In an earlier article (see: Risk Analysis – Method and Questions to Facilitate a Portfolio of Projects) we defined “best” by projects that scored favorably in an Innovation test by looking at the relative technology and market risks associated with new ideas (eg, process, product, etc.). With this article (geared for experienced facilitators and methodologists, but beneficial to beginners, as well) we go a step further to isolate the very best candidates using a three-step screening process:
- How Real is the opportunity
- To what extent we can Win compared to competitive options, and
- To what extent the opportunity is Worth doing.
MG RUSH has been a long-term proponent of decision matrices so, with some leaning on George Day, the following discussion shows you what to modify for your particular situation.
“The R-W-W screen is a simple but powerful tool built on a series of questions about the innovation concept or product, its potential market, and the company’s capabilities and competition.” – George Day
The method provides objective scores but also requires expert reviews at each stage. If the idea is ‘great’ for example, but we cannot win—then there is no need to go further. Even if we have the capacity to win, if the concept is not worth much—then there is no need to go further. As a consensus-building tool, the Real-Win-Worth method provides a disciplined method for exposing assumptions while also identifying knowledge gaps (or areas of superiority).
Successful screening depends upon the quality of the questions you use. To arrive at consensual understanding about answers to the Big Three questions, develop a robust set of detailed questions. Neither Day or MG Rush can tell you how to modify the basic questions below, so first understand the intent and then determine what you need to make an informed decision for each of the three stages.
To what extent the opportunity is Real
Consider two critical vectors. Value the feasibility of the product, service, or solution and the extent to which it is attractive (eg, internal or external customers). Answer these vectors by exploring the questions they represent. Eight representative questions are provided below. Rarely should the questions be posed as close-ended. Rather, by exploring the “extent” you will want to develop the degrees across the continuum.
Typically, your best (perhaps most innovative) solutions will score higher relative to each other. For example, with question 2.2. (To what extent do we have the technology and expertise to make it?) your range could be . . . Note the non-linear weighting suggested below, ranging from zero through nine. Ultimately the ideas that score best will pass on to the next stage.
To what extent can Win compared to competitive options
After determining the extent to which your customer demand and solution are both real, next assess your ability success against competitive options. According to Day,
“Two of the top three reasons for new-product failures, as revealed by audits, would have been exposed by the Can we win? analysis: Either the new product didn’t achieve its market-share goals, or prices dropped much faster than expected. (The third reason is that the market was smaller, or grew more slowly, than expected.)”
Begin by reviewing an additional six questions that explain the two vectors about synergies and advantages. Consider pulling in the results from any research efforts to help answer the questions. Focus on the open-ended nature of likely answers or projections. For example,
To what extent the opportunity is Worth doing
The final stage addresses predictive vectors including financial risk/ reward and strategic fit. Financial projections can be general or refined bust apply the same level of rigor to everything you evaluate. Keep in mind that the forecasts of financial returns from innovative solutions are notoriously unreliable. Day notes from his research that . . .
“Given the susceptibility of financial forecasts to manipulation, overconfidence, and bias, executives should depend on rigorous answers to the prior questions in the screen for their conclusions about profitability.”
The ranges used need to be modified for your scale. Keep in mind that the risk/ reward factors while specific, are nevertheless projections. There is no better time to use a group for evaluation since the “Wisdom of the Crowd” suggests that nobody is smarter than everybody. Here are some illustrative placeholders for one of the nine questions suggested below.
Consider a facilitated session to build your questions as well as your evaluation continuums. You may discover that by having individuals score the candidates privately and then aggregating results you have a tremendous stimulus to launch a decision-making session based on everyone understanding and supporting the final assessment. Keep in mind that the highest scoring idea(s) does not claim victory, but you will likely not spend too much time discussing sub-optimal ideas, allowing the group to focus on its final decision(s).
Remember the questions that follow are directional and should be liberally modified. Finally, an illustrative example of the questions and potential continuums for each is provided at the end.
 See “Is It Real? Can We Win? Is It Worth Doing? Managing Risk and Reward in an Innovation Portfolio” that appeared in the December 2007 edition of the Harvard Business Review
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