Towards a design-to-launch perspective: Implementing end-to-end processes for innovations with reference from consumer goods industry Prof. Dr. Jan-Philipp Büchler University of Applied Sciences and Arts Dortmund, Professor for General Management & Global Business Management, Center for Applied Studies & Education in Management (CASEM) Emil-Figge-Str. 44, 44227 Dortmund, GERMANY
ABSTRACT Accelerating dynamics of global competition with ever-faster product lifecycles and significant failure rates of product innovations require companies to set-up an integrated and resource-efficient process for new product development across internal functions and in alignment with external contributors. Progressive consumer goods companies have incorporated an overarching end-to-end process approach from product design to product launch in order to systemize innovation initiatives and align the organization along the innovation process. The stage-gate model is one of the most prominent approaches for implementing a design-to-launch process within organizations. However, the implementation of this approach is difficult as it requires changes in terms of organizational roles and responsibilities towards a shared process perspective across functions and countries as well as external contributors. This change in perspective becomes most obvious in marketing management, which is required to develop from marketing mix focused brand ownership towards holistic innovation process ownership and needs to act as enabler and catalyst for change within the organization. Several implications for innovation management arise for all organizational functions involved in the design-to-launch process. The paper illustrates an end-to-end process view on global marketing and innovation management with a focus on the consumer goods industry and refers to empirical research of innovation process and management at Henkel AG & Co. KGaA based on qualitative interviews.
Key Words: Innovation management, innovation process, stage-gate process, value chain, demand chain, supply chain, new product development, new product launch, international marketing, consumer goods, project management Contact:
[email protected]; Center for Applied Sciences and Education in Management (CASEM): www.casem.eu
1
INTRODUCTION
The dynamics of global competition require companies in most industries to accelerate their innovation initiatives and new product launch activities. At the same time, the global coverage of operations and roll-out activities present a high level of complexity to be managed in terms of geographical scope and cross-functional interdependencies. A mere activity based view of the value chain does not provide grounds for a competitive innovation process in this context. Market leading companies in the fast moving consumer goods industry started to implement a cross-functional end-to-end process perspective of the value adding activities for innovation projects. This paper aims to analyze the measures that facilitate a cross-functional end-to-end process perspective and tries to identify best practices based on an empirical study in one the leading consumer goods companies. After a short review of innovation process models, the implications for orchestrating the value chain activities and managing the organizational change are explored in this paper. An integrated end-to-end process perspective is developed and discussed on the basis of qualitative semi-structured expert interviews on innovation management at Henkel.
2
A CATEGORIZATION OF INNOVATION PROCESS MODELS
The majority of companies implement innovation processes on the basis of a structured and systematic model that is customized to specific requirements e.g. industry or market specificities. Thus, the design of innovation process models is as diverse as their use. Nevertheless, most process models can be categorized on the basis of process and performance criteria. A categorization of the generic types of process models is proposed in order to identify the areas for refinement and further improvement of the existing models. Innovation process models can be categorized according to different criteria. For the purpose of this paper a differentiation of process models on the basis of process maturity and business result seems to be appropriate as it reflects input and output related dimensions in the innovation process. In accordance with the capability maturity model, the term innovation maturity shall be defined by the degree of structural formality of processes, from ad hoc practices, to defined process steps, to managed result metrics, and to continuous optimization of the underlying processes (Paulk et al. 1993). An increase in innovation maturity is driven by increasingly fast, repeatable, and multidisciplinary tools, processes, and methods. The dimension of maturity is important because any improvement in maturity results “in an increase in the [innovation] process capability of the organization” (Paulk et al. 1993, p.5). Innovation business result represents a set of performance related criteria and is driven by increasingly greater returns, predictable innovation outcomes, and market share position.
Figure 1. Categorization of innovation process models
The three categories of process models represent distinguished maturity levels and delineate the historic development of the different generations of innovation process models in the academic literature and in practice. The proposed categorization focuses on structured process models as found in most multinational corporations. Unstructured innovation models such as creative shops are not reflected in this categorization because creative shops represent a highly unpredictable innovation model driven by an undefined small group of experts and influencers instead of standardized processes.
