Clarity on PLM

What I learned this week … came after long reflection on my predictions for product innovation in 2010. As you may have noticed from the sparse number of posts in December, I must have been doing a lot of reflecting! I decided to look back at my 2008 research at Aberdeen Group called “The Product Innovation Agenda 2010″ to see whether or not my predictions came true, and bust those that didn’t. I hope you find it interesting. For a look at my take on this last year, please see the post What I Learned: Product Innovation and Engineering “2009 Style.”

Disclaimer on my Lack of a Crystal Ball

First, I want to say that my predictions were not based on a crystal ball or some supposed deep insight into the world of product innovation. As a researcher, I always find it better to ask the people who know the answer instead of guessing. In this case, I surveyed manufacturers about their plans for improving product innovation, product development, and engineering between 2008 and 2010. Then, I compared what the leading companies were doing – and planning to do – differently than average and poorer performing companies.

Predictions and Outcomes

Based on the prior research, here are my thoughts on where we stand as a manufacturing and engineering community against our plans for 2010:

Overall, I feel pretty good about how well the study predicted where companies would focus their efforts. Clearly companies made adjustments based on the economy, but the fact that PLM can help both the top-line and bottom-line was a big benefit.

What Did I Miss?

I missed the impact that social computing would have on product innovation processes. The report touched on open innovation and standardizing innovation processes, but I didn’t ask the right questions to see how the explosion of social networking would impact product innovation. I am not sure that if I asked the right questions that manufacturers would have been able to predict the boom in these technologies and their applicability to product development. I hope that I have made up for my miss by reporting on the trend in posts such as Going Social with Product Development, Social Computing Drives Innovation, Social Innovation in Simple Terms, and Enterprise 2.0 Adoption Study Good Sign for Social Computing in PLM. This is a space to watch in 2010 and companies plan on how to compete in 2011 and beyond.

Implications for Manufacturers

Last year I saw companies adopt a “survive and thrive” approach to innovation due to the down economy. The economic downturn forced companies to run lean and many had to downsize. But many companies I studied were keeping at least a subset of their resources on future innovation to be ready for the return of the market. I noticed that the long-term strategies for PLM were the same, but companies were shifting PLM strategies to short-term tactics to reduce cost and get the most out of existing resources.

Predictions for 2011 and Beyond

This year:

• I expect to see continued emphasis on innovation and PLM.
• I believe many companies will be picking up where they left off with PLM strategies, but maintaining their focus on keeping costs in check.
• PLM will continue to expand, as discussed in What I Learned: PLM, Please Take 3 Giant Steps Forward, and will play a large role in helping companies improve product innovation, product development, and engineering on a broad scale.
• Social computing will have a profound impact on product innovation, and 2010 will see many initiatives exploring the value that the intersection of web 2.0 technologies and process have with PLM.

So those are my thoughts on the past, present and future. I hope you found it interesting. What does 2010 and beyond look like to you?

What I learned this week … came from a blog entry by Paul Hobcraft on Innovation Tools asking “What is ‘exnovation’ and where does it fit in the innovatin life cycle?” I found “exnovation” an intriguing term and an interesting concept. And then, as usual, I tried to think about how manufacturers could apply it to their product lifecycles to enhance product profitability. I think the answer may be similar to the portfolio shift depicted in this graphic:

So What is Exnovation, Anyway?

From the blog entry (it’s short, take a quick read and please come back) I picked up a few key points that I will repeat here:

• The term is credited to “Kimberly in 1981″
• Exnovation is at the end of the innovation life-cycle where it “discards” or even purges existing practices to allow the organization to adopt different and fresh thinking to any new innovation activities.
• Exnovation gives us the opportunity to jettison what is no longer relevant and the space to create something more relevant to the current project.

I don’t have much to add in defining the term, I am sure that Paul is much more versed in innovation literature and processes than I am. So, let’s turn to my thoughts and the “so what’s in it for us?” question.

