The innovation funnel

The innovation funnel is a well known representation of the innovation process discussed widely in variety of innovation journals and articles. Let us see briefly what it means and how it helps in managing the new product development process. Simply put this structure is a quite straightforward approach, which consists mainly of five consecutive stages namely; idea generation, concept screening, analysis of selected ideas, development (or prototype building) and launch (market diffusion). All these stages are separated by stage gates and are ideally independent. But in practice there could be overlaps between two adjacent stages as well.


I would not get into details of different stages and their activities here, which is quite broad and each stage would necessitate separate discussion, but would like to point out some simple and important facts observed in this model. This model beautifully summarizes the contradiction between flexibility and efficiency i.e. it attempts to combine the structured part with the unstructured part of new product development. First, the stage gates present in this process (ex gate 1, gate 2 … etc) impose the restrictions (process guidelines) that check the whole process from going out of control (provides efficiency), whereas within the individual stages there exists freedom for participants to show their creativity and talent (but within the prescribed guidelines of that stage). The second important thing to observe here is the gradual shift from chaos towards a structured process. As we could observe in the idea generation phase there exists highest uncertainty, so the need of utmost flexibility and freedom for the participants, and the goal is to involve people from varied field (external or internal) to generate as much ideas as possible. Any control here would limit the creativity. In the next stage, i.e. concept screening, the goal is to select few good ideas from a bounded pool of ideas, thus putting a restriction on the number from which the choice should be made. This “bounded pool” is an example of one of the initial restrictions/controls imposed on the process. Moving further in the analysis stage, the objective shifts towards expanding/building the selected ideas by taking into consideration the relevant resources available and also the existing market conditions (these are additional restrictions put in place). Next in the development stage the expanded concept(s) is/are subject to strict production practices and any slack in this part is consciously avoided (full restriction and a control process in place). The launch stage involves a highly calibrated (structured) approach for diffusion of the product in the marketplace (little margin of error to achieve commercial success). In the above discussion we could observe the stage gates, acting as regulators, are gradually facilitating the random process to turn into a stable outcome. The guidelines they use are normally derived from a strategic plan.

The outcome (quality) of the whole funnel is thus influenced by three fundamental parameters. First the efficiency of stage gate regulators (rules and guidelines as part of the strategy), second the quality of ideas generated at the initial stage (efficiency of the ideation process) and third the time span for each stage of the process. Hence we can summarize the discussion as:

Innovation quality (ex. for NPD) = function (regulating strategy, idea generation, time)