2.1
Qualified innovation process model
Qualified innovation processes comprise a limited set of standard processes and represent the first generation of structured innovation models (Cooper 1994, p. 4). The origin of phase-review-processes dates back to the 1960s when scientific institutions e.g. NASA conceptualized new management tools for projects in research and development. According to this process model, a project is divided into several sequences (phases) in order to systematize and to control work packages with contractors and suppliers. A precise definition of inputs and outputs for each phase facilitates decisions on the progress of a project. The “go/no-go” decisions are taken in regular management reviews. The review involves a detailed documentation of the status-quo and a request to the project sponsor to move into the next phase including respective funding and allocation of resources. The focus of phase-review processes is on complex and unique scientific projects. The governance, processes, and standards remain local and customized to each single project. The phased approach aims at managing uncertainty by completing serial project tasks (Herstatt / Verworn 2012, p. 3). The phase-review-process has been implemented by several companies, e.g. Hewlett Packard, allowing for standardization of former ad-hoc activities and for repeatable innovation. However, the singleproject perspective lacks a consolidated framework allowing for integration and comparison of several innovation projects in a program or portfolio. A further short-coming is the sequential process flow that is prone to delays caused by issues in one project sequence or review. Moreover, the focus on the phases of research and development neglects the important phase of commercialization including marketing, sales and customer service activities. Thus, the qualified innovation process relates only to the front-end of the innovation process and remains incomplete. An extensive discussion on phase-reviewprocesses is summarized by Hughes et al. (1996, p. 90).
2.2
Disciplined innovation process model
Disciplined innovation processes form part of the second generation of structured innovation models and are based on a comprehensive process perspective covering the entire innovation process from end-to-end. The stage-gate process model is the most prominent approach in this category to systemize the innovation process and serves as an operational road map for moving innovation projects from idea to launch (Cooper et al. 1990, p.46). The process flow of the stage-gate model describes a series of activities, i.e. stages, and decision points, i.e. gates. Stages constitute working phases comprising an integrated and prescribed set of activities and standardized analyses carried out by a cross-functional team. Gates are characterized as decision points on further product development, launch and execution and they are placed where they are most beneficial to the continuity of new product development (Herstatt / Verworn 2012, p. 5). The process is governed by a gatekeeper who is responsible for decision making and moving the project to the next stage. A gatekeeper is represented by a decision body consisting of a crossfunctional team staffed with managers from marketing, sales, R&D, market research and a controlling function e.g. marketing or sales controlling. The cross-functional composition of the decision body ensures a comprehensive perspective and evaluation of the product concept and launch plan in order to align market needs with technical feasibility and financial requirements linked to the overall company
strategy. Furthermore, the cross-functional decision body is responsible for continuous refinement and optimization of the product-marketing mix proposed by the marketing function right from the start of the new product development project until the end of this process. As a result, a common perspective on innovation project emerges and aligns all functions involved.
Figure 2. Disciplined stage-gate process model (Cooper et al. 1990, p.46)
The second-generation process model is an improvement because of integrating diverse company functions, especially R&D and marketing into an end-to-end process calibrated on customer requirements. Again, the process is divided into discrete stages resulting in an overall slow process flow. In addition, high overhead drives costs up and innovation culture down. Practitioners and researchers state that stage-gate models treat all projects the same and all choices as one-off decisions. An inherent shortcoming is the strict emphasis on process over substance which might even kill innovation.
