Idea Screening

1. SWOT Analysis and Ideation

While an organizational culture can encourage or discourage innovation, this doesn’t answer why new ideas are needed or why some are better than others. These ideas may come from existing frustrations using a certain product, or a desire to do something better or more simply. They may come as a moment of inspiration, such as the one Gordon experienced while biking up a steep hill, but more often come from listening to customers, as we discussed in the last tutorial. Successful products almost always fill a real or perceived need.

EXAMPLE

The “pet rock” fad of the mid-1970s was a collectible toy that had a brief but fervent popularity. It was simply a rock sold as a “pet.” Inventor Gary Dahl came up with the idea at a bar while listening to friends complain about their pets. That is, even the most frivolous idea comes from a real or perceived need—in this case, a “perfect pet” that requires absolutely no care (Stern & Stern, 1992).

think about it

What inventions or new ideas have you seen in your lifetime, particularly ones that caught on quickly? What problems did these solve?

New products under consideration will fill a need and have the critical success factors customers want. But there are still big questions the company needs to answer: Are they equipped to make and sell the product? Does the product fit their brand? Will they be able to make it for less than the public is willing to pay? Will the market be saturated with competitors’ products by the time theirs hits the shelf?

In the idea screening phase, a company is focused on whether the idea will work and whether it is feasible. That is, even knowing that there is a likelihood the product will succeed, they need to know that they will be able to sell it and turn a profit. If you consider large organizations that have hundreds of ideas a year, this process is an important step to help determine what products the company wants to invest time and money in for development.

Some of these answers can be obtained from basic research using SWOT analysis: strengths, weaknesses, opportunities, and threats. Many methods may be used to gain insight into new product lines or product features, including:

• Market and consumer trends: Reviewing information on market and consumer trends can assist in determining any gaps that exist, or unmet consumer needs. It can also help the organization better understand their target market and demand for a particular product or service.
• Research and development: Performing research and development is necessary and can be helpful for companies in understanding where they might expand their existing product lines, and identify areas related to quality improvement.
• Competitors: SWOT analysis and other methods can help assist in understanding how their products (or proposed products) are different than competitors’. Research (even the use of corporate spies) may also be used to determine what new products the competitors have in development, not to copy their ideas but to make sure that they are not pursuing the same ideas.
• Focus groups: Focus groups are a method companies can use to test concepts, address customer needs and wants, and help companies understand reactions and emotions customers have with particular products and services.
• Trade publications and trade shows: Trade shows and trade publications give companies insight into industry trends, and allow companies to examine competitor offerings, which can provide insight during the idea screening process.
• Employees and sales staff: Employees and sales staff often work directly with customers and receive a lot of feedback from customers. Harnessing the knowledge of these employees can provide a good basis for better understanding of what customers want and need. In some industries, like fashion and entertainment, staff excitement about a new concept can make an option a lot more attractive.
• Ethnographic methods: As we covered earlier, ethnographic methods involve researching the use of products and services in the natural environment. This type of research gives a deeper understanding of customer behaviors, opinions, and environments, which can provide valuable insight into how customers will react to a new product.

A SWOT analysis can be used as a first step to determine if it makes sense to move forward with an idea and looks at the potential strengths and weaknesses of a product as well as opportunities and threats around the product. Ideally, the product would play to the company’s strengths—brand recognition, current production processes, and so forth. The company would also look for opportunities, uncontested areas where they can establish a new market, rather than areas threatened by competition or obsolescence. The SWOT analysis is often presented as a summary in a format like this:

Strengths	Weaknesses
Internal assets of the company, its brand and reputation, and the product	Internal issues that should be addressed regarding the company or the product
Opportunities	Threats
Positive external factors that should be used to the company's advantage	External factors that require attention and solutions

Let’s return to our entrepreneur, Gordon. He would likely perform research on the strengths, weaknesses, opportunities, and threats (SWOT) for his bicycles. Here’s the form Gordon’s analysis might take:

Strengths	Weaknesses
Unique technology (initially) Passionate customers Can meet the needs of inexperienced riders I have the time and expertise to do it	Expensive to develop Concern with marketing avenues Many competitors Technology might be easily copied
Opportunities	Threats
Develop relationships with bike shops for marketing Government grants for product development, due to environmental concerns (getting cars off the road) Surveys to understand customers wants, needs, and price they are willing to pay Develop not easily copyable technology	Legislation requiring a license to use an e-bike Consumer demand is low Pricing is higher than casual cyclists will pay Competitors may have similar products in development and more reach

Based on this analysis, Gordon now knows the challenges that might be associated with creating this product as well as the strengths and opportunities he can emphasize. These lead to key design decisions. For example, knowing that his e-bike will appeal to inexperienced riders, Gordon is likely to choose safety and comfort over design elements that make the bike faster. For another example, knowing that his cycle will have cutting-edge technology (a strength) that might be copied (a challenge), he knows that he should design the software component to be hard to replicate. You can see how Gordon plays to his strengths but also addresses the threats and weaknesses, and even turns these into opportunities.

term to know

SWOT Analysis

Basic research on a company’s strengths, weaknesses, opportunities, and threats. Strengths and weaknesses refer to the company’s internal operations and forces; opportunities and threats refer to external forces.

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2. Aligning NPD With SWOT Analysis

After a company completes a SWOT analysis, they enter a five-step process for determining which idea best realizes opportunities or addresses threats (or both!).

2a. Opportunity Identification

The first step is opportunity identification. Large or incremental business and technological opportunities are identified in a relatively structured way, determining which of the opportunities best aligns with company strengths and brand. Resources are thus allocated to new projects, leading to a structured new product strategy.

