8. Research & Development
Our last product and service division department is Research & Development (R&D), which is responsible for new product and service ideation and prototyping (early development). Along with a few folks in top leadership, R&D leaders are typically considered the technology foresight professionals in any organization.
This department is typically responsible for two of the top twenty foresight specialties, in alpha order as follows:
1. Ideation & Design,
2. Innovation & R&D.
Ideation Management is another human capital related function that is benefiting from exciting new tools for generating collective foresight from large groups of an organization’s employees, customers, and stakeholders. Employee idea collection and refinement platforms (see BrightIdea, Datastation, CogniStreamer, Hype, IdeaScale, Imaginatik, and SpigitEngage), technical problem solving communities (InnoCentive), and employee engagement and feedback platforms (TeamPulse, Suggestion Ox) are now niche industries, selling their ideation products to HR leaders in all kinds of businesses. These firms are pioneers in software-as-a-service innovation management. Many of these systems work on top of the firm’s internal social networks and CRM systems, and the better ones incentivize firm-wide problem identification, idea generation and evaluation of employee and customer provided solutions, crudely assessing submitted ideas for their potential ROI for the firm, and offering project management tools for ideas that are turned into projects by employees or leadership. Prediction markets, which elicit forecasts and feedback on the potential outcomes of company ventures and relevant events, are another new area for collective foresight. But ideation and innovation management platforms are much more commercially successful and internally useful than prediction markets at present.
Design can be thought of as the hands-on, tangible exploration of ideas. It tends to focus on beauty, novelty, and style in the firm’s current and potential products and services. Ideally, the design professionals in this department work closely with sales and marketing, to discover what people want that isn’t yet being delivered, and with customer service, to discover problems and annoyances that can be eliminated. They also commonly work with top management in the Facilitation & Gaming specialty, helping to design environments and experiences that improve the firm’s foresight and collaboration. Like ideation itself, design can be used anywhere in the firm, and it deserves a champion in top management that sees its promise. Design consulting firms like IDEO offer design thinking engagements that will help leaders recognize the great power of structured creativity in thinking about, and interacting with, our mental and physical environment.
The new domain of Innovation Management, and the CINO (chief innovation officer) have become exciting new frontiers for innovation-related foresight work. As our IT systems get progressively smarter, we can use them, and smart rulesets, to continually improve the level of collaboration among the firm’s stakeholders and prospective customers.
Henry Chesbrough’s concept of open innovation, where the best firms use both internal and external innovation sources (i.e. ideas and IP from customers, rival companies, universities, and the global public), is a model that seems increasingly attractive for top firms in coming years. Kickstarter and Indiegogo are just two leaders in a plethora of crowdfunding companies that are capitalizing (often up to the ten million dollar range, and still climbing) and demand-testing all kinds of new events, projects, and products. Quirky and Assembly are among the world’s first crowdfounding companies, in which inventors and anyone else online who adds value to business ideas can work together to innovate and launch a new product or service, and receive equity or shares based on their inputs (i.e., with Quirky, 10% equity goes to the idea provider, another 5% to others who offer marketing, technical, or other value, and the rest to Quirky).
We can expect more of these kinds of companies in the next decade, now that small investors are allowed to directly invest in and receive equity (President Obama’s JOBS Act, one of the highlights of his administration). Prior to this, only accredited investors (folks with $1M or greater personal assets beyond their primary residence) could join angel investing syndicates, a law that put small business innovation at a systematic disadvantage. Democratizing small business equity investing via the JOBS Act is a big advantage for startups, and it seems likely to also grow jobs. Small businesses have been greatly advantaged in the last few years by crowdfunding sites as well. Crowdfunding grew 81% in 2012, its first year of major success, and hit $2.7B worldwide.
Clayton Christensen et al. in The Innovator’s DNA (2011) describe five behavioral skills that are key to innovation and R&D: Association (of information, to create ideas), Questioning (to highlight problems, define unknowns, challenge assumptions), Observing (seeing clearly what presently works and what doesn’t), Networking (connecting to others with diverse inputs), and Experimentation (a culture tolerant of quick, fast, and frequent failure during learning). This is not a definitive list, as other innovation-aiding skills have been proposed (e.g. design thinking). But it seems a solid start. For foresighted R&D managers today, providing greater employee freedom and incentive to innovate, doing better recruitment and global sourcing of technical innovators, enabling firm-wide or open innovation via software platforms, and aligning culture with innovation goals, and those goals with learning and development efforts, are some of the many promising foresight frontiers in this department.
R&D is the traditional name for this department, and it has its own set of communities and practice standards in every major industry. We mentioned some of those in Chapter 1. Unlike innovation management, R&D practitioners tend to focus more on basic research and technical intelligence, and less on the generation of successful products and services. The larger any firm gets, and the larger the industry it serves, the more a case can be made to support in-house scientific staff that focuses on exploring basic scientific and technical capabilties and phenomena that are within the scope of the firm’s mission.