Presentation on theme: "New Contenders, New Approaches"— Presentation transcript:
1 New Contenders, New Approaches Beyond “Stage-Gate:” Faster and More Profitable New Business DevelopmentECMRANew Contenders, New ApproachesGreg Stevens, President, WinOvationsSM, Inc.October 9-11, LondonThe title of this talk, “Beyond Staged-Gate: Faster and More Profitable New Business Development” could also be called “New Contenders, New Approaches for NBD,” or “Innovations in Innovating.”It is all about more effective innovation. Innovation is like a carrot and a stick in determining shareholder value.It is like a carrot in that a recent study by Wharton, Ernst & Young and Forbes found “Innovation” to be the number one driver of shareholder value. Innovation is more important in determining shareholder value than other factors like alliances, quality, customer satisfaction, environmental performance and branding (Forbes, 3/3/00, 142).In contrast, innovating poorly is like taking a stick to shareholder value. Low new business development success rates are the root cause of many corporate failures. It is hard to overestimate the importance of innovation.Today we are going to expose several long-established and attractive myths regarding innovation and new business development (NBD). These myths are very damaging because they lead to low success rates in new business development.
2 Outline State of the Art: “Stage-Gate” Processes Killer Myths Inhibiting the Fuzzy Front End (F.F.E.) of New Business Development (NBD)Debunking Myths & Achieving Six Sigma Improvements in New Business DevelopmentIn Speed & ProfitabilitySpecific ApplicationsWe will start out by briefly reviewing the state of the art in new business development, and then discussing - and debunking – several common myths regarding the fuzzy front end (F.F.E.) of NBD. These myths are widely believed, and most corporations are operating their NBD efforts today assuming that these myths are trueWe will go on to describe how, by aggressively applying the latest thinking, Six Sigma improvements can be achieved in both speed and profitability when benchmarked against today’s typical Stage-Gate new business development efforts.There is a new contender.
3 A. Stage-Gate® Systems Are “State of the Art” for New Business Development Today’s NBD Processes First Published Broadly in *SC Johnson, Booz-AllenLittle New TodayWidely Adopted in Last 20 YearsBy 60% of FirmsPer PDMA “Best Practices” Study“Stage Gate ®”: Trademark of Robert G. CooperIn the last 40 years, Stage Gate processes have become the well established state of the art. Stage Gate processes are the current paradigm for new product development.The stages used in Stage Gate processes have undoubtedly existed for as long as new products have been developed: idea generation, analysis, development and so on. These stages have literally existed for millennia.Stage Gate processes were first formally described in the literature in the late 1950’s, and have been widely adopted especially in the last 20 years. Robert G. Cooper, the noted academic from McMaster University, has become most closely associated with Stage-Gate processes. He has even trademarked the term, “Stage-Gate.”The PDMA “Best Practices” study shows that 60% of all major firms now use Stage Gate Processes. (Footnote)
4 B. Several Myths Inhibiting New Business Development (NBD) Today Many Grains of TruthIn Current NBD ParadigmAnd Much Confusion“Get the Assumptions Wrong, and Everything that Flows from Them Is Wrong.”Peter F. Drucker, “Management’s New Paradigms” Forbes, Oct. 5, 1998, ppNext we’re going examine and shatter several of today’s myths regarding new business development. They contain many grains of truth, yet there is also a great deal of confusion regarding them.As Peter Drucker says, “Get the assumptions wrong, and everything that flows from them is wrong.”
5 Problem: “NBD” (& Other) Experts Are Often Wrong WSJ Survey of Expert Economists Forecasting 30-Year Treasury Interest Rates (WSJ: 1/4/99):Got the Direction of the Changes Right Only 28% of the time9 of 32 Forecasts:When Experts Said Rates Would Rise, 72% of the Time They Fell30 Technology Companies Highly Recommended in 1968 Lost an Average of 98.3% Value in 3 Years*Same Happening Today for “Dot Com’s:”Bankrupt:Boo.com; SurfBuzz.com; Red Rocket; Epidemic Marketing.comPart of the problem is that, just as in many other fields, NBD “experts” are often wrong. A couple of examples should suffice to make the point that the “experts” may not always be correct.This kind of thing happens all the time, especially in areas (like NBD) that are striving to become sciences, but are simply not there yet. For example, the “dismal science” of economics produces projections that are often wrong. A Wall Street Journal survey of expert economists forecasts of interest rates over 20 years found that they didn’t even get the direction of the change right more than 28% of the time. One would do nearly twice as well by flipping a coin. (Footnote)In 1968, thirty new technology stocks were being highly recommended not only by internal NBD company experts, but also by expert stock analysts at major financial institutions. However, just three years later, the average stock in this list of thirty had lost over 98% of its value. The same thing is happening today with “Dot Com’s.”These are clear examples of experts involved in NBD being wrong.*Devoe, Raymond F., The Devoe Report, “More Bugs on the Windshield of Financial Life (Past Visits To the Elephant’s Graveyard), Vol. 21, #2, Jan 15, 1999.
6 Myth #1: Stage-Gate Processes Work (Better than Nothing)! Reality: No Correlation Between Companies with Stage-Gate or other NPD Processes and Commercial Success*Per Latest IRI/CIMS R&D Database Study:*Research•Technology Management, Roger L. Whiteley, Alden S. Bean and M. Jean Russo. July-August, 1998,& Even Per R.G. Cooper’s Own Research**Stage-Gate®: Trademark of Robert G. Cooper**J. Prod. Innov. Manag. 1999; 16:The first myth from the “NBD experts” is that Stage-Gate(R) processes work better than having no process at all.The reality is that there is a mounting body of evidence suggesting that Stage-Gate processes are not working. A ‘98 statistical analysis using the IRI/CIMS database found no correlation between companies having Stage-Gate or other NBD processes and commercial success from new products.While Stage-Gate processes may work on one project or in a particular firm, the results have been inconsistent, and on average across all projects and firms, having a Stage-Gate process is no better than having no process at all. It is a stunning finding, and a sobering statistic. (Footnote)According to the academic experts, Stage-Gate processes “should work.” However, the data shows that these “state of the art” processes simply have not worked very well in practice, in real companies.
