Stages of Innovation

Introduction

The evolution of innovation from interesting phenomenon to commercial deployment goes through a number of distinct stages, each with its own characteristics, business models and required skill sets for success.

These stages, while related to Technology Readiness Levels (TRL’s)[1], are not completely described by them.?It is important to know in what stage of development an innovation is, in order to apply the correct processes, tools, business models and skill sets.

“If you don’t know where you are going, you might wind up someplace else.”

-Yogi Berra -

This article will propose five stages of innovation and suggest how they might be most effectively executed:

1.???Research and Development

2.???Engineering the Embodiments

3.???Integrating and Developing Investable Projects

4.???Deployment

5.???Continuous Improvement

?Simplified Approach to Stages of Innovation

Technology Readiness Levels (TRL’s), as defined by NASA, consist of 9 levels that describe the state of readiness of a particular technology.?While this is a useful shorthand for technical progress, it is insufficient to describe the state of development of technologies or groups or technologies with the ultimate goal to deployment.?In other words, TRL’s do not describe the types of activities and skill sets required at a given stage of development.?TRL’s, as a technical readiness metric, do not provide any insight into the level of commercial or business readiness.

As innovation moves through the 5 stages of Research and Development, Engineering Embodiments, Integrating and Developing Investable Projects, Deployment and Continuous Improvement, different teams (skill sets), processes and tools need to be brought to bear.

Let’s Look at the Stages

The 5 stages are somewhat analogous to the different species participating in the innovation ecosystem that were discussed in Hawk & Squirrel Article # 2, Growing an Innovation Ecosystem.?Just as different skill sets and mindsets need to be used by different players in the ecosystem, so too, different skills, processes, tools and activities need to be employed at each of the different stages.

Research & Development

This is the first stage in the innovation process.?It is here that scientific knowledge is expanded, and new phenomena are discovered.

This stage requires specialized and detailed knowledge in a particular scientific domain.?Many years of detailed effort are generally required to surface new knowledge and phenomena.?Practitioners of R&D need to be motivated by a desire to understand and reveal basic fundamentals of our universe.

This inquiry can be motivated by solving for a particular technical or business opportunity, but truly disruptive technological phenomena typically result from pure scientific curiousity.

This work is typically done by academics and research providers

Engineering the Embodiments

Once a novel phenomenon is discovered, it needs to be converted to some sort of useful embodiment.?This could be a new machine, product, or process.?This conversion makes the new phenomenon accessible to the ecosystem at scale.?

Common activities at this stage include the industrial engineering (in its broadest sense) to conceive of an embodiment of the technology, technical de-risking, scale-up and commercial demonstration.

This is a high-risk stage as many possible manifestations will not be feasible.?Practitioners here need to be highly creative, attuned to the current needs of their customers, systems focused, practical and motivated to do the hard and frustrating / exciting work of doing something new.

Typically, this work is done by start-up companies with support from others (accelerators, incubators, VC’s, strategic investors, government) in the innovation ecosystem

Integrating and Developing Investable Projects

This stage is often overlooked and represents the point where many technologies fall victim to the “second valley of death” where a technology is proven, economical and practical but is still not deployed.?This happens less often for technologies that are low cost and easy to deploy, such and digital applications and new sensors.?However, for capital-intensive, disruptive technologies, this step is necessary and challenging.

At this stage, practitioners need to assess the opportunity embodiments in a given area of interest and synthesis these opportunities into a solution of interest.?This requires addressing technical, financial, economic and value chain requirements.?A great deal of translation is required between the affected parties in this synthesis.?The ultimate goal is to present de-risked investable projects to parties that have the resources and skills to execute these projects and to describe these projects in a way that is understandable and acceptable to these parties.

This stage often involves integrating multiple ‘best of breed” technologies from the varuous engineered embodiments into a project with the highest probability of commercial success.

It is unclear who is best placed to perform this work.?Large companies, with the resources to ultimately deploy projects will often have groups within the company doing this, but often there are skill set and business process mismatches that keep this from being sustainable.?Small start-ups also try to do this but are disadvantaged by their commitment to a particular embodiment and, often, their inability to work with other start-ups.?Hawk & Squirrel has been exploring the opportunity of offering services at this stage as-a-service to multiple companies as a specialized practice.

Deployment

At the end of the day, if a technology is going to make a difference, it will need to be deployed.?In the case of capital-intensive, disruptive technology, this requires a very specialized and disciplined skill set.?Facility capital costs in the hundreds of millions of dollars cannot be deployed by just anyone.?Project development and project execution skills are typically deeply embedded in large incumbent companies.?If the previous stage of developing investable projects has been done properly, the project proposed for deployment should be translatable to these execution professionals.?Often, it is the failure of the previous stage that leads to either lack of deployment or cost and schedule overruns.

While many start-ups complain about large companies as being risk adverse and slow to change, they need to understand and address the fact that if a commercial manifestation of their technology is a facility with capital costs in the hundreds of millions, there will naturally be a great deal of scrutiny placed on that project.?The previous step of developing investable projects needs to take these start-up embodiments and sufficiently de-risk them such that the deployment step can take place and be effective.

Continuous Improvement

People often reference First-of-a-Kind (FOAK) costs as being higher than Nth-of-a-Kind (NOAK) costs.?It is unlikely that the first manifestation of a new technology will be the most efficient and effective.?This is often used as a legitimate reason to accept lower economic returns the first time a technology is deployed.

However, for a technology to be widely adopted, it is critical that the hard work of continuous improvement be done, and the technological solution be updated and improved for the next iteration.?For this to occur, both the technicians that operate the new technology and the original technology developers need to work together to identify and engineer improvements.

Why does it Matter?

As Yogi Berra said off the top, “If you don’t know where you are going, you might wind up someplace else”.?

Particularly for “Hard-Tech”, capital intensive and disruptive innovation, each of these stages needs to be executed with the appropriate processes, tools and skill sets.?Often, failure to deploy is a result of either skipped stages or stages executed by the wrong skill set, process or tools.?This does not allow them to proceed to the next stage and technology fails to make a difference.

Wrap Up

This article proposed a simplified 5 stage process for innovation, focused particularly on capital-intensive, disruptive hard tech.

Each stage has its own special requirements and processes.

Often failure to get technology deployed is a result of a failure at one of these steps.?This article offers a potential diagnostic for those uncertain of how to proceed in their current situation.?First, find out where you are.

[1] NASA, https://www.nasa.gov/directorates/heo/scan/engineering/technology/technology_readiness_level