Business Innovation
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Innovation Funnel: what it is and how it works

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Innovation is not a simple process. It requires companies to question themselves and accept risks, but it is also the only way to remain competitive in a constantly evolving market. This is why the Innovation Funnel is such an important tool: it allows companies to develop winning ideas and manage business innovation in a rational way, avoiding wasting money and resources and remaining constantly focused on the objectives to be achieved.

Lean Thinking

Lean Thinking (a streamlined attitude) is an operational strategy born at the end of the Second World War. Engineer Taiichi Ohno and the founders of the Toyota company felt the need to develop an operational model that would respond to the needs of the historical moment they were experiencing and linked to their cultural context: the Japanese one. Thus was born Lean Thinking: an approach based on flexibility, rapid adaptation to the market and the removal of everything that did not add value to the company. This approach was opposed to Fordism, which instead used assembly line technology to increase productivity which would lead to an alienating regime based on mere automation and not innovation.

The Stage-Gate Model by Robert G. Cooper

Subsequently, Robert G. Cooper, an internationally recognised expert in the field of innovation management, developed a way to streamline activities and better control them: the Stage-Gate Model (1986). This method makes the development phase of a product efficient, optimising the use of human, economic and technological resources as much as possible. In this way, each idea is examined step by step by carrying out a strict selection, so as to only leave the most valid. This evaluation process is nothing more than a great filter to separate great ideas from those that won't work. For that reason, with each step, the company's fear of failure decreases.

How the Innovation Funnel works

Lean Thinking and the Stage-Gate Model are the basis for the development of the Innovation Funnel, a scheme used by companies to systematically process the feasibility of innovative ideas. Thanks to it, it is easier to distinguish winning ideas from those that are not worth realising. It reduces the unknowns to a minimum, maintaining focus on the objectives, helping to ensure that the resources work in an efficient and consistent way with the established process and monitors the results accurately.

The phases of the Innovation Funnel

The Innovation Funnel is divided into six phases ranging from the "widest" part of the funnel, which represents all the preliminary stages to the development of the innovative idea, to the "narrowest" one, which represents the realisation of the winning idea .
  1. Analysis
Customer needs are examined, market trends are analysed and in-depth competitive benchmarking is carried out in order to set concrete objectives and evaluate the real opportunities that can be seized.
  1. Brainstorming
The analysis is followed by brainstorming, which is a comparison phase in which ideas are formulated and expressed freely.
  1. Selection of ideas
This is the first narrowing of the funnel: the ideas developed during the brainstorming phase are selected, eliminating those deemed less effective.
  1. Conceptual elaboration
In this phase, the best ideas become prototypes to be tested and the budget for research and production is established.
  1. Consumer testing
The prototypes are tested on a series of people who are part of the target audience, who will provide useful feedback to understand if they are winning products or if updates or changes are needed.
  1. Launch of the product
The final stage, of course, is the realisation of the innovative idea.

The benefits of the Innovation Funnel

The Innovation Funnel brings numerous benefits to companies. The most important are:
  • High quality idea development process
  • Clear definition of objectives
  • Accurate budget preparation
  • Efficient use of resources
  • Effective reduction of the time between the start of the development process and commercialisation
Article updated on: 09 August 2023
Talent Garden
Written by
Talent Garden, Digital Skills Academy

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