7 Doing Activities Well in the F. F. E Doing Activities Well in the F.F.E. of NBD Correlates with Success, But Having a Stage-Gate Process Does NotStage-Gate Process “Success Factor Studies” Are Like Saying: If You Score a Lot of Points, This Correlates with Winning.But Installing a Stage-Gate System Does Not Ensure that the F.F.E.-NBD Activities Are Done Any Better than Before:Most of the Stage-Gate Activities Were Already Being Done Before, Just Less FormallyEven After Installation, Most Firms Do Not Rigorously Use the Process (So In Reality there Is Little Change)& The People Doing & Managing the Activities Are All the SameYet the Players Make an Enormous Difference, both in Sports and NBDLittle Change Brings Little BenefitThere is a subtle but important distinction to make here. Countless “success factor” studies have shown that when a good job is done with the activities that make up the fuzzy front end (F.F.E).of NBD, there is a correlation with greater NBD success (Cooper, Robert G. and Elko, J Kleinschmidt, “Benchmarking the Firm’s Critical Success Factors in New Product Development” Journal of Product Innovation Management, 12: , 1995).However, that is an entirely different thing than saying that Stage-Gate processes themselves are associated with increased commercial success. Indeed, the IRI/CIMS database found no such correlations. How can this be?The following analogy provides a possible explanation of how the “NBD experts” could be wrong. Imagine a hypothetical situation in which we set out to determine the “success factors” correlating with winning basketball games. The number of rebounds, and shot percentages would clearly be important success factors. Next we could rank order the most important success factors, and give the “new” process a name (like “Stage-Game”). Then we could write a thick manual full of valid statistics proving that “making a lot of points correlates with winning.” We could publish and distribute it widely. Finally we could berate those teams that continue to lose and encourage them to hire us for a process update, because they “still clearly have it wrong.”Yet the reality is that most ball-clubs (and most people involved in NBD) have already been practicing many of the identified success factors for decades (which have themselves been known for decades), with or without a formalized process. Declaring it “new” (when it is not), giving it a name and leading a parade will not provide improved results.Another reason for the lack of improvement in the above scenario is that the organizations still have the same players and coaches. The point is, the people within the process make an enormous difference, both in sports and NBD.Finally, many firms having formal Stage-Gate processes are not rigorously using them. Most just go through the motions. Hence, because little has really been changed in most organizations by the introduction of Stage Gate processes, one should not expect to find correlations between having a formalized NBD process and commercial success – and indeed, none have been found.
8 Reality: Stage-Gate Processes Little Changed Since 1950’s in Either Processes or Results Reality: No Measurable Improvements in 40 Years!In Spite of All the “Changes” & “Best Thinking”Indicating Few Substantive Changes& Same Globally: Americas, Europe, Asia60% Success from Launch*Same Globally: Americas, Europe, AsiaPer Robert Cooper (3/99 JPIM), & Many Other Studies11% Success from Early Development StageOne in Nine Success RatesThe best way to tell if substantial improvements have been made is to measure new business development success rates over the years. The “NBD experts” would lead you to believe that they have made vast improvements.The reality is that there has been no measurable improvement in success rates from launch since this was first measured in 1958 by Booz-Allen and Hamilton. (Footnote) The same approximate 60% success rate from launch has also been found in all of the western countries around the world every time it is measured, including Europe, Asia and North America. (Footnote, Stevens (3000…), and Eric Jan Hultink, Susan Hart, Henry S.J. Robben and Abbie Griffin, “Launching New Products in Consumer and Industrial Markets: A Multi-country Empirical International Comparison.” 1997 PDMA Research Conference Proceedings, Oct , 1997, Monterey, CA)If one looks at the stages preceding launch, the success rates are of course lower. There is typically one success out of nine projects from the early development stage.Robert Cooper acknowledges the problem. In the March ‘99 issue of JPIM (Journal of Product Innovation Management) he says, “There is little evidence that success rates or R&D productivity have increased much.” In brief, even Cooper acknowledges that it’s not working.Cooper goes on to say, “Maybe we researchers are guilty of missing the boat here, of focusing on the wrong problems.” (Footnote) Later in this article, we will identify several key NBD success factors that have indeed been missed.*Cooper et al, J. Prod. Innov. Manag. 1999; 16:
9 Like the Fable of The Emperor’s Clothes No Better Off With, or Without ThemAlso Like Medicine in the 1800’s:When Patients Staying Home Got Well Just as Often as Those Visiting a DoctorAnd Witch Doctors“If a Factory Produced Such Low Quality, it Would be Shut Down.”Cooper et al, J. Prod. Innov. Manag. 1999; 16:The situation with traditional Stage-Gate systems appears to be very much like the fable of the Emperor’s Clothes: you are no better off with or without them.Today medicine involves real science, but in the 1800’s it was not so. The science of statistics was invented to study the effectiveness of medicine. They found that on average, patients staying home got well just as often as those who were treated by a doctor. At that time, the medical “experts” were no better than witch doctors.Cooper’s has also recently said that, “There is a quality crisis in product innovation!” and, “If a factory produced such low quality it would be shut down.” (Footnote)
10 “Insanity Is Doing the Same Thing Over and Over and Expecting Different Results.” Benjamin Franklin(40 Years with No Improvement Would Probably Qualify for the “Over and Over” Part)Benjamin Franklin defined insanity as, “Doing the same thing over and over again, and expecting different results.”Forty years with no statistical improvements in success rates would probably qualify for the “over and over” part of that definition.In short, we are stuck with 40 year old processes, and 40 year old success rates, which are far too low.In some ways we are no more advanced than supposedly primitive tribes with witch doctors. It seems we have our own modern-day witch doctors. They just wear different masks, as required to impress us today.
11 Myth #2: “Most NBD Efforts Do Succeed. ” Title of Article, by Robert G Myth #2: “Most NBD Efforts Do Succeed!” Title of Article, by Robert G. Cooper*Reality: Most NBD Efforts Fail89% Fail from Early Development StageMany ExamplesIridium Satellite PhonesPoor F.F.E. NBD ActivityNow BankruptF.F.E. of NBD Is the Most Difficult of All Business Activities**Another myth is that most NBD efforts succeed. This was even the title of an academic article. (Footnote) It is a “warm and fuzzy” myth, designed to make people feel good.The harsh reality is that most NBD efforts fail. Fully 89% of projects at the Early Development stage fail. (Footnote)We all know of many examples of failed projects. One of the most spectacular recent failures involves the Iridium satellite phones. Billions of dollars have been written off, largely because the Fuzzy Front End was not done well. The resulting phones were bulky, cost $3000 each, and reportedly did not work in a building or a car. The company is now bankrupt, and facing the prospect of letting their satellites burn up in the atmosphere.The reality is that that the F.F.E. of New Business Development is the most difficult and treacherous of all business activities. This too has been well documented since 1958**.*R.G. Cooper et al, Research Management, Vol. 26: 20-25, Nov.-Dec. 1983**G. Stevens et al, “Creativity + Business Discipline = Higher Profits Faster from NPD,” J. Prod. Innov. Management, Vol 16: , 9/99
12 Universal Industrial Success Curve Shows Most NBD Efforts Unsuccessful* 10,0003000 Raw Ideas (Unwritten)60% Success Rate from Launch Unchanged in 40 Yrs. In Spite of All the “Improvements”* **1000300 Ideas SubmittedNumber of Ideas100125 Small Projects9 Early Stage Devel.104 Major Devel.In reality, the overall success curve, or benchmark for new business development success looks like this, with the number of projects plotted Vs. the stage of the process. We call this the “Universal Industrial Success Curve.” You can see that that most NBD efforts are unsuccessful. Maybe we should call it the “Failure Curve,” but “Success Curve” sounds much better.In researching this curve, we got this same result no matter whether we evaluated venture capitalist experience, the project literature, or patent results.From a patent perspective, 300 patent disclosures result in 125 issued patents, and only one commercial success.As noted earlier, from Stage 4 (the conclusion of the “fuzzy front end” of the NBD process, where early stage development begins), on average only one in 9 projects, or just 11% are commercially successful. This is wasteful, because projects of this scope in large corporations are often staffed with 5-15 people.1.7 Launches1 Success11234567*Reference: G. Stevens and J. Burley, “3000 Raw Ideas = 1 Commercial Success!”Research•Technology Management, 40(3): 16-27, May-June, Runner-Up, IRI “Best Paper of the Year.”Stage of NBD Process** Hultink, Erik Jan; Susan Hart, Henry S.J. Robben and Abbie Griffin. Launching new products in consumer and industrial markets: a multi-country empirical international comparison. Product Development and Management Association Research Conference Proceedings, October, 1997,
13 Myth #3: Failures Are Good! Myth: “If You Are Not Failing Enough, You Aren’t Trying Hard Enough”Like Saying “Bad Quality is Good!”Reality:“There Is a Quality Crisis in Product Innovation”R.G. Cooper: *J. Prod. Innov. Manag. 1999; 16:Because Most New Business Efforts Do Fail Today, We Desperately Search for Excuses!What We Really Need:More Successful Systems; Higher Quality Results, & ProfitsAnother myth is that, “Failure is good!” And it goes on to add, “If you’re not failing enough, you aren’t trying enough new things. You are not pushing the envelope.”This is just like saying, “Bad quality is good!” Or, “Losing money is good!” Or, crashing the test plane is good.The reality is that most new business development efforts do indeed fail, and instead of trying to understand the root causes and fix the system we look for excuses, and have come up with a whopper: that failure is good. This is better than an excuse. If failure is good, then you don’t even need an excuse!The simple truth is that what we really need are better systems, higher quality results, and more profits and growth than are typical today in most corporations.We do not need more expensive new business development failures. And, we do not need NBD processes that deliver, on average, no more than having no process at all.