2.3
Effective innovation process model
The effective innovation process represents a further improvement of the stage-gate process targeting higher productivity and effectiveness of the process. Improved productivity should drive the commercial value and return of innovation projects. Companies with stage-gate innovation processes reported a shortage of blockbuster innovation due to inaccurate prioritization of innovation projects resulting in a majority of low value projects (Cooper 2009, p.13). Increased effectiveness should overcome delays due to the sequential flow of stages and activities. In order to increase the productivity and commercial value of innovation projects the prioritization of projects is facilitated by a comprehensive portfolio review on a corporate level and refined decision criteria. Instead of reviewing and evaluating innovation projects in an isolated business unit context, the corporate portfolio review establishes a formal portfolio management system for optimal resource allocation. The portfolio management system integrates tools for strategic analysis and makes use of funnel tools that are known from decision-making, e.g. scenario funnels. All innovation programs and projects across all business units form part of the corporate innovation portfolio. A comprehensive evaluation on corporate level requires a comparable and predefined set of transparent decision criteria and comprehensive metrics, e.g. scorecards for effectively screening and selecting the most valuable projects. This refinement of gate criteria proposes a consistent view on a predefined set of internal and external key performance indicators (KPI) in all gates. Internal KPI include
operational (e.g. complexity) and technical (e.g. risk) criteria as well as financial (e.g. sales, gross margin) criteria defined by minimum thresholds and ranked by values or scores. In order to speed up the whole process, the sequential and stringent process flow is superseded by parallel processing and a more fluent transition of tasks between the stages (Cooper 1994, p. 5). The sequence of stages and gates is structured in a way to consistently narrow the scope on the most valuable innovation projects, i.e. the innovation funnel. This re-setting of the process flow implies a comprehensive integration of the collaborative cross-functional processes in order to establish seamless linkages and to realize data integrity along the entire process.
Figure 3. Effective funnel stage-gate process model
A cross-functional end-to-end process requires a substantial organizational change from silo thinking of isolated business functions towards an integrated process responsibility. A silo is a metaphor for an organizational unit that has its own management team and lacks the motivation or desire to work with or even communicate with other organizational units (Aaker 2008, p.144). Organizations have a collection of silos that include product silos, i.e. business units defined by product or service offerings and country silos, i.e. geographic silos defined by countries or regions. These silos cultivate dispersed accountability due to particular motives and result in a lack of coordination across the process.
Figure 4. Cross-functional collaboration in effective stage-gate process model
An effective end-to-end process requires an organizational body as facilitator for cross-functional collaboration with full accountability for the decisive process steps. An innovation committee as a new function could create the momentum for organizational change and calibrate the innovation process on customer needs while orchestrating the responsibility in all stages among the functions involved for effective execution. The change in the different roles of the functions involved in this new process setup is described on the basis of the RACI methodology (Jacka / Keller 2009, p. 257). The third-generation stage-gate process is an advancement based on improved metrics with transparent criteria and faster processes. However, this process model requires a modified structure of value chain activities and implies an organizational change program.
3
INNOVATION PROCESS AND THE VALUE CHAIN
The end-to-end process perspective spans the entire value chain of a company and sets the focus on transactional processes across the organizational structure of departments involved in the design-tolaunch process. This full-fledged process view requires a holistic managerial approach for managing innovation initiatives by aligning cross-functional teams from the phase of idea generation, to concept testing, to marketing mix definition, and to launch execution. The end-to-end process view has substantial implications for the analysis and setup of the value chain.
3.1
A supply and demand side perspective of the value chain
According to Porter (1985), the value chain separates all activities of a company into a sequential chain composed of primary activities (i.e. inbound logistics, operations, outbound logistics, marketing & sales and service) and secondary (i.e. supportive) activities within the business organization that contribute to a value generating output. In this value chain definition, all core business processes are implicitly included such as supply chain management, customer relationship management and new product development. The revenues derived from the output reduced by the costs associated with activity within the value chain determine the profitability of the company. The generic value chain has been adopted in manifold ways. Rainbird (2004) proposes a modification of the original value chain model and defines the value chain as the overarching framework comprising a supply chain and demand chain separated from each other as presented in figure 5.
