An innovation funnel is a tool or process ensuring only the best ideas are executed. In a metaphorical sense, the funnel screens innovative ideas for viability so that only the best products, processes, or business models are launched to the market. An innovation funnel provides a framework for the screening and testing of innovative ideas for viability.
Understanding an innovation funnel
The framework is based on the idea that many innovative projects can be brainstormed and fed through the wide mouth of the funnel. To begin narrowing the funnel, the business must screen each idea in various ways and at various stages to determine whether it is worth pursuing.
At the end of the funnel, its narrowest point, the business is left with the opportunities it must prioritize moving forward. These are opportunities that make the best use of resources, deliver on project objectives, and align with organizational goals.
Moving through the innovation funnel
Here is a very general look at some of the most important steps:
- Opportunity assessment – to begin with, the business must examine customer and market data to determine whether there are opportunities for a new product or product line.
- Insights-based ideation – during this step, the business works out whether an opportunity could be monetized. Further research into the market and target audience should be performed with brainstorming, crowdsourcing, and focus groups used to generate product ideas. Some organizations will also seek out existing research and access development grants.
- Conceptualization – here, the most viable areas are turned into prototypes ready for testing. Several prototypes may be created for the same product for different features or iterations.
- Evaluation and benchmarking – the prototype is then tested on the appropriate end-users, with further tweaks made based on their feedback.
- Consolidation – at this point, the business must decide whether to continue investing resources into an idea or cut it loose. Many organizations have difficulty with this step, either persisting with unviable ideas for too long or discarding potential winners. Viability is determined by assessing manufacturing, marketing, distribution, and advertising costs, among other things.
- Launch – at the launch step, the business has reached the narrowest point of the funnel. The innovative idea becomes a reality once it has been released to the market.
Limitations of the innovation funnel
The innovation funnel does have a few limitations:
- Risk-averseness – the innovation funnel is a risk-averse strategy that errs on the side of caution. Considering that only one in 3,000 ideas is commercially successful, the business may reject innovative and viable ideas considered too risky to pursue.
- Short evaluation time – another limitation that may cause viable ideas to be discarded is short evaluation time. The innovation model encourages project teams to process and review as many ideas as possible. This means new ideas may be pruned so early in the process that they never have a chance to be tested.
- Discourages creativity – the consequence of risk-aversion and the rapid evaluation of hundreds of ideas is that creative ideas are discouraged in favor of safe ideas. Safe ideas are not innovative, which contradicts the premise of the innovation funnel.
- An innovation funnel provides a framework for the screening and testing of innovative ideas for viability. In theory, it ensures only the best ideas are executed.
- An innovation funnel takes many forms depending on the end goal of the business. However, some of the key steps may include opportunity assessment, ideation, conceptualization, evaluation, consolidation, and product launch.
- An innovation funnel does have some limitations. Primarily, the framework favors risk-averse ideas that are safe without being creative.
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