14 Profiting From Failures Can Happen (the Grain of Truth), But Mostly Failures Are Routine & Devastatingly WastefulAverage Life of Fortune 500 Co’s is 40 YearsOne Major Chemical Co.:‘82-’92: Spent $13 Billion “With No Contribution to Bottom Line” per CEO‘60’s-’70’s: Spent $16 Billion on R&D, “Technological Black Hole” per Wall St. JournalWhile Doing “Everything Right” per Today’s Standard PracticesFrighteningMassive Layoffs: Over 30%The grain of truth in the myth that “failure is good” is that failures often do lead to new thinking and profitable outcomes. And that is great - just as long as the failures happen early in the process, and are cheap.However, the reality is that most failures are expensive and devastatingly wasteful, like Iridium. The CEO of one major global chemical company said in Business Week that between ‘82 and ‘92, his company spent $13 billion on development efforts, “with no contribution to the bottom line.” (Footnote)The same company spent $16 billion on innovation in the ‘60’s and ‘70’s with “no major blockbusters, and few tangible new products.” The Wall Street Journal called it “a technological black hole.” (Footnote)And, these were very smart people who were doing it “just right” according to today’s state of the art Stage-Gate thinking about new business development.The result was a disappointing stock along with massive layoffs of personnel, and changes in top management. It would be impossible to convince anyone during this time period that “failure is good.” Yet many of their procedures for the F.F.E. of NBD are being copied by other companies. It’s frightening.
15 Myth #4: NBD Processes Work Linearly Mythic Linear View of Traditional “Stage-Gate®” NBD Processes:Idea >> Stages >> LaunchMyth #5: “Our Stage-Gate Is Unique”Reality: 5-7 Stages in Most Stage-Gate ProcessesReality: Most Companies Just Reinventing Cooper’s (or 1958 S.C. Johnson) Linear “Stage Gate” Models, & Spending Millions Doing It.7654321Another myth from the “NBD experts” is that stage-gate processes work in a linear fashion. Stage-Gate processes are almost always drawn linearly.There is yet another myth buried within this one, and that is that “Our stage-gate process is unique.” The reality is that they all typically have 5-7 stages, and most of the processes of the Fortune 500 companies look pretty much the same. Most companies are just “reinventing the wheel” and spending millions of dollars doing it, while jealously protecting their “unique process.”We agree with Michael Schrage of MIT, when he says that we shape our models, and then our models shape us. Our models help shape out thoughts and actions, just like the model of a flat earth shaped the actions of early navigators.The trouble with the linear model is that once it is pictured this way, people navigate accordingly.*Trade Name of R.G. Cooper & Associates
16 Reality: NBD Is Non-Linear in Early Stages Reality: NBD Is Non-Linear in Early Stages. Requires Leaps of Creativity, “Morphing,” To Identify Winners2341234567234In reality the fuzzy front end of the NBD process is non-linear. It requires leaps of creativity and branching from the starting point ideas. In short, it requires non-linear thinking.Creativity is needed because starting ideas are almost never commercial, as shown in the “Universal Success Curve.” Analysts involved in the Fuzzy Front End need to “morph” or change the starting idea from one that is usually destined to fail, into something that can succeed. This means creating a substantially new idea.What we observed over 15 years of practice is that when the Fuzzy Front End of the NBD process is run in a linear fashion, as less creative people tend to do, the process too often becomes an efficient idea-killing machine.In contrast the more creative individuals would typically both lay to rest the starting idea while also branching off from that idea to create a commercial success. In short, they “morph” the starting idea into a winner.Later, in the development stages of the NBD process, the NBD process needs to become linear because costs mount significantly. Hence, in development, it is time to “lock and load” – assuming of course that you are aimed at a commercial success, which you will be if the F.F.E. of NBD has been done correctly.Non-Linear F.F.E LinearStages & Gates Still Exist but Real View of NBD Process Is Non-Linear, Especially in Fuzzy Front End (F.F.E.)
17 Myth #6: Everyone Is Creative! Or Can Be Taught to Be Creative Fa La! Therefore Everyone Can Create New Products in the “Fuzzy Front End” of NBDJust Read the Manual, Follow the StepsAnother destructive myth from the “NBD and creativity experts” is that everyone is creative, or can be taught to be creative. Virtually all creativity organizations and consultants say all you need to do is attend one of their programs, rediscover your inner child and become more creative.Therefore, most corporations believe that anyone can operate the “fuzzy front end” of new business development. Just read the manual (usually very thick), and follow the steps. If it was only that easy.
18 Myth #6 Restated: “The Environment (Nurture) Largely Determines Personality” 67% of Americans Believe Can Readily Change Personalities*Popular belief, & “Politically Correct”Standard Psychology Texts of 1970’s & ’80’s: Taught Individual Personality Was Determined Largely by Environment, or Nurture:Said: “If Identical Twins Raised Apart Could Be Studied, Their Personalities Would Be “Enormously Different**’’Underlying the myth that “everyone is creative and anyone can do the fuzzy front end” is another myth, which most people believe, and that is that the environment, or nurture, largely determines who we are - that the environment determines our personalities and our degree of creativity. This is also the “politically correct” view.Indeed, most standard psychology texts and experts through the early 1980’s taught that the childhood environment predominates in determining our adult personalities. They taught that if identical twins could be raised apart in different environments, their personalities would be “enormously different.” (Footnote)*Roper Reports, 1993, 93-8 (November), Roper Starch Worldwide Inc., NY, NY**Introduction to Personality, Walter Mischel, Holt Reinhart and Winston, 1976, 2rd Ed., p
19 Reality: ~80% of Core Unchanging Adult Personality & Creativity Determined by Genetics Stable Core Adult PersoNalityOverall PersonalityWell, guess what? The experiments involving identical twins raised apart have now been run.The reality is the opposite of the myth. The reality is that approximately 80% of the core unchanging adult personality is determined by genetics. The foundations supporting this conclusion are reviewed next.