Figure 5. Supply and demand chain
The demand chain comprises outbound logistic functions, marketing, sales and customer service functions that connect the business with its customers. The supply chain represents the operational
backbone of the business including inbound logistics and manufacturing functions that act on the specific request of the demand chain. The distinction between supply and demand chains allows for a specification of the different perspectives inherent to the respective functions involved. According to Langabeer and Rose (2001) the supply chain focus is on efficiency, i.e. cost per item, thus cost is seen as key driver for supply chain management, and on immediate resource and short-term capacity
3.2
A process perspective of the value chain
Following from the stage-gate model the design-to-launch process needs to establish an overarching process view that spans the value chain across activities and organizational boundaries. Zentes et al. (2004) propose a modified illustration of Porter’s value chain based on a process perspective that differentiates between core processes, management and support processes. The authors define supply chain processes and market development processes including marketing and research & development as the core processes shown in the following figure.
Figure 6. Process view of the value chain (Zentes et al. 2004, p. 222)
This proposition is congruent to Rainbird’s differentiation of a separate supply and demand chain and acknowledges the importance of these two core processes. The core processes cover several activities across the value chain. All administrative and supportive processes are subordinated for best servicing the core processes. However, this view lacks an important aspect of an end-to-end process view because supply chain processes and market development processes are still defined as separated processes. The interconnections and mutual interdependence of the activities and tasks performed within each process flow are not sufficiently considered.
3.3
Towards an end-to-end process perspective of the value chain
A business process architecture that offers a cross-functional and integrated perspective to all of the value chain processes needs to turn away from a pre-fixed organizational fundament. The integration of cross-functional process tasks requires a parallel and joint execution of certain activities within process stages. Therefore, such a perspective requires to put the definition of processes over business organization and departments. A precise and detailed definition of processes, sub-processes, tasks and activities helps to structure the process flow for all departments and functions involved in the value chain processes. It is useful to differentiate between core processes, management processes and administrative processes. Management and core processes are constituted by a high shaping character. They either create
or are disposed of valuable, rare, inimitable and organizational specific resources (Barney 1991, p. 117). Administrative processes are distinguished by a high safeguarding or servicing character of the tasks and activities carried out. The core processes shall be defined as customer-centric and comprise insight & decision-making, design-to-launch and source-to-deliver. The difference to the above mentioned concepts is that the processes involve and integrate several organizational departments and functions in the process flow. As the administrative processes are not in scope of this paper, the focus is consequently on a definition and description of the core processes illustrated in the following figure.
Figure 7. End-to-end process view of the value chain
The insight & decision making process is a management process that covers all tasks and activities occupied with insight generation relevant for decision making by general management in order to shape and lead the organization. Several departments contribute to this process providing performance analysis and competitive studies with recommendations for management action and strategic direction. The source-to-deliver process covers all tasks and activities from sourcing including supplier selection and negotiation to manufacturing and delivering and integrates e.g. the purchasing and legal department in the selection and negotiation of suppliers, toll manufacturers and haulers. Moreover, R&D is integrated in the continuous optimization of formulas and the sales function is integrated in order to optimize customer-specific cooperation. The design-to-launch process spans across all tasks and activities from product idea generation and winning concept creation, to product development and testing and finally launch execution. It is different from the continuous insight & decision-making processes due the project driven character and the creativity inherent to design-to-launch projects. The core processes are set up as an integrated process flow with checkpoints in order to evaluate the proceeding of the innovation and market initiatives based on a common set of criteria evaluated by a cross-functional decision body.
