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Consumer Electronics Industry Needs to Overhaul How It Manages Innovation

December 30, 2009 By Adi Alon
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Consumer electronics companies around the world have been hit hard by the ongoing economic downturn. To overcome these challenges, the industry needs to overhaul the way it manages innovation. This conclusion is based on my work with clients and new innovation research findings Accenture recently completed. The research involved interviews with consumer electronics corporate executives working for global companies based in the United States, Europe and Asia/Pacific.
 
The research, which is relevant to attendees at next week’s Consumer Electronics Show in Las Vegas, found numerous flaws with innovation such as:
 
·  Disconnected and uncooperative business units;
·   Opposing internal forces;
·   Insufficient cross-operational knowledge of innovation projects;
·   Overemphasis on short-term financial results instead of longer term investments;
·   Opting for product or service line extensions instead of developing new ideas;
·   Failing to learn from mistakes; and
·   A tendency towards risk aversion.
 
To achieve growth through innovation in the consumer electronics industry, players should consider:
 
·   Number One: Approach innovation as a business discipline, and then manage and execute it systematically and with structured processes. That means as an end to end process from insight development to idea generation to development to marketplace launch.
 
·   Number Two: Establish uniformity of command of innovation with one high-level executive who has accountability for innovation results. Consider appointing a chief innovation officer. Accenture’s research found a direct correlation exists between the level of successful innovation within companies and the presence of a chief innovation officer.
 
·   Number Three: Have a dedicated budget for innovation. Appointing a chief innovation officer is not enough. Accenture has seen many instances where organizations appointed someone to lead the innovation charge but then ran up against the crippling “who owns the budget?” problem. A dedicated budget is a vital component of successful innovation. This does not mean all innovation efforts should be centralized. But there does need to be an adequate level of resources to fund the innovation infrastructure.
 
·   Number Four: Develop the ability to identify the markets ripe with opportunities. Understand what customers in those markets want. Consistently, quickly and cost effectively bring products to market that fulfill customers’ desires. One of the biggest keys to achieve sustained innovation is a culture that tolerates risk, rewards failure and encourages continuous improvement. Without such a culture breakthrough ideas are impossible to identify and capitalize on.

 