20 Data for New Genetic Paradigm of Creativity: 2 Key Experiments Addressing Effects of Nature and Nurture on Personality:1. Study of Personality of Identical Twins Raised ApartSame Genetics, Different EnvironmentsSeparated at 3 MonthsKey Review Article: 1990 Science:*2. Study of AdopteesDifferent Genetics, Similar EnvironmentsThe “Reverse Experiment” of Twins Raised ApartThere are two key experiments showing the powerful effects of genetics on adult personality. Much of this work is from the University of Minnesota. (Footnote)The first experiment involves the study of identical twins raised apart. The twins studied were separated an average of three months after birth, and raised apart in independent environments for several decades. This is the cleanest way to study the effects of nature and nurture on personality.The other key experiment involves the study of adoptees, who share the same environment while having no genetic similarity with their adoptive parents, or with each other.*Thomas J. Bouchard, Jr., David T. Lykken, Matthew McGue, Nancy L. Segal, Auke Tellegen.. Sources of Human Psychological Differences: The Minnesota Study of Twins Reared Apart. Science October
21 Reality: Identical Twins, Raised Apart Have Very Similar Personalities Take the case two identical twins raised apart since birth in different environments. The myth says they should be very different. Yet, both grew up to be fire captains.
22 Reality: Identical Twins Raised Apart Are As Alike As Those Raised Together Both Fire ChiefsBoth BachelorsBoth FlirtsBoth Raucous“We kept making the same remarks at the same time, and using the same gestures. It was spooky.”Suggests Zero Contribution from Childhood EnvironmentNot only are these identical twins raised apart both fire chiefs, they are both bachelors. Both are raucous and flirtatious individuals. Their personalities are very similar. Upon meeting for the first time, they noticed they used the same body language, and immediately started completing each other’s sentences. They were so much alike, “It was spooky.”So, instead of being enormously different, the personalities of identical twins raised apart are on average remarkably similar. If one twin is cheerful, the other tends to be too. If one is quiet and reserved, the other usually is too. (Footnote)
23 Identical Twins Raised Apart Non-Identical Twins Raised Together EEG Brainwaves of Identical Twins Raised Apart Show 95% Correlations * Similarity Due to Genetics, As Share No Common Nurture After SeparationIdentical Twins Raised ApartNon-Identical Twins Raised Together95% CorrelationFurther evidence for the genetic nature of creativity and personality comes from the study of brainwaves.The brainwave patterns from identical twins raised apart are astonishingly alike: more than 95% alike. Again, they are as alike as the brainwave patterns of identical twins raised apart. They are almost like looking at infrared spectra of the same compound. The correlations are half as great for non-identical twins, and average 0% for unrelated individuals. (Footnote)The very patterns of thought of identical twins raised apart appear to be almost identical. This is further strong evidence supporting the genetic nature of personality and creativity.*“How Individual Are Human Brainwave Patterns?” by H.H. Stassen, Psychiatric University Hospital Research Department, Zurich, Switzerland, 1992 p. 75 & 83.
24 Correlations Between Any Environmental Factors During Upbringing, and Adult Personalities Are Totally Lacking: ZeroTrue For Adopted Identical Twins Raised Apart& For Adoptees in Same Household Environment“Reverse Experiment” of Identical Twins Raised Apart: No Genetic Similarity, But Same Environment During Childhood.The second major experiment involves studying environmental correlations.What has been found is that there is on average zero effect on adult personality from the childhood environment. It’s very surprising.This is true for adopted identical twins raised apart. It is also true for adoptees raised in the same household environment. Zero. (Footonote)The findings are very simple, and again are counter to the myth that our adult personalities are largely the result of nurturing received as a child.*Thomas J. Bouchard, Jr., David T. Lykken, Matthew McGue, Nancy L. Segal, Auke Tellegen.. Sources of Human Psychological Differences: The Minnesota Study of Twins Reared Apart. Science October
25 New Data Is Remarkably Consistent Supporting Strong Genetic Basis for Personality & Creativity All the data are remarkably consistent supporting a strong genetic basis for personality and creativity.The findings regarding the personalities of identical twins raised apart have been repeated in four separate studies globally. While controversial to the public these results are becoming widely accepted by many leading experts in the field today. From a purely rational standpoint, the data is hard to ignore.
26 Re-emerging “New” Paradigm: “Genetics Is the Most Powerful Determinant of Most Psychological Traits*”“New” Since Plato, Christ, Buddha, Schumpeter, Maslow...“This Sudden Switch...From a Belief in Nurture, in the Form of Social Conditioning, to Nature, in the Form of Genetics and Brain Physiology Is the Great Intellectual Event ... of the Late 20th Century.” “The Fix Is in! We’re All Hard Wired.”Tom Wolfe, Author, Forbes ASAP, December 2, 1996, p. 218One can argue about the exact percentages, but in brief, the age-old question about nature and nurture has been largely answered.There is a re-emerging “new” paradigm for personality and creativity, which is that “Genetics is the most powerful determinant.” Of course, the idea that nature predominates is hardly new, but it has been sidelined for the last years by the behaviorists.Core adult personality and creativity now appear to be predominantly determined by nature, or genetics, just as had been believed for thousands of years by some of our greatest thinkers.Tom Wolf, author of “The Right Stuff” says that this sudden switch in belief from nurture to nature is “the great intellectual event of the late twentieth century.”Many of our personality traits appear to be instinctual, or as Wolf puts it, “The fix is in…we’re all hard wired!” (Footnote)*Bouchard, Jr. Thomas J., “Twins and Type,”Presentation at the Association for Psychological Type, 10th Biennial International Conference, July 6-11, 1993, Long Beach, CA
27 Myth #7: That Personality & Creativity Can Be Lastingly Taught Another myth is that creativity can be lastingly taught. Virtually every major creativity “guru” claims they can permanently raise your creativity. And, there is a grain of truth to it. There is little question that creativity boosting exercises can temporarily boost creativity.However, the reality is that creativity is just another personality trait, largely determined by genetics. Creativity can be directly measured from personality measurements, including the MBTI® or Myers Briggs Type Indicator, via the MBTI-Creativity Index.Another reality involves the human forgetting curve. People forget 80% of what they learn in approximately six weeks. (Footnote) This is the basis for the advertising industry. Because of the forgetting curve, any beneficial effects from creativity boosting exercises quickly wears off.Further, most of the creativity “gurus” quietly acknowledge this, by stealthily stocking their creativity sessions with a few exceptionally creative individuals to ensure success. In short, they “cheat” on their theories, in order to ensure success.Hence, in general we think it is more productive to teach business discipline to creative people than to attempt to teach creativity to those who tend to be inherently disciplined, like accountants.Reality: It Is More Productive to Teach Business Discipline to Creative Types Than to “Teach” Creativity (Largely Genetic)
28 Willy & Wilt: Differently Gifted So: Is Everyone Creative? Reality: Only In the Sense that Everyone Is TallWe Are All “Tall...”And Can All Be Taught to Jump a Little Higher...But... Only a Few Can Play in the World-Class NBALets return to the myth that “everyone is creative.” There is a grain of truth to it, but only in the sense that “everyone is tall.” Of course, some are much taller than others. You might even say, some are short, or some are not tall. And, only a few individuals can play in a world class organization like the National Basketball Association.Here are two outstanding athletes: Willy and Wilt. Note that they are both extremely gifted, and both were at the top of their respective sports.Yet, who would think of trying to training the jockey to play professional basketball, or training Wilt the Stilt to be a jockey?And, when creativity is needed on the job, as it is on the fuzzy front end of NBD, who will win? The more creative or less creative person?Willy & Wilt: Differently Gifted
29 C. Achieving Six Sigma Improvements in Speed & Profitability By Incorporating Latest Thinking into the F.F.E. of NBDIn the third and final part of this presentation, we will describe how shattering these myths involved in the fuzzy front end of NBD has led to six sigma improvements in both the speed and profitability of innovation.
