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Chapter 12: Idea evaluation in:

Joachim H. Becker, Sven Pastoors, Ulrich Scholz, Rob van Dun

Towards Sustainable Innovation, page 235 - 246

A five step approach to sustainable change

1. Edition 2017, ISBN print: 978-3-8288-3903-8, ISBN online: 978-3-8288-6655-3, https://doi.org/10.5771/9783828866553-235

Tectum, Baden-Baden
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231 chapter 12: Idea evaluatIon Joachim Becker Summary After the ideation process is finished, ideas need to be collected and grouped in order to come to a solution to the problem. The direction of thought must be changed in the scope of idea selection. Creative activities are no longer in the foreground, but rather the ideas must be considered critically. For that purpose, several evaluation and decision-making techniques will be introduced in this chapter. When the creative team decided on one or two possible solutions, its members should write them down as detailed as possible. In this context, the team should discuss the strengths and weaknesses of the ideas and which problems it is going to solve (resp. which value it is creating for the customer). Furthermore, similar solutions of the competitors should be evaluated. It is important for the company to understand which other companies and solutions are already on the market as well as what potentially could be developed. By determining the relative level of threat from competitors, the manage- 232 Pastoors · Scholz · Becker · van Dun: Towards Sustainable Innovation ment team will be able to recognize whether they should go forward with an idea or not. For important decisions it is worth keeping a record of the steps the creative team followed in the decision-making process. That way, it can justify its ideas based on the information and processes it used later on. Furthermore, by keeping a record and engaging with the decision-making process, the creative team will improve their own as well as the management´s understanding of how it works, which can make future decisions easier to manage. 12.1 pre-selection of ideas When the ideation process is completed, the direction of thought must be changed in the scope of idea selection. Creative activities are no longer in the foreground, but rather the ideas must be considered critically. Schedule enough time to elaborate your ideas. Time pressure constitutes an obstacle to precise elaboration. “If you work under the pressure of deadlines, you should plan in enough time for the elaboration. Presumably, you will convince your client more with an only half-genius but cleanly elaborated proposal than with a halfgenius stroke of genius.” (Nöllke 2002, p. 38) There are different techniques that may help a team selecting the best ideas to solve a problem. In the following chapter we will introduce you to some of them. Affinity Grouping Affinity Grouping is an evaluation method in which participants organize their ideas and identify common themes. Procedure • Randomly place the cards that contain the individual ideas on a table (or place notes on flip chart paper taped to the wall). 233 Chapter 12: Idea evaluation • Without talking, each person looks for two cards or notes that seem to be related and places these together, off to one side. Others can add additional cards or notes to a group as it forms or reform existing groups. Set aside any cards or notes that become contentious. • Continue until all items have been grouped (or set aside). There should be fewer than 10 groupings. • Now discuss the groupings as a team. Generate short, descriptive sentences that describe each group and use these as title cards or notes. Avoid one- or two-word titles. • Items can be moved from one group to another if a consensus emerges during the discussion. Point scores For the first rough idea selection, it is recommended that the ideas are visualised, by displaying them on a pin board, flipchart or on the wall. Procedure • In the first step, double entries are sorted out. • For the second step, new ideas are separated out and presented separately. This prevents the ideas to be overlooked and lost during the points score. New ideas, in particular, have a high potential. • In the third step, every participant receives a certain number of points, which they have to distribute between the ideas to be scored. Hartschen (2009) recommended for a group of 8-12 people that each person awards 4 points. Using previously defined selection criteria, the points can be distributed as, for example: Feasibility, market size, cost, etc. (Hartschen et al., 2009) • In the next step, the ideas can be separated into three groups. The groups could be labelled TOP, GOOD, POOR. The aim is 234 Pastoors · Scholz · Becker · van Dun: Towards Sustainable Innovation to find the 15 top ideas. The work can proceed more efficiently with these ideas. • The fifth step is now the formulation of the TOP ideas. By doing this, it can be estimated, whether the ideas can be implemented at all. Every TOP idea is noted on an A4 sheet of paper. • If it is sensible, sketches or a simple prototype can also be added. The idea description can be for both qualitative and quantitative criteria, which enable an evaluation of the idea. Classification TOP: Ideas with three or more points. These ideas will be refined and documented (approximately 5-15 % of all ideas). GOOD: These ideas have only received one or two points. Depending on the requirements, these ideas can be combined with others. They can also be saved for later use (30-40 % of all ideas). POOR: No points, no use. These ideas are usually discarded (over 50-60 % of all ideas). Sticking dots Sticking dots is a quick method for determining priorities by voting. This is not a deeply analytic method, but a short, sharp measure of the current thinking about the idea. It is a group method, based on opinions. However, it has many application possibilities in different areas and is useful for the collection of opinions in early phases in idea selection processes. Procedure: • Ideas are itemised clearly on a flip chart (or similar aid). • The group thinks of three relevant criteria (e.g. use