My Thoughts

As summer draws to a close, students are getting ready to go back to school and families are wrapping up vacations. This is the time to restock school supplies (or office supplies) and get back to school (work) refreshed and ready to take on new challenges. At that time, it often makes sense to clear away the clutter and get ready for what’s next. Isn’t that exactly what we need to do coming out of the “summer doldrums” brought on by the recession? What really appeals to me in the “exnovation” idea is to clear away what isn’t necessary. To me, this can include a review of practices and policies that might be outdated, but also a review of the existing product portfolio. Shouldn’t this be the time to jettison the extra baggage in the product portfolio that is holding the company back, and then focus resources on what will rebuild the future of the company? I am not saying to throw away cash cows that generate money, but maybe get rid of the sacred cows that can no longer afford to be protected. In other words, isn’t it time to prune the product portfolio to cut away the dead wood? Wow, sorry for all of the cliches, but I hope I made my point…

What’s in it for Us? (Implications for Manufacturers)

So what does this mean for the manufacturing industry? Strip out unprofitable products and product lines. Sell off product lines that have no future. Rationalize the portfolio to one that:

a) Has profitable products to keep the company going during the down cycle

b) Has strategic up-side potential to accelerate growth during the upturn

This is exactly what I have seen many companies do in what I have talked about as the “Product Portfolio Shift.” Whether you call it rationalization, exnovation, pruning, or any other name – I think this is a healthy time to let every product and product line earn the right to be in the product portfolio. That is, instead of selectively deciding what to take out, take everything out of the portfolio and then decide what you would like to put into the portfolio to build the future of the company. You just might come up with a very different set of products, and one that will drive better profitability in both the short and long terms.

So that is what I learned, I hope you found it interesting. Who knew about “exnovation,” at least by that term? I didn’t, if you did let us know about it.

I had a chance to talk with… the team at Sopheon about their recent product enhancement in the customer needs management (CNM) space. Through an OEM agreement with German based idea management vendor, Hype Software, the product portfolio management company has announced Idea Lab, an idea discovery, management, collaboration and analytic offering – areas that were partially addressed by their existing idea management offering. With Sopheon’s existing portfolio management and product planning/roadmapping strengths, these additional capabilities at the very front end of innovation give it a strong offering in the customer needs management space.

What do they Offer?
My expectations going into the meeting were that Idea Lab would be yet another idea capture and campaign management tool – but it is more than that. With its analytical and social networking capabilities, this is a rich offering when combined with Sopheon‘s portfolio and product planning capabilities. We look forward to hearing about customer successes, as the solution gains traction.

Two of the most interesting points discussed were the need to connect innovation to corporate strategy, and the ability to “develop communities around the concept.” For the latter, users have the ability to search the system for like ideas, and collaborate with people across the company who are working to solve the same problem. Really, it facilitates internal social product development: a simple way to reuse IP and innovation (perhaps in a different product group) and avoid the age old corporate problem of multiple groups working on the same thing. There are also idea portfolio analytics layered in, enabling the innovation team to filter to the best ideas, based on how each division (marketing, manufacturing, R&D, supply chain) ranks an idea; thus ensuring the entire company has a voice in what products get brought to market.

As far as connecting with corporate strategy, amen! Too often, PLM happens in a box, disconnected from corporate strategy – whether a brand new idea or (most likely) a product enhancement, it needs to be connected to a corporate goal, whether that be (for e.g.) to grow market share in X market by 10% in 2009, or increase revenues by 20%. I like the “Message from the CEO” on the front page of Idea Lab, stating the importance of finding a solution to the posed problem. One enhancement opportunity would be to be to have the CEO be specific about what corporate goal the idea would support. In other words, why should I, the employee, take the time to participate in this idea campaign?

Taking a page out of 3M’s innovation book, a nice touch in Idea Lab is the innovation recognition program. Top innovators in the company can be recognized through number of innovation credits, built up through number of ideas and comments submitted. In other words, it’s a mechanism for companies to expedite involvement in innovation through healthy competition with fellow employees.

How Does it Fit into the Ecosystem?
As my last post noted, there are few PLM and idea management solutions that see the full benefit of linking together the front end of innovation with the rest of the PLM process – where ideation is connected with product modeling, roadmapping, and requirements management. I think Sopheon realizes this – that said, you wouldn’t buy Accolade from Sopheon for your modeling, PDM, requirements management, or manufacturing process planning needs; there is still the need to integrate with a PLM system.

I like the concept of innovation governance – as noted in my last point, I believe that the creative innovation process needs to be corralled at some point into a portfolio of ideas/feature enhancements, a portfolio of products, a set of requirements, and a product roadmap. “Governance”, however, can be a scary word for front end of innovation practitioners like designers, marketers and brand managers – but what Sopheon is striving to do with Idea Lab is build the bridge from the free-form ideation process to innovation governance, not impede it.

I expect this move will spark a continued push from primary rivals Planview (which partners with Siemens PLM), and CA (with their Clarity product) into product planning and portfolio management, from their roots in IT portfolio management. These vendors with an “IT governance” heritage are competing now in, as Sopheon calls it, the “innovation governance” space.

So that’s what I hear from Sopheon. I hope you found it useful. What do you think? What else should I have asked them?