30 Could Personality Traits of Individual Analysts Involved in the Early Stages 1-4, or “Fuzzy Front End (F.F.E.) of NBD Affect Profits When Later Commercialized?We started out by asking the fundamental question, “Could the personality traits of analysts involved in the fuzzy front end of the new business development process affect the profits earned when their recommendations were later developed and commercialized?
31 Population Studied by WinOvationsSM: From a Fortune 500 Chemical Co.Dow Chemical69 F.F.E.-NBD Analysts & Projects Profiled>95% of Analysts & Projects Measured267 Staged Projects Spanning 10 Years: Gave Time to Measure ProfitsIn Europe and North AmericaIn Effect a 10 Year, $20 Million ExperimentThe population WinOvationsSM studied was from Dow Chemical, and involved 69 analysts operating in the fuzzy front end (F.F.E.) of NBD, and all of their early-stage NBD projects.We were able to analyze more than 95% of the population. There were only two people who chose not to participate.Collectively, this group completed 267 F.F.E.-NBD projects, in both Europe and North America, spanning a ten year time period between 1984 and 1994.The opportunity analysts typically resided in the market research function of each business. They were provided with early stage opportunities to investigate by the businesses, and were expected to make a recommendation to those businesses about whether or not to further develop the idea after a substantial business analysis.This was in effect a ten year, $20 million dollar experiment.
32 Consistent Process Used by All F.F.E.-NBD Analysts Evaluated Evolved from Planned Innovation Opportunity AnalysisBacon & Butler, 1982Testing Critical NBD Hypotheses, or “Draft Propositions:”NeedValueOpeningAdvantageFitRigorous Training & Coaching Through 1-2 ProjectsStaged Analyses, Periodic Management Review “Gates”All of the analysts studied used the same, consistent “Planned Innovation Opportunity Analysis” process over the entire ten year time period.This process was developed by Bacon and Butler, and involves creating and testing hypotheses of need, value, opening, advantage and fit. (Footnote)All of the analysts received the same rigorous training and coaching in the same iterative process for the F.F.E. of NBD, with periodic management reviews. The training consisted of a one week ground-school followed by one-on-one coaching by the consultants through one or two projects, lasting from six months to two years. The personal one-on-one coaching over many months was the most essential part of the program, because it ensured effective learning.This was a serious and sustained program, that lasted more than 10 years.
33 “Fuzzy Front End” (F.F.E.) of NBD Process: End of Individual’s F.F.E. Analysis“Fuzzy Front End” (F.F.E.) of NBD Process:``ProfitsWHAT IS THEVALUE OFMEETINGUNMET NEEDS?Winning ActionsUnspoken NeedsNew IdeasWinning TacticsWHAT ARETHE SYSTEMCOSTS?`HOW IS THEFUNCTIONDONE?More specifically, the model at the heart of the F.F.E.-NBD process used is circular, not linear.This new model requires two or three turns of the idea around the “Success-WheelSM,” forming, testing and morphing ideas into winners. In this way, the necessary failures leading to success happen quickly and cheaply: mostly within computer models.The expectations and assumptions regarding staffing, training and outcomes that are built into the circular model are entirely different than those of the linear stage-gate models, while being compatible with them.To recap this myth then, the real F.F.E.-NBD process is iterative and circular, not linear. Indeed, people who use a linear NBD process during the F.F.E. of NBD find that they routinely kill almost all ideas.Gap-AnalysisIdeas PrioritizedDraft PropositionsWHAT ARE THE SPOKEN UNMET NEEDS?Idea ManagementSuccess-Wheel2.Gut-Level-ScreenGut-Level-ScreenStages: Ideation Shaping Analysis Validation Develop & ImplementIndividual Analyst Predominates Teams Predominate
34 Personality of Analysts in the F. F. E Personality of Analysts in the F.F.E. of NBD Was Measured Using MBTI® Instrument & Correlated with ProfitsTwo MBTI Personality Measurements Correlated With NBD Profits Earned After Project Was Later Developed & Commercialized by the Business:“N” for Intuition (Vs. “S” for Sensory)“T” for Thinking (Vs. “F” for Feeling)No Benefit from Including Other Two Personality Measurements:E/I (Extroversion – Introversion), orJ/P (Judging – Perceiving)Personality can be measured using a wide range of psychological instruments, including the MBTI, or Myers Briggs Type Indicator. The MBTI is used 2 to 3 million times per year in the US, and internationally in many languages as well.A little known fact is that the MBTI sub-factors can be used to calculate creativity. The MBTI Creativity Index was developed by Harrison Gough, who also developed the California Psychological Inventory, or CPI. It turns out that Creativity is a measurable personality trait, just as we measure extroversion or introversion, although most creative people resist the idea that you can measure their creativity. (Footnote).The same is true for all the traits measured by the MBTI (including creativity): 80% of the long-term reliably measured variance in personality including creativity appears to be determined by nature, or genetics. The results of several articles we have published in PDMA and IRI journals are summarized next. We found a remarkably strong correlation between personality and profits. (Footnotes)Of the four MBTI sub-measurements, two personality traits correlated significantly and equally with profits that resulted when the analysts’ recommendations (from the fuzzy front end of NBD) were later commercialized by the business. Hence, the importance of a ten-year longitudinal data base. The two traits measured by the MBTI that correlated with profits are:“N” for Intuition (Vs. “S” for Sensory at the other end of this MBTI scale), and“T” for Thinking, (Vs. “F” for Feeling at the other end of this MBTI scale)
35 Result: Rainmaker-IndexSM* (Based on MBTI®) Mean Rainmaker-Index Scores of F.F.E.-NBD Analyst GroupsTop 1/3 (23 Analysts) = 70.4-78 Min.102 MaxBottom 1/3 (23 Analysts) = -14.7Middle 1/3 (23 Analysts) = 27.8An 85 Point Increase in the Rainmaker-Index Correlates with $8.7 Million Additional Profits Earned Per Analyst*Corresponds to the Difference Between the Mean Scores of the Top Third and Bottom Third of the Rainmaker-IndexRainmaker-Index Also Correlates with MBTI Creativity Index: Rainmakers are Highly Creative*We refer to the resulting scale as the “Rainmaker-IndexSM.” The Rainmaker-Index is calculated from the continuous scores for each of these two key MBTI personality measurements. Creativity in the Rainmakers comes from “N,” or Intuition. The ability to learn the required mental discipline comes from the preference for “T,” or thinking.The possible range for the Rainmaker-Index is from minus 78 to 102, so the full scale has 180 points. The mean in our sample is 27.8, and the median is 25.The Rainmaker-Index also corresponds closely with the MBTI-Creativity Index. The point is that the top Rainmakers are also highly creative. (Footnote)*See References: #2 & #6 by WinOvations, At End of Presentation. Selected as “Outstanding Research Paper” from October, 1997 PDMA Research ConferenceRainmaker-Index: Service Mark, WinOvations, Inc.