for the customer, degree of innovativeness, personal favourite etc.) to evaluate the ideas. • Each participant receives a certain colour set of dots, (e.g. 235 Chapter 12: Idea evaluation 5 red dots for the first criteria, 3 green dots for the second criteria and 2 yellow dots for the last one). • The participants decide on a criterion to start with (e.g. degree of innovativeness) • Now the participants may stick their dots by their preferred top ideas. Each participant may stick as many dots for ideas as he/she wants to. Nameless voting tends to work best. • All ideas that didn’t get a dot have to be stroked out. Afterwards the process starts again using the second criteria. • After the third turn all dots are summed up. The innovation process proceeds with the ideas which got the most dots. • At the end a short-list of the top 5 is made. 12.2 decision-making methods To put it simply, decision-making is the act of choosing between two or more courses of action. Decisions need to be capable of being implemented, whether on a personal or organisational level. Therefore, everyone who wants to implement new ideas successfully need to be committed to the decision personally, and be able to persuade others of its merits. However, sometimes, the idea collectors are not the decision-makers, in other words, those who decide which ideas attain marketability. In the following, some decision-making methods are presented. Plus-Minus-List The simplest means of deciding which idea to implement is the plusminus method: a simple list of the advantages and disadvantages of an idea. 236 Pastoors · Scholz · Becker · van Dun: Towards Sustainable Innovation Table 12.1: Simple plus-minus list Advantages Disadvantages 1. 1. 2. 2. 3. 3. 4. 4. 5. 5. Depending on which side there are more arguments, the idea is kept or discarded. A huge disadvantage of this method is that the advantages and disadvantages are not weighted. PMI – Plus minus interesting With the PMI method he developed, Edward de Bono offered a possibility of carrying out weighting. This method weights all the advantages and disadvantages, and helps to estimate the consequences of the alternatives. Furthermore, it shows whether additional information needs to be collected (Lorenz, 2010). Procedure: • Define the question for which the decision must be made. • List all the advantages of one alternative (2-3 minutes), then write down all the disadvantages (2-3 minutes). Don’t jump, always keep the focus on the advantages or disadvantages. • Points, both positive and negative, are written in the positive and negative columns. • All the points that still need to be clarified or require 237 Chapter 12: Idea evaluation additional information, are assigned to interesting. As soon as these points are clarified, they can be moved to the positive or negative column as appropriate. • With the aid of the following, the unweighted PMI helps to make the decision obvious; but primarily, it closes gaps in the information and brings to light the points that still need to be clarified. Table 12.2: PMI method Positive W Negative W Interesting Weight (W): 1- Less important 6-Especially important Source: Own presentation according to Lorenz, 2010. Principally, the PMI weighting enables a clear Yes-No decision, but also a clear decision between several alternatives. All the aspects and ideas listed in the table are evaluated. For this, the weighting ranges from 1: unimportant to 6: particularly important. The table is evaluated through the simple addition of all the values in the plus and minus columns. Finally, the minus value is subtracted from the plus value. If the result is positive, the answer is yes. If the result is negative, the answer is No. When evaluating several alternative ideas, each idea is evaluated separately. The decision is made for the variant with the highest final point score. 238 Pastoors · Scholz · Becker · van Dun: Towards Sustainable Innovation Some organisations may have a formal process that is required at this stage, including a financial assessment, so check beforehand. A good way to do this is to use a ‚balance sheet’, weighing up the pros and cons (benefits and costs) associated with a specific solution. Decision matrix The decision matrix method supports the decision made between two or more alternatives using rational criteria. Evaluation of the individual alternatives is made using predefined criteria. The alternative with the most points is taken (Lorenz, 2010). Procedure: • Define the alternatives. • The criteria must be defined, and the evaluation is made according to this definition. • It is important that the criteria are formulated positively. • The alternative points are allocated for all the criteria. (6 = optimum fulfilment, 1= marginal fulfilment of the criterion) • The points are added together for each alternative. • The alternative with the most points is selected. Table 12.3: Decision matrix Sample 1 Alternative A Alternative B Alternative C Criterion 1 Criterion 2 Criterion 3 Criterion 4 Criterion 5 Criterion 6 Total Source: Own presentation according to Lorenz, 2010. 239 Chapter 12: Idea evaluation The criteria are not evaluated in this method. However, if the criteria are not equally important, the weighted decision matrix should be used. When doing this, the criteria are either allocated a weighting using ranking or a percentage. With this weighting, the individual evaluations are multiplied so that the influence of the important criteria are increased and are taken into consideration when making the decision (Lorenz, 2010). Table 12.4: Decision matrix Sample 2 Weighting of the criteria Alternative A Alternative B Alternative C Evaluation Weighted value Evaluation Weighted value Evaluation Weighted value Criterion 1 Criterion 2 Criterion 3 Criterion 4 Criterion 5 Total Source: Own presentation according to Lorenz, 2010. Decision tree To begin with, the simple decision tree method is designed for a simple Yes-No classification of the individual decision aspects. The user systematically comes to a decision using its strict hierarchical structure. At the same time, a tree includes the rules for answering precisely one question. Procedure: • Define the question • The tree is completed bit by bit. • A criterion is asked for at every fork and a decision is made regarding the selection of the following fork. This process continues until the end of the branch is reached. 