The foundation of any successful new product strategy rests upon thorough opportunity identification. This initial step involves a systematic exploration of potential business and technological advancements. These opportunities can range from large, potentially disruptive innovations to smaller, incremental improvements that enhance existing offerings.

The identification process should be structured to ensure a comprehensive and objective evaluation. Market research, competitor analysis, and customer feedback are all crucial in uncovering gaps or unmet needs that present opportunities for innovation. Additionally, internal assessments of a company's strengths and brand identity are vital to determine which opportunities offer the best alignment.

By aligning identified opportunities with the company's core competencies and brand values, a clear direction emerges for resource allocation. Resources can then be strategically directed towards the most promising opportunities, ensuring that the NPD is not only innovative but also strategically sound. This targeted approach fosters a more efficient and effective innovation process, ultimately leading to the development of new products and processes that deliver value to the market and contribute to the company's continued success.

Some innovations do not affect the end product and are not visible to customers but are related to greater efficiency in production. Examples of opportunities might be recognizing a demographic that can be targeted with the existing product, a technological improvement that could differentiate a product from the competition, or an internal opportunity for speeding up the production process or reducing overhead costs. Much of the NPD process still applies.

2b. Opportunity Analysis

The second step is an opportunity analysis. In this step, the NPD team predicts how the identified opportunities will affect both the business and operations of the company. The first element of an opportunity analysis focuses on aligning ideas to target customer groups and can include market studies and/or technical trials and research. They will answer questions like:

1. Will our current customers embrace the product?
2. Will the product attract new customers?
3. Will the public trust our brand with this product?
4. How will this new product or process affect our brand?

The second element of an opportunity analysis addresses how the new product or process will affect the company’s internal operations and finances. They will answer questions like:

1. How much will this innovation cost, and how will we recoup the cost?
2. Will changes needed to adopt the new process or product cause the production of existing goods to slow down?
3. Will the quality of our products be affected in any way?

Following the identification of potential opportunities, a thorough opportunity analysis becomes the cornerstone of informed decision making. This step is critical in predicting the impact of these opportunities on the company's business trajectory and operational landscape.

The initial element of the opportunity analysis centers on ensuring a strategic alignment between the identified ideas and the target customer groups. This alignment is crucial for maximizing the potential success of any initiative. Two primary methods are employed to achieve this alignment: market studies and technical trials/research.

Market studies provide valuable insights into customer demographics, preferences, and purchasing behaviors within the target audience. This data can be gleaned through surveys, focus groups, or competitor analyses. By understanding the specific needs and wants of the target market, the NPD team can tailor opportunities to directly address those needs, enhancing the overall value proposition.

Technical trials and research delve deeper into the feasibility and practicality of the identified opportunities. This might involve prototyping product concepts, conducting A/B testing on marketing strategies, or exploring the technical viability of new technologies. This phase allows the team to identify potential roadblocks or areas for optimization before significant resources are committed.

The opportunity analysis serves as a vital filter, ensuring that promising ideas are not only strategically aligned but also demonstrably impactful on the target customer base and the company's operations. Through a combination of market studies and technical exploration, the NPD team cultivates a well-informed understanding of the potential opportunities, enabling them to make data-driven decisions for optimized growth.

2c. Idea Genesis

The third step in screening is idea genesis. This is an evolutionary and iterative process of progressing an initial idea from birth to maturation into a tangible idea. This process can occur internally or externally (e.g., a supplier offering a new material or technology, or a customer presenting an unusual request). Think of this as the refinement and development of an idea, including all its features and benefits.

big idea

You may see a lot of overlap between phases of new product development like ideation and idea screening. This is because the process is not one of distinct steps. Rather, it is a dynamic process where each step is closely connected to both the previous step and the next step.

2d. Idea Selection

The fourth step is idea selection, whereby the product chosen to pursue an idea is determined by synthesizing the information from the opportunity analysis and picking the one that has the most likelihood to succeed.

2e. Concept and Technology Development

Concept and technology development is the final step in selection. It involves the development of a business case based on estimates of the total available market, customer needs, investment requirements, competition analysis, and project uncertainty; we will describe these stages more in the next three tutorials.

Some organizations begin with concept and technology development because they do not want to spend time and energy on a product until they are assured there is a market for it and that they have the means to make it. That is, they may start not by asking, “Where is there a need?” or “Where is there an opportunity?” but “What do we have the capacity to make and sell?” As you might guess, this presents less risk but also less innovation.

A company beginning with concept and technology development may even develop a prototype of a product and perform product testing with a small group of consumers. Based on feedback, they may revise or reimagine the product based on this feedback, so it meets the needs of customers.

IN CONTEXT: GORDON'S BIKE COMPANY

Let’s look at how inventor Gordon might go through each of these front-end steps and consider questions he might ask himself.

Step in Screening	Decision
Opportunity identification	Gordon has always wanted to invent something, and a self-assist e-bike seems like the perfect product to produce because he’s both passionate about it and has the skills to develop the technology.
Opportunity analysis	Gordon considers his idea and the different features the bike might have. He talks with his bike-riding friends to get feedback on the features.
Idea genesis	Gordon hones in on the idea and drafts technical specifications to determine how he will create this technology.
Idea selection	The idea is viable and doable. He decides to move forward with the idea.
Concept and technology development	Gordon puts together a development budget, researches the market, and finalizes his technical drawings to get ready for the development of a prototype.

REFERENCES

Stern, J. & Stern, M. (1992). The Encyclopedia of Pop Culture. Harper Perennial Press.