36 Profit per Analyst, $ Millions RainmakerSM Index: Correlates Strongly With Later NBD Profits (Even Better Than MBTI®-CI)Profit per Analyst, $ MillionsTimes MoreEffective,Top Vs. Bottom ThirdPersonalityIndexBottomThirdMiddleThirdTopThirdN = 23 AnalystsN = 23 AnalystsN = 23 AnalystsRainmakerIndex$8.2395 X$0.09$0.93When we added up the profits per analyst we found that the analysts in the bottom third of the Rainmaker-Index earned $90,000 each, while those in the top third earned $8.2 million. Hence, those in the top third outperformed those in the bottom third by a factor of 95 times, or a 9,500% improvement.We also measured personality using the pre-existing MBTI Creativity Index, which also correlated well with profits, but not as well as the Rainmaker Index. The profits per analyst in the top third vs. the bottom third of the MBTI-Creativity Index were 11 times greater.While that is still a remarkable difference, the Rainmaker Index provides a 9 fold improvement vs. the MBTI-Creativity Index in separating high performance opportunity analysts involved in the F.F.E. of NBD from lower performing analysts.Overall, the results are stunning: the starting hypotheses regarding the importance of the personalities of the analysts involved in the fuzzy front end of NBD turned out to be more true than we thought, and represents a very significant success factor that has been overlooked by the academics. (Footnote). In short, who is “on the team” matters immensely.Rainmakers!MBTI-CIIndex$0.65$1.37$7.3711 X
37 All Personality Types Needed in Business Development “Rainmakers” (With Business Discipline) NeededHaving Business Discipline Training & CoachingStarters: For the “Fuzzy Front End” of New Business DevelopmentMany Other Types Also NeededFinishers: For Later Stages of New Business Development and ImplementationIn Fact: Need More of Other Types than RainmakersBecause Later Development Stages Take Far More EffortAt this point, many people are wondering, “Am I the right type?,” particularly if they are not MBTI - “NT’s,” which make up only about 12% of the population. The answer is, “Yes, you are the right type.”It is not just a platitude to say that all personality types are needed in business, including new business development. Correlations between NBD profitability and the Rainmaker Index applies only to the fuzzy front end of new business development.Other personality types are needed for other job functions. For example, the later stages of new business development generally require a more practical kind of effort, with more organizational, implementation and optimization skills. In brief, later development stages require a greater degree of linear thinking. That is usually a different kind of person than the non-linear-thinking analysts who score in the top third of the Rainmaker-Index.Indeed, there are far more linear-thinking implementers needed in the business world than creators, because the later stages of new business development take far more total effort than the fuzzy front end of NBD. Those who are not MBTI-NT’s, or Rainmakers, should feel very good about being involved in NBD.
38 Analysts’ Recommendations After Detailed Analyses Stage Consistently Profitable When Later Developed & Commercialized97% of Positive Recommendations from F.F.E. of NBD Process Later Commercialized Were ProfitableVs. 11% Typically from Stage 4 of 7 Stages on Success CurveMore Than a Six Standard Deviation Improvement Vs. Benchmark “Universal Success Curve” for NBDAnother key finding from this study is that 97% of the recommendations made after Stage 4 of a 7 Stage process were profitable. This compares with a normal success rate of 11%, as seen from the benchmark universal success curve. This improvement is more than six standard deviations better than the benchmark for typical Stage-Gate processes, and therefore exceeds a six sigma improvement. (Footnote)Cumulative profits for this ten year effort were $213 million through 1994 and have been very rapidly climbing since then. Today the value from this effort exceeds $800 million.Profits through 1994 generated exceeded the costs of the fuzzy front end analysis work by over 10 to 1 as implemented ($213 million profit, vs. $20 million cost). If the analysts included in this study had been preselected from the top third of the Rainmaker Index, then the returns would have been 29 to 1, or nearly three times greater.