3.4
The new role of marketing: Holistic innovation process ownership
A seamless end-to-end innovation process is essentially based on cross-functional collaboration and thus requires a holistic management perspective based on customer-centric processes. This requires clear and transparent guidance for responsibilities of all parties involved worldwide in order to ensure a common perspective on medium- and long-term strategic plans as well as guidance on short-term actions and target across the entire organization and along a well-defined stage-gate process. This has to be based on a standardized and harmonized design-to-launch process. To that end, a process framework including a detailed description of the governance and interaction model as well as process instructions need to be defined, agreed across all parties and introduced including extensive training on
the process method and tools. This includes also the introduction of continuous process performance measurements based on a set of predefined KPI. This new process perspective affects the entire organization. In order to align global business and local organizations on a holistic process perspective under one single overall objective, the process framework needs to be integrated and applied consistently. This requires a function that facilitates a comprehensive perspective by effective communication and alignment of cross-functional project work. Additionally, this function needs to have a well-balanced mix of strategic as well as operational expertise in order to develop a competitive go-to-market approach. Furthermore, the overall organizational mindset of all parties involved in the design-to-launch process requires a consequent customer orientation. This includes the penetration of the market and customer focus throughout the organization. There seems to be no more apt function than marketing to take this role. A vital function of marketing is to ensure that consumer and market insights are understood and looped up in the organization to the end of continuously optimizing the product offer while integrating all functions and departments in this process and facilitating exchange of knowledge and expertise. Therefore, marketing is required to facilitate an integrated process perspective by disseminating consumer insight and market information. However, Marketing needs to develop the required capabilities, i.e. a new mindset and an increased responsibility compared to classical marketing tasks, which could be described as holistic innovation process ownership (Aaker 2010, p. 315). The holistic process ownership involves marketing actively in all stages of the design-to-launch process thereby enabling a shared perspective in cross-functional teams by integrating and coordinating all functions and departments involved in the process. “[…] Interfunctional coordination is key to achieving the main goal of marketing, the creation of superior customer value. […]. The overarching rationale […] is that customer value is being created through the integration of areas that are not traditionally associated with marketing” (Jüttner et al. 2006, p. 377). This rationale represents a shift in the overall organizational mindset and implies a qualitative change of the collaboration and interaction between marketing and all other functions and departments coming from a briefing-and-done culture towards an intense interact-and-reason culture. The change of mindset concerns all parts of the worldwide organization and requires developing a collaboration model of functions that is based on shared methods, tools and resources. The respective functions remain the expert for certain activities, but especially these functions that perform transactional tasks in the process need to provide their methods and tools to the process organization and share their insights and expertise, thereby acting as a competence center to serve best the progress of the process. Consequently, the focus on functions within an organization shifts towards a stronger focus on competences (centers) within a process organization. Moreover, the hierarchical attitude of functions develops into a collaborative process attitude of competence centers in a design-to-launch process. Timeconsuming validation processes within functions involving always superior management validation will be replaced by transparent validation process at decision gates performed by cross-functional teams. This implies a thorough analysis of all activities in order to focus on the most valuable core activities in the innovation process. A shared service approach could be considered for all non-core activities in the process. Furthermore, marketing is part of the decision bodies at the gates of the design-to-launch process. Thus, marketers have still to be strategists in order to develop a competitive go-to-market approach while showing excellence in operational processes at the same time. To the end of integrating functions and responsibilities and aligning cross-functional project work, marketers have to be effective communicators. The respective job profiles and organizational roles need to be defined in detail based on process maps and not on organizational hierarchies.
The shift towards a process perspective enhances the flexibility of the entire organization in order to respond to dynamic environments and changing customer needs. A standardized and harmonized design-to-launch process enables innovation initiatives and realizes competitive advantage across the financial, customer or consumer, process and human resource dimensions, thus covering all dimensions of the balanced scorecard reflecting the key performance indicators in an organization (Kaplan and Norton 1992).
3.5
Henkel Inno Gate – Innovation Process and Management at Henkel
Henkel provides a good example for the implementation of an effective innovation process model establishing an end-to-end perspective. The consumer goods company is a global leader in brands and technologies organized into three globally operating business sectors: laundry and home care, cosmetics and toiletries, adhesive technologies. In fiscal 2011, the company generated sales of 15,605 M€ and operating profit of 2,029 M€ (adjusted), ROS 13,0% and is part of DAX 30 and Fortune Global 500. The company introduced Henkel Inno Gate (HIG ) in 2007 and designed the process model on the basis of an effective stage-gate system adapted to the needs of the company in order to steer all product lifecycle activities efficiently (Müller-Kirschbaum 2009). HIG divides the innovation process into three major phases. The idea generation phase covers the front-end of consumer insight generation and idea creation, thus fueling the subsequent phases. The development phase ensures the efficient transformation of ideas into winning concepts, their translation into a bundle of new product launch projects, followed by the (technical) development of products and the launch execution. The final phase of the HIG process covers all launch control and monitoring activities. This phase is closely linked to the review & phase-out process that describes all activities and processes dealing with assortment renewal and optimization forming part of the going business. The monitoring phase ends with a launch control and provides the generated insights to the strategy process.
