The Innovative Leader and editor of A Guide to Open Innovation and Crowdsourcing, published both published by Kogan-Page. Follow him @PaulSloane
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