39 1 Effort with Best Practices 9 Efforts Needed with Typical NBD Systems Getting the Right Answer Consistently Provides Profits/Unit Effort Nine Times Faster Vs. Benchmark$$ Profits97% of Time,>Six Sigma Improvement1 Effort with Best PracticesProfits 11% of Time123456789The six sigma NBD approach is also 9 times faster in terms of dollars earned per unit of effort expended. The increase in productivity and speed can be more easily seen by lining up the nine separate project efforts normally required to earn a profit, and comparing it with one very high quality effort which achieves the same thing. (Footnote)Another important aspect is that when you kill or shelve 8 projects out of 9, pretty soon the entire organization loses its stomach for using Stage-Gate processes in the traditional way.We believe this is why most organizations don’t use the stage-gate processes rigorously. This also helps to explain why there is no correlation between the presence of traditional Stage-Gate processes and actual new product success, as found in the recent IRI/CIMS study referred to earlier. For many of these reasons, the traditional Stage-Gate processes are simply not rigorously used by most people in real organizations – and they probably never will be.9 Efforts Needed with Typical NBD SystemsNegative, Discouraging Outcomes: Helps Explain Why Typical Staged-Gate Systems Are Underutilized
40 Pick the One in 10 that Wins? Done That In short, by applying the new thinking to the F.F.E.of NBD, we can now pick the one out of ten projects that is likely to succeed, before it goes into the expensive and time consuming later development stages of the NBD process.What is even more exciting is that we can also achieve success with almost all F.F.E.-NBD projects. This is done by morphing starting ideas that were destined to fail into winners, with more than a 95% chance of being profitable when commercialized. In this way the analysts involved in the F.F.E. of NBD not only lays waste to the starting idea, but creates a substantially new one.This is a lot more fun than sequentially killing idea after idea as too often occurs with linear Stage-Gate processes.More Exciting: Achieve Success With Almost All Early-Stage NBD Projects By “Morphing” ThemDone That Too
41 9 Early Stage Developments The New NBD System Provides More Than a Six-Sigma Improvement Vs. The “Universal” NBD Success Curve10,00095% Success Rates From Stage 4 Are Achieved vs. the Benchmark for Traditional Stage-Gate Processes of 11% (1 in 9). This Represents More than a Six Sigma Improvement.3000 Raw Ideas (Unwritten)1,000300 Ideas SubmittedNumber of Ideas100125 Small ProjectsBenchmarkBenchmarkFrom HereFrom Here9 Early Stage Developments10Either way you look at it, the new approach represents more than a six-sigma improvement vs. the Universal Success Curve for NBD. In fact, it is a 14 sigma improvement vs. traditional Stage Gate processes, and represents a new paradigm in F.F.E.-NBD effectiveness.4 Major Developments6 s6 sWinOvationsWinOvations1.7 Launches1 Success11234567To HereTo HereStage of NBD ProcessRef: Stevens & Burley, May-June 1997,Research•Technology ManagementRef: Stevens & Burley, May-June 1997,Research•Technology Management
42 Dramatically Increases the Probability of Success by Selecting Inherently Creative People When NeededAs in Fuzzy Front End of New Business Development (F.F.E. of NBD)Creativity Needed Because Starting Ideas Are Rarely Commercial, & Must Be MorphedKey: Train & Coach Creative Types in Business Discipline – Described Next“Leash Your CreativitySM”The good news is blindingly simple. When you really need creative results, then hire inherently creative people, and train them in F.F.E.-NBD discipline. One such area needing creativity is the fuzzy front end of NBD.It is almost that simple. The catch is that creative individuals do need to be trained in NBD discipline in order to become effective, which we will briefly describe next.Notice, however, that what we are proposing is the opposite of what most organizations are trying to do. Most organizations are trying to “unleash, or unlock people’s creativity.” But, because of the genetic nature of creativity, we believe this is about as effective as teaching a dog to dance. The reality is that there is nothing to unlock. Instead of “unleashing your creativity” we are attempting to “leash the creativity” of inherently creative individuals, via NBD business discipline training and coaching.Our 10-year longitudinal database shows that this can be done with exceptional results.
43 Process Step 1: Determine Top Management’s Gut-Level-ScreenSM Manager 1Manager 3Manager 2“Group” Zone of Agreement & ExcitementTheir Gut-Level-ScreenThe first step of the F.F.E.-NBD process used to achieve breakthrough results in NBD effectiveness is to learn top management’s Gut-Level-ScreenSM. This is the business development area where the top few decision makers happen to agree (the ones who will “sign the check.”)If an opportunity is identified within this zone of agreement, then later buy-in of a well qualified NBD opportunity is nearly automatic. Without this buy-in, many ideas (which could indeed make money) will not be pursued, simply because they fall outside of top management’s zone of excitement.This step is rarely done. Yet we find that understanding top management’s Gut-Level-Screen makes the overall NBD system two to three times more effective than normal. Another way of saying this is that in most organizations, two out of three F.F.E.-NBD efforts would not pass top management’s Gut-Level-Screen, and have almost no chance of being later commercialized within that organization, regardless of whether or not they would make money. This is very wasteful.
44 Step 2: Prioritize Platforms, Groups & Projects Vs. Gut-Level-Screen Platform APlatform BPlatform CUse Success-Wheel on These Projects First, & Leverage Findings Across Entire GroupGroup 1Group 2Group 3FunctionalGroupingsProject 1Project 2Project 3Project 4Project 5Project 6Project 7toProject “n”Project 1Project 2Project 3Project 4Project 5Project 6Project 7toProject “n”Project 1Project 2Project 3Project 4Project 5Project 6Project 7toProject “n”Specific New Product LevelIdeasThe second step in the F.F.E.-NBD process is to prioritize potential NBD platforms and product groupings against top management’s Gut-Level-Screen.The product groupings share common critical elements in the marketplace. In this way, when the top priority projects are later analyzed in depth, (through extensive interviews with customers and world experts) the findings can be extrapolated across the entire group.When a positive opportunity is found in one group, then other opportunities within that group are explored, because they are likely to be positive as well. This group is like a rich vein of gold ore.However, if the findings are negative, then opportunities in the rest of the group usually have a similar outcome, and can also be laid to rest. This group consists mainly of gravel.Grouping projects in this way also greatly increases the efficiency of the NBD system.
45 Steps 3-4: Success-Wheel Project Analysis Forms and Tests Draft Propositions That Must be Proved A. Internally Tested Propositions:Fit Vs. Gut-Level-Screen &Sustainable Competitive AdvantageB. Marketplace Tested PropositionsCustomer Visits: How Done, Spoken Needs, Costs, ValueC. Iterative-PropositionsSM:Unspoken Needs, New Ideas, Winning Way in WorldWhen Know How to Win, It’s Time for Commercial DevelopmentAfter a potential project has been chosen, then Steps 3-4 of the F.F.E.-NBD process are conducted. This involves forming and testing draft propositions.The first group of draft propositions, or hypotheses, are those that only matter within your organization: does the potential opportunity fit the Gut-Level-Screen, and do you have the basis for a sustainable competitive advantage?The second group of draft propositions are tested in the marketplace, by extensively interviewing customers and other world experts. In this way, we learn how they are performing the function today, what their spoken needs are, what their current system costs per unit of performance are, and what value any improvements would have. These questions are asked about how they are performing the function not only today, but in the next design cycle tomorrow. Usually, the starting point idea is laid to rest after this first set of interviews is completed.The third set of draft propositions is the most important one, and can not even be written down at the start of the project. These are the Iterative-PropositionsSM. They are based on an understanding of real customer needs and value which arises from analyzing the first set of marketplace propositions. The Iterative-Propositions are formed and tested just as rigorously as the first set of propositions. Often the customer needs that are uncovered in this process are unknown to the customers themselves, and have great value. The process continues until you know how to provide a winning solution for your customer vs. the best alternatives in the world tomorrow. Then the F.F.E. of the NBD process is done, and it is time to begin development.
46 Best Global Approaches Final F.F.E.-NBD Analysis Step: Cost Per Unit Performance In The Customer’s Eyes Is Key ($/Part, or $/Ft. Bonded: Not $/Lb. Sold)$ Per Unit PerformanceWins!Best Global ApproachesIn This Example, the Highest Cost Per Pound Raw Material Still Wins Vs. The Best Global CompetitorsVs. Today’s Processes... And More Importantly Tomorrow’sThen Go!! Activate Teams, Develop & CommercializeThe key slide of the final report to management at the conclusion of the F.F.E. of the NBD process shows the cost-performance of the new idea vs. the best alternatives in the world tomorrow. Typically, the cost-performance data is shown in a set of stacked bar graphs, comparing raw materials, labor, capital and overhead.If the new idea does not have a significant advantage over the best alternatives in the world tomorrow, then the idea should be shelved, or “morphed” into an idea that is commercial. Note again that this is significantly different than traditional stage-gate processes, which focus on “go-kill” decision gates. Yet the most important activity in F.F.E-NBD activity is not the “go-kill” decision, but in “morphing” the starting idea, when it has an unfavorable cost-performance ratio, into a new idea that is a winner.If all a NBD process does is to make “go-kill” decisions, then that process is relatively pointless. Run linearly, it will efficiently kill over 99% of the starting ideas, because for even patented ideas, only 1 in 125 has significant commercial potential. The “morphing” of ideas must therefore be an essential element of a breakthrough NBD System.When the original idea (or more likely its “morphed” cousin) does have the best cost-performance ratio, then and only then is it time to fire up the project champions, activate the development teams and begin to commercialize the business.