240 Pastoors · Scholz · Becker · van Dun: Towards Sustainable Innovation 12.3 evaluation of ideas When the creative team decided on one or two possible solutions its members should spend a few more minutes to write them down as detailed as possible. In this context, the team should discuss the strengths and weaknesses of the ideas and which problems it is going to solve (resp. which value it is creating). Furthermore, similar solutions of the competitors should be evaluated. By determining the relative level of threat from competitors, the management team will be able to recognize whether they should go forward with an idea or not. For important decisions it is worth keeping a record of the steps the creative team followed in the decision-making process. That way, it can later on justify its ideas based on the information and processes it used. Furthermore, by keeping a record and engaging with the decision-making process, the creative team will improve their own as well as the management´s understanding of how it works, which can make future decisions easier to manage. Companies may get to this stage, and have a clear favourite, but still feel uncomfortable with it. If that is the case, they should revisit the process. They may not have listed all the pros and cons, or they may have placed an unsuitable weighting on one criterion. In general, one´s intuition is a strong indicator of whether the product idea is right for company and fits with its values. No technique can substitute for good judgement and clear thinking. If possible, it is best to allow time to reflect on a decision once it has been reached. It is preferable to sleep on it before announcing it to the rest of the company. Once a decision is made public, it is very difficult to change. 241 Chapter 12: Idea evaluation Product definition and analysis Once an idea passes the evaluation phase, the next phase is the testing phase which starts with the development of the business model. This phase includes five main steps: • Define the value proposition: One of the first steps is to identify user needs and wants and to determine the customer value. This addresses questions about the product such as what is the job to be done, what benefits does the product provide and what features should the product have. During this time the company should conduct surveys and interviews with existing and potential customers (customer insight). • Analyse the market: When this is done, the company should conduct a market analysis. They have to determine the market size and segmentation, rate of growth, customer trends and behaviour, and what channels they should use to reach these customers. Once the company completed the market analysis it should conduct a competitive analysis. It is important to know how their competitors operate. This will not only help them to build a great product, but will also help in determining how and where to launch the new product. • Develop prototypes: Finally, the company can begin to test the concept they have developed. This is when the company may start to develop early prototypes and to present them to staff and consumers to gain feedback and measure customer reaction. Based on this, it can make the necessary changes and figure out the sales potential of the product. This feedback will also help the company build a solid product definition. • Test the feasibility: Based on the product definition, the company can start to draw up a technically feasible product concept, which includes the substances and methods needed to produce the new product (life-cycle-assessment). Once this is completed the company can carry out a production and operations cost analysis along with a market and launch costs analysis. 242 Pastoors · Scholz · Becker · van Dun: Towards Sustainable Innovation • Improve and enrich the product idea: At the end of this process the company once again further develops the product idea using the knowledge it gained in the other four steps. From now on the idea will constantly be improved (e.g. again by means of customer insight, life cycle assessment, or cradle to cradle) until the product is finally launched to the market. Training question: 1. Please name the five main steps of the testing phase. Recommended literature Diehl, Michael/Stroebe, Wolfgang (1991): Productivity loss in ideagenerating groups: Tracking down the blocking effect. In: Journal of Personality and Social Psychology, 1991/61, p. 392-403. Hartschen, Michael/Scherer, Jiri/Brügger, Chris (2009): Innovationsmanagement: Die 6 Phasen von der Idee zur Umsetzung, Offenbach. Lorenz, Heike (2010): Entscheidungsmethoden – Komplexität reduzieren, Klarheit schaffen, online: http://das-unternehmerhandbuch.de/2010/10/18/entscheidungsmethoden-komplexitaet-reduzieren-klarheit-schaffen/ Nöllke, Mathias (2010): Kreativitätstechniken, München. Osborn, Alex F. (1953): Applied imagination, Oxford.

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Zusammenfassung

With sustainability having gained a lot of momentum over the last years and companies implementing strategies to create corporate sustainability, there are lots of opportunities for innovation. Thus, the two concepts of sustainability and innovation should not be considered separately – they are closely interlinked with one another. The main goal of sustainable innovation is to develop new products and technologies that have a positive impact on the company’s triple-bottom-line. To meet this aim, they have to be ecologically and economically beneficial as well as socially balanced.

In order to help companies to improve their sustainable innovation process practically, this book is structured into five possible phases of a sustainable innovation process:

Awareness of a sustainability problem

Identification & Definition of the problem

Ideation & Evaluation of the solutions

Testing & Enrichment of the solutions

Implementation of the solutions & Green Marketing