Figure 8. Henkel Inno Gate model (Müller-Kirschbaum 2009)
The qualitative case analysis is based on in-depth, semi-structured interviews with 20 experts, i.e. managers from different business functions at Henkel (see Appendix A.1). Each interview lasted approximately 45 minutes and covered a standard set of questions (see Appendix A.2). The interviews were conducted in English language and written verbatim. The interviewees were encouraged to raise and discuss related topics as well. The interview questions addressed the research question regarding the measures that facilitate a cross-functional end-to-end process perspective in innovation management by grasping the experts’ evaluation of their role and performance in the innovation process. The experts were not given any key definitions of technical terms or process steps. The analysis of the interview data started with a compilation of all interviewees’ responses ordered by interviewee within each question. The diverse responses within each question were assessed regard-
ing similar statements and dominant themes and answers. If recurrence of opinion was found for several interviewees, a quotation that illustrated the point of view was selected from the interview. At the beginning, the interviewees were asked to describe their role and experiences in the innovation process based on examples. Sixteen out of 20 respondents considered their role as important and viewed HIG as a collaborative and transparent process. Four out of 20 respondents considered their role as a strategic role with regards to decision-making, coordination and process ownership. Although not requested, all respondents viewed their role as more important since the introduction of HIG. All respondents shared overall positive experiences with the HIG innovation process. Eighteen out of 20 respondents referred to positive experiences regarding collaboration and communication with other business functions and subsidiaries by a facilitated exchange of relevant information and knowledge. Fourteen out of 18 respondents who stated this experience mentioned a higher motivation for and a stronger focus on innovation in general. Sixteen out of 20 respondents mentioned harmonized objectives and process timings as a positive experience because of less frictions and higher commitment and reliability of all stakeholders in the process. Although not requested to compare the innovation process and management before and after the introduction of HIG, thirteen respondents stated a definite improvement. The following statement by one of the managers represents this view: “Every time we started a new product development project we fell like climbing Mount Everest. We know exactly where we want to be at the end of the project, but we have no clear perspective how to go there due to the complexity of the project. With HIG we follow a clear road-map, decompose the complex project in a set of clearly defined work packages.” There was discrepancy among the respondents as to whether they have a say on innovation activities in general and in the gate meetings. Six out of 20 respondents stated a clear decision-making competence on innovation activities in general and in the gate meeting. Fourteen out of 20 respondents stated a general influence on the innovation process, e.g. by submitting a business plan, defining the product range mix or specifying launch activities. All respondents stated to have a clear understanding of how and why decisions are taken in the gate meetings. Respondents explained this understanding with a transparent set of criteria and KPI that are applied in gate meetings and communicated to all stakeholders. Examples were given specifically in the context of the launch gate and post-launch review meetings. One manager characterized the approach as smart watering: “The principle of smart watering in agriculture recommends to allocate scarce resources to those seeds which show a fertility at or above expectations and remove resources from those seeds which show a fertility clearly below expectations. Applied to a business context, an efficient launch monitoring system starts at an early stage in the innovation process in order to allocate resources to the innovation initiatives with high potentials and refine concepts in order to minimize risks.” This approach is carried out by a launch monitor team that verifies the financial commitment based on a transparent and predefined set of KPI as characteristic for effective process models. A detailed analysis of the marketing mix factors is the basis for identification of fact-based reasons for off-track performance including fact-based comments that are aligned with all participating teams and countries before distribution to senior management. The launch monitor is presented in a standardized format and serves as a basis for further brand steering and suggests possible directions for improvement of performance. Recommendations can be classified into continuation, i.e. KPI are above benchmark and no actions are necessary, change, i.e. KPI are below benchmark and corrections are necessary to improve the product performance, and discontinue, i.e. KPI are significantly below benchmark and no reasonable action would bring product performance back on track. The results of the launch monitor are taken into the strategic planning process of the strategic business units and local marketing teams.