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Most Recent Comments:
Larry Pace - Posted on December 31, 2009
Very good article. I hope that you get a lot of positive response, as it would be very helpful to the industry, particularly to help reduce the "not invented here" syndrome.
Robert M Cotton - Posted on December 31, 2009
Having been an innovator of new products and concepts for over thirty years, I had little interest or insight into how innovation occurred in large organizations. I assumed that the process was somewhat similar to how it was managed in smaller organizations but at a much larger scale and with more sophisticated methodology and greater resources. I was able to easily identify examples of high profile innovators of our times such as Bill Gates, Steve Jobs and Michael Dell. In the consumer electronics or audio world you have always had a history of innovators such as William Hewlett or David Packard or J. B. Lansing and Thomas Dolby that built company that bear their names and reflect the success based on their visions. What was not clear to me was how once great companies who lost their visionary founders would continue to lead through innovation. In my most recent venture as a product and solution innovator, I achieved several new product awards as well as gained a reputation for creating unique and relevant designs and solutions for Consumer Electronics (CE). My growing reputation also elicited interest from some well known Consumer Electronics companies which resulted in contract work for developing custom audio solutions that would adapt to their new products. It was during this process that I discovered a disconnect in many large CE organizations between their R&D, Industrial Designers, Marketing & Merchandising and the ultimate goal of new product innovation. I originally set out in June of 2,000 with a goal to develop a new and innovative brand of portable audio consumer electronics. I quickly discovered a log jam holding up the process for product development when attempting to advance new designs. In most traditional CE companies, new and interesting intellectual property (IP) goes in through the back door and straight into the hands of the audio engineers. Their first directive was to test and approve the IP according to industry standards and for eventual integration into new products. The testing and relevance of these new IP’s was judged strictly at the analytical level and did not consider or define the practical application of the IP in advance of testing. The audio engineers may or may not be aware of the end game. My personal experience with the audio engineering division of my larger clients was that, due to the engineers highly technical training and typically analytical nature, you were often required to wrestle the technology out of the audio engineer’s grasp or it would become lost forever to testing and tweaking and thus death by committee. For example, in early 2,001, I was invited by a well known Venture Capital firm to review $1/3 billion worth in development cost that netted over one hundred patents or IP’s which had been produced by 100 audio engineers over a period of a few years. Not one single product or IP had made it to market as of the date of my review and most would never see the light of day. The audio lab is not always the first step for innovation. Sadly, by the time a unique IP emerges from the engineering lab and then is passed on to the Marketing & Merchandising team and further passed on to the industrial engineers, it may have lost the entire first to market timing advantage or had all of the potential market relevance drained out of the prospective new product. For the better part of three decades I have always instructed my employees, “do not just bring me problems, bring me solutions”. In developing new products or new solutions I always practiced what I preached. My personal venture into the world of high profile retail brand Consumer Electronics had philosophically challenged my own concept of new product development and turned it on its head. I like to work from the opposite end of the development process and in effect put the caboose before the engine. First, search for new and relevant intellectual property and meet with the developers for a demonstration and a lengthy discussion as to relevant attributes. Second, define a relevant market or demographic and design a solution that would employ the unique functionality of that new IP and thus would add obvious value to the target market or industry. Three, the next challenge was to develop a loose outline for the Marketing & Merchandising of the product. Finally, direct the audio engineers and industrial engineers to improve upon the rough design, box every one of them into a very tight corner and resist any and all attempts to fight their way out of that corner. It is a continuous and heated challenge that requires complete vigilance and requires the engineers to justify and earn every modification. The primary objective of this process is to create a new product that is highly relevant to the end user and will always exceed the expectations of the consumer both in function and price to value. Inevitably, the original discomfort of the audio engineers would be transformed into pride in their achievement. Through the pain of child birth comes new life. Consumer Electronics has become very closely associated with the Music & Entertainment industry. Modern innovators have even taken on a highly public image. They have become the “Face” of the brand and in effect have become “geek stars”. Without that public persona these companies would lack personality or the cache that gives the charm to their PR departments. This larger than life persona becomes the attention grabber that drives the new products and new innovations into the market. The more a consumer can relate to and trust the “Face” of the company, the more effective the execution of the brand. As is the case with Steve Jobs or Bill Gates, the introduction of a new product is always turned into a special event and is always presented by the Founder and innovator with much pomp and Press. I have narrowed it down to four (the 4 P’s) critical elements for creating a successful and new benchmark product, stated as; 1) the Product, 2) the Philosophy, 3) the Prophet and 4) the Path. There are many examples of major successful CE companies that have executed this strategy. There are others who have not. Using the “4 P’s” described above you may be able to identify those companies who have been successful and those who still have a ways to go.
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Archived Comments:
Larry Pace - Posted on December 31, 2009
Very good article. I hope that you get a lot of positive response, as it would be very helpful to the industry, particularly to help reduce the "not invented here" syndrome.
Robert M Cotton - Posted on December 31, 2009
Having been an innovator of new products and concepts for over thirty years, I had little interest or insight into how innovation occurred in large organizations. I assumed that the process was somewhat similar to how it was managed in smaller organizations but at a much larger scale and with more sophisticated methodology and greater resources. I was able to easily identify examples of high profile innovators of our times such as Bill Gates, Steve Jobs and Michael Dell. In the consumer electronics or audio world you have always had a history of innovators such as William Hewlett or David Packard or J. B. Lansing and Thomas Dolby that built company that bear their names and reflect the success based on their visions. What was not clear to me was how once great companies who lost their visionary founders would continue to lead through innovation. In my most recent venture as a product and solution innovator, I achieved several new product awards as well as gained a reputation for creating unique and relevant designs and solutions for Consumer Electronics (CE). My growing reputation also elicited interest from some well known Consumer Electronics companies which resulted in contract work for developing custom audio solutions that would adapt to their new products. It was during this process that I discovered a disconnect in many large CE organizations between their R&D, Industrial Designers, Marketing & Merchandising and the ultimate goal of new product innovation. I originally set out in June of 2,000 with a goal to develop a new and innovative brand of portable audio consumer electronics. I quickly discovered a log jam holding up the process for product development when attempting to advance new designs. In most traditional CE companies, new and interesting intellectual property (IP) goes in through the back door and straight into the hands of the audio engineers. Their first directive was to test and approve the IP according to industry standards and for eventual integration into new products. The testing and relevance of these new IP’s was judged strictly at the analytical level and did not consider or define the practical application of the IP in advance of testing. The audio engineers may or may not be aware of the end game. My personal experience with the audio engineering division of my larger clients was that, due to the engineers highly technical training and typically analytical nature, you were often required to wrestle the technology out of the audio engineer’s grasp or it would become lost forever to testing and tweaking and thus death by committee. For example, in early 2,001, I was invited by a well known Venture Capital firm to review $1/3 billion worth in development cost that netted over one hundred patents or IP’s which had been produced by 100 audio engineers over a period of a few years. Not one single product or IP had made it to market as of the date of my review and most would never see the light of day. The audio lab is not always the first step for innovation. Sadly, by the time a unique IP emerges from the engineering lab and then is passed on to the Marketing & Merchandising team and further passed on to the industrial engineers, it may have lost the entire first to market timing advantage or had all of the potential market relevance drained out of the prospective new product. For the better part of three decades I have always instructed my employees, “do not just bring me problems, bring me solutions”. In developing new products or new solutions I always practiced what I preached. My personal venture into the world of high profile retail brand Consumer Electronics had philosophically challenged my own concept of new product development and turned it on its head. I like to work from the opposite end of the development process and in effect put the caboose before the engine. First, search for new and relevant intellectual property and meet with the developers for a demonstration and a lengthy discussion as to relevant attributes. Second, define a relevant market or demographic and design a solution that would employ the unique functionality of that new IP and thus would add obvious value to the target market or industry. Three, the next challenge was to develop a loose outline for the Marketing & Merchandising of the product. Finally, direct the audio engineers and industrial engineers to improve upon the rough design, box every one of them into a very tight corner and resist any and all attempts to fight their way out of that corner. It is a continuous and heated challenge that requires complete vigilance and requires the engineers to justify and earn every modification. The primary objective of this process is to create a new product that is highly relevant to the end user and will always exceed the expectations of the consumer both in function and price to value. Inevitably, the original discomfort of the audio engineers would be transformed into pride in their achievement. Through the pain of child birth comes new life. Consumer Electronics has become very closely associated with the Music & Entertainment industry. Modern innovators have even taken on a highly public image. They have become the “Face” of the brand and in effect have become “geek stars”. Without that public persona these companies would lack personality or the cache that gives the charm to their PR departments. This larger than life persona becomes the attention grabber that drives the new products and new innovations into the market. The more a consumer can relate to and trust the “Face” of the company, the more effective the execution of the brand. As is the case with Steve Jobs or Bill Gates, the introduction of a new product is always turned into a special event and is always presented by the Founder and innovator with much pomp and Press. I have narrowed it down to four (the 4 P’s) critical elements for creating a successful and new benchmark product, stated as; 1) the Product, 2) the Philosophy, 3) the Prophet and 4) the Path. There are many examples of major successful CE companies that have executed this strategy. There are others who have not. Using the “4 P’s” described above you may be able to identify those companies who have been successful and those who still have a ways to go.