Throughout the course of our ongoing study into Supplier-Enabled Innovation (SEI), I’ve been keen to understand how procurement manages the ideation process – a necessary, but often unfocused, step on the route to SEI.
A fundamental problem with the concept of “ideation” (apart from it being a word that really shouldn’t be used in polite company) is that, in itself, it can speak far more of vanity than efficacy. The fact that a company or a team comes up with a million ideas is utterly meaningless – what really matters are successful projects and, ultimately, the delivery of value.
And this isn’t a volume game.
Nevertheless, there seems to be some fascination with tracking the number of ideas that are generated through the SEI process. Take Roche, for example. Through its programme, (which you can read about here) the Swiss pharmaceutical giant has so far generated more than 5,000 ideas. The important thing to know, however, is that this landslide of ideas has translated into 45 approved business cases. That’s about a 1% conversion rate.
At Brose, on the other hand, the conversion rate is ten times this. In 2014, 155 identified ideas translated into 14 projects planned for mass production; and since 2012, the ratio has remained remarkably consistent with a total of 22 projects being approved for mass production from 223 identified ideas.
This 10% conversion rate was also experienced by another procurement executive from the tobacco industry, who claimed a similar experience to that of Brose, saying that the ratio of successful projects to ideas is in the region of 10 – 15%.
But something else he said, resonated with me even more and is, I believe, particularly relevant to this debate. “When you are in ideation mode, you have to prompt not inhibit ideas,” he said. “You have to invest time and resources.”
This concept of investing time and resources to uncover new ideas doesn’t sit easily. Sure, new ideas are needed; but I believe these should come from the collaboration taking place between key partners rather than from dedicated “ideation” sessions.
Ideas and solutions come sporadically and at unpredictable moments, which makes it incredibly difficult to design a process for their inception. Rather, we should employ a process for screening and reacting to ideas when they do surface.
One process put in place at Johnson & Johnson Consumer is designed to do just that. Any new idea or suggestion that comes from the supplier base is logged on a cloud-based technology platform, and the information made available across the business. Johnson & Johnson also commits to a response within two weeks, whether positive or negative.
Whoever said there’s no such thing as a bad idea has a lot to answer for, because if there’s one certainty in life beyond death and taxes, it’s that bad ideas exist. They also tend to happen more frequently than good ones.
So, whether your idea to implementation ratio is 1%, 10% or 100%, I would argue that the most important thing is to spend your time and resource on developing the good ideas, and not on generating the bad.
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