All respondents shared the belief that the defined HIG process standards and routines improved the transfer of knowledge and information between business functions. Fifteen out of 20 respondents demonstrated a clear and consistent understanding of the process steps and used a shared and consistent set of key terms and definitions of HIG in their answers. Henkel harmonized the process activities and defined global standards that are shared throughout the entire organization in order to generate structured and comparable information available to all relevant process stakeholders. The HIG process design is based on clearly defined work packages (stages), decision points (gates) and clear deliverables and timelines. The process prevents superfluous loops and unstable project or product specifications. The following statement represents the importance of a disciplined innovation process: “The standards and routines help to avoid misunderstandings and improve collaboration in crossfunctional project teams and provide a better fundament for decision making to senior management.” When asked about the drivers for motivation in the innovation process, sixteen out of 20 respondents mentioned innovation competitions and attractive prizes for the winning innovation concept of the month. Fourteen out of 20 respondents mentioned new organizational structure that foster crosscollaboration and cross-fertilization in the innovation process such as the InnoPower teams. Multifunctional, open to external contributors and international, these teams are responsible for specific product categories and all innovation projects relating to these categories across several regions (MüllerKirschbaum 2009). This new organizational body is composed of representatives from all major business functions and chaired by a product category leader. The InnoPower team develops category strategies in consultation with senior management that are submitted for senior management approval in the annual planning process and are afterwards implemented by the InnoPower teams in the market. To institutionalize cross-functional collaboration and to link the results with the strategic planning process makes innovation a top priority and responsibility for all functions. One manager stated his personal InnoPower team experience in his own words: “The InnoPower teams are the nucleus of cross-fertilization in the innovation process at Henkel and facilitate organizational change. They break open organizational or functional silos and orchestrate cross-functional and cross-regional collaboration.” All respondents agreed on the importance of the technical backbone of HIG as a facilitator for effective and efficient innovation management. HIG provides state of the art information technology allowing instant access to transparent process information and to up-to-date pipeline information for all stakeholders. All parties involved are able to create standard presentation decks for decision-making or reporting purposes. The modular IT architecture also allows for changes and improvements to ensure the needed flexibility for different project types. HIG features an integrated project management tool including export/import functionalities covering the needs of expert project managers. This facilitates coordination and increases transparency especially for the marketing function. Henkel executives evaluate the stage-gate process as key enabler for the effective implementation of prioritized innovation ideas into successful customer-oriented products. The successful implementation at Henkel is driven by shared process standards and transparent process design and performance metrics, by efficient resource allocation, by cross-functional organizational catalysts such as InnoPower teams and by a state of the art IT system architecture including project management support tools.
4
CONCLUSION
In a dynamic global economy, that company has competitive advantage, which is most adaptable and responsive to change (McCallum 2001). The design-to-launch process enhances the adaptability and
responsiveness of companies. It is suggested that the cross-functional process view covers the entire new product development process from the design up to the launch phase and facilitates a consistent go-to-market strategy definition. The integration of consumer insights in the entire process catalyzes a market and consumer based view within the company. Because of this perspective, companies strengthen their competitive advantage and excellence in execution, i.e. reduced time-to-market, increased transparency and flexibility, limited complexity and optimized usage of resources. These benefits resulting from a design-to-launch process perspective are realized across all dimensions of the comprehensive balanced scorecard perspective. Regarding the implementation of a design-to-launch process, Marketing is required to take the lead and needs to adapt to the new responsibility and integrate all functions involved. The insight of agility as an innovation capability that can be sustained and improved by an end-to-end-process gives room for further research.