47 D. Applications of New System at Honeywell (AlliedSignal): The new approach “combines creativity with a high degree of business discipline. … we ended up with winning business plans that fully identified over $100 million per year in new sales potential.… with the likelihood of developing into several hundred million dollars per year businesses.”“As a result of their work…we know the costs of the best competitors in the world, and how to beat them, by better meeting customers’ spoken and unspoken needs.”
48 Application of New Approach at Dow Chemical, in (Insite®) Metallocene Polymer Catalysis: Helps Identify “Starters” and “Finishers”Key Personnel IssueHas Resulted In Over 3 Billion Pounds of New Polymer Capacity, Much in New AreasProjected in 1991, and Now Come True& It’s Just the Beginning
49 Myth #8: “We’re Already Doing Something Pretty Much Like This” With Due Respect, Saying the Traditional Staged-Gate Approach and the New Approach Are Alike… “Is Like Saying Veterinarians And Taxidermists Are In the Same Business, Because Either Way You Get Your Dog Back.”Sen. Joe Lieberman, Wall St. Journal, 8/22/00, p.1.A final myth we often hear is that “We are already doing something pretty much like this.”The reality is that most NBD Systems, and especially the Fuzzy Front Ends of these NBD systems need dramatic improvement.You know that your NBD system is really working well if, and only if, most of the following guidelines are true within your company:95% of the NBD recommendations after the fuzzy front end of the NBD system within your company are profitable, vs. the benchmark success rate of 11%, per the Universal-NBD-Success-Curve.Your company greatly exceeds your industry in:Corporate growth rates, profitability and consistencyStock appreciation and book valueYou and most of your co-workers are heavily invested in your company.New employees want to work there, with stock options.Business magazines like Forbes, Fortune or Business Week choose your company as a gem within your industry.If this sounds like your company, then congratulations. You have earned real NBD bragging rights. If not, then there is significant room for improvement, and the above guidelines can serve as an achievable vision to strive for.
50 Reality: Most NBD Systems Need Dramatic Improvement You Know Your NBD System Is Really Working IF:95% of NBD Efforts Succeed After Early DevelopmentVs. 11% Per Universal Success CurveYour Company Greatly Exceeds Your Industry In:Corporate Growth Rates, Profitability & ConsistencyStock Appreciation & Book ValueYou & Most of Your Co-Workers Are Heavily Invested In Your Company. New Employees Want to Work There, With OptionsEconomist, Forbes, Fortune, or BW:Picks Your Company as a Gem in that Industry
51 Six Sigma Improvements in Speed and Profitability Have Been Achieved in Early-Stage NBD Systems via Breakthroughs In 1. Personnel, 2. Process & 3. Coaching“A Well Directed Imagination is the Source of New Approaches and New Contenders.” Chinese ProverbThe main take-away is very optimistic: When Rainmakers work within a non-linear NBD process with the best training and coaching, then more than a six-sigma improvement in success and speed is achievable vs. today’s standard Stage-Gate processes. We are no longer stuck with 40 year old success rates of 11% from early stage business development, but instead can routinely achieve 95% success rates. The new system is different, as it needs to be to achieve improved results, yet compatible with most existing processes.Think about this: An 85 point increase in the Rainmaker-Index correlates with $8.7 million additional profits earned per analyst.* This corresponds to the difference between the mean scores of the top third and bottom third of the Rainmaker-Index.Who knows, maybe someday this will lead to bidding wars for analysts with high Rainmaker-Indices, just as speed in the 40 meter dash translates to higher football salaries. The people you select, and the coaching they receive are every bit as important as the process itself, and probably more so. These are critical NBD success factors that until now have been entirely overlooked. Taken together as a system, the people, process and coaching they receive can achieve more than a Six Sigma improvement vs. the Stage-Gate benchmark for NBD results.The Chinese Proverb seems to be especially true for the F.F.E. of NBD: “A well directed imagination is the source of great deeds.”
52 Key Reference Articles Stevens, Greg A. “Shattering Myths and Achieving Higher Profits Faster from Six Sigma Improvements in New Business Development.” Technology Transfer and Innovation ’99 Conference, September 29, 1999, Melbourne, Australia. Also at the Project Management Institute (PMI) 9-00, Houston, TX.Stevens, Greg, James Burley, and Richard Divine. “Profits and Personalities: Relationships Between Profits from New Product Development and Analyst’s Personalities.” Product Development and Management Association (PDMA) 1998 Research Conference, October 5-7, Atlanta, GA. ppsStevens, Greg. A. and James Burley, “3,000 Raw Ideas = 1 Commercial Success.” Research · Technology Management 40(3), (May-Jun, 1997).“Innovation in Industry Survey.” The Economist. Feb. 20, p [Shows the Universal Success Curve for New Business Development from Ref. #3.]Bacon, Jr., Frank R. and Thomas W. Butler, Jr. Achieving Planned Innovation®, A Proven System for Creating Successful New Products and Services. The Free Press/Simon & Schuster, 1998.Stevens, Greg, James Burley, and Richard Divine. “Creativity + Business Discipline = Higher Profits Faster from New Product Development.” Journal of Product Innovation Management, 16: [& Selected as “Outstanding Research Paper” from October, 1997 PDMA Research Conference.]Stevens, Tim. “The Nature of Creativity.” Industry Week, Viewpoint Archive. IndustryWeek.com. June 29, pps. 1-4.Others Are Listed Within the Body of the Presentation
53 Contact, & Additional Background Information Greg Stevens, PresidentWinOvationsSM, Inc. 240 W. Main St., Suite 1200 Midland, MI USA Tel: FAX:
54 WinOvationsSM Projects Done In: Americas, Japan, Australia, Western Europe, Eastern Europe, Russia, Middle EastClients Since 1995 Include:Results Published Internationally:Associations: IRI, PDMA, PMI, ACA, ASC, TTI, SIRF, CDMA, CMRAJournals: The Economist, Industry Week, The Journal of Product Innovation Management, ResearchlTechnology ManagementJohnson & Johnson3MNCROwens CorningReilly IndustriesSolutiaVelsicolWacker ChemicalOthersBaker Oil ToolsDestec EnergyDow Chemical Co.Dow CorningEssex Specialty ProductsGMHoneywell (AlliedSignal)HuberIrwin Seating
55 Project & Training References from Large, Medium & Small Businesses