REFERENCES Aaker, David A. (2008), “Marketing in a Silo World: The New CMO Challenge” California Management Review, 51 (1), 144-56. Aaker, David A. (2010), “Marketing challenges in the next decade” Journal of Brand Management, 17 (5), 31516. Barney, Jay B. (1991), ”Firm Resources and Sustained Competitive Advantage” Journal of Management, 17 (1), 99–120. Cooper, Robert G. and Kleinschmidt, Elko J. (1990), New products – the key factors in success, Chicago: American Marketing Association. Cooper, Robert G. (1994), “Third generation new product processes” Journal of Product Innovation Management, 11(1), 3-14. Cooper, Robert G. (2001), Winning at New Products: Accelerating the Process from Idea to Launch. New York: Perseus Books Publishing. Cooper, Robert G. (2009), “Effective Gating. Make product innovation more productive by using gates with teeth”, Reference Paper No. 37, Product Development Institute. Herstatt, Cornelius and Verworn, Birgit (2002), “The innovation process: An introduction to process models”, Working Paper No. 12, Department for Technology and Innovation Management, Technical University of Hamburg (Harburg) Hughes, David G. and Chafin, Don C. (1996), “Turning new product development into a continuous learning process” Journal of Produc t Innovation Management, 13 (2), 89-104. Jacka, Mike and Keller, Paulette (2009), Business Process Mapping: Improving Customer Satisfaction. Hoboken: Wiley. Jüttner, Uta, Christopher, Martin, Baker, Susan (2006), “Demand Chain Management – Integrating Marketing and Supply Chain Management” Journal of Industrial Marketing Management, 36 (3), 377-92. Kaplan, Robert S. and Norton, David P. (1992), “The Balanced Scorecard – Measures that Drive Performance” Harvard Business Review, 70 (1), 71-79. Langabeer, James R. and Rose, J. (2001): Creating demand driven supply chains, Oxford: Chandos Publishing. McCallum, J.S. (2001), “Adapt or Die” Ivey Business Journal, 66 (2), 72-4. Müller-Kirschbaum, T. (2009) “Leading in Innovation”, presentation at investors and analysts day 2009, Düsseldorf (September 02). Paulk, Mark, C., Curtis, Bill, Chrissis, Mary B. and Weber, Charlie V. (1993) "Capability Maturity Model for Software, Version 1.1," research report, Carnegie Mellon University, Software Engineering Institute, CMU/SEI-93-TR-24, February 1993. Porter, Michael E. (1985), Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press. Rainbird, Mark (2004), “Demand and supply chains: the value catalyst” International Journal of Physical Distribution & Logistics Management, 34(3/4), 230-51. Zentes, Joachim, Sowoboda, Bernhard, Morschett, Dirk (2004), Internationales Wertschöpfungsmanagement, München: Vahlen.
APPENDIX: A.1 COMPOSITION OF THE DATABASE The database for the qualitative case analysis comprises ten semi-structured expert interviews, i.e. management from different functions and with diverse background according to the following table.
Criterion
Composition of the interview database
(1) Organizational hierarchy Seniority
- Senior management (4) - Middle management (16)
Unit
- General management (4) - Marketing & Sales (6) - Controlling (4) - R&D (2) - Supply chain management (4)
(2) Corporate role Function
- Corporate headquarters (12) - Domestic subsidiary (4) - Foreign subsidiary (4)
(3) Personal assets Tenure with company
- Long, i.e. more than 10 years (6) - Medium, i.e. more than 5 years (14)
Industry experience
- Long (20)
A.2 QUESTIONS USED IN THE EXPERT INTERVIEW The semi-structured interviews covered the following set of standard questions: 1. 2. 3. 4. 5. 6. 7.
Please describe the role of your business function within the innovation process. Describe your personal experiences regarding the innovation process; please give examples. To what extent do you have a say on innovation activities in the gate meetings? Please give an example. To what extent do colleagues from other business functions transfer information and knowledge to your function? What in the innovation process (if at all) affects your work knowledge and information? What in the innovation process (if at all) affects your motivation? What in the innovation process (if at all) affects your performance?
