By Mitch Beaumont, Ben Thuriaux, Prashanth Prasad, Chandler Hatton, Colin Davies
It is increasingly important for companies to deliver breakthrough innovation to their markets. However, the approaches that have been successful at improving innovation delivery over the last 30 years are holding most organizations back. Senior executives in product- and process-technology companies are already championing agile approaches to improve breakthrough innovation performance. Creating a separate path with agile principles tuned for a product development environment has been shown to be an effective approach.
Business executives have always been under pressure to generate growth, and today’s fast-moving and competitive business environment does not make that any easier. Arthur D. Little’s eighth Innovation Excellence Survey revealed that leading companies expect their share of revenue from breakthrough, as opposed to incremental, innovation to double over the next five years. However, achieving breakthroughs is easier said than done: we also found that 88% of business leaders were dissatisfied with their breakthrough innovation performances. They have become increasingly frustrated with the limitations of their current innovation systems on producing significant results.
The underlying issue for these organizations is usually that they are applying a non-optimal innovation approach to realize breakthrough innovation. For the past three decades, most technology-based companies have employed a phase-gate (or waterfall) approach to all of their innovation efforts. In fact, they have made significant investment in the design and adoption of these approaches so they would become rigorous and mechanical. Their fundamental goal has been to minimize variances (i.e., risk) from a well-understood set of requirements and a detailed plan that are both established at the beginning of a development project. As a result, they have created the perfect environment for incremental innovation, reducing cycle times and improving on-time delivery. Unfortunately, this well-honed model is not conducive to breakthrough innovation, in which requirements are rarely set in stone and uncertainty is not only the norm but a vehicle to explore beyond the usual boundaries.
In the meantime, for the past two decades the information technology and software world has been applying its own, highly dynamic innovation model – the agile approach. For some time agile has been applied almost exclusively to software development, and this has borne fruit: the software industry has consistently produced patents at three times the level of the next-most prolific sectors. Today, agile approaches are increasingly being deployed alongside phase-gate processes in engineering and R&D functions outside software, with positive results. Arthur D. Little’s research reveals that companies that have successfully added agile methods to their toolboxes, and tailor their innovation approaches by the type of innovation, perform significantly better than those that stick to single, waterfall approaches.
Key principles to apply an agile approach
Iterative approach. The heart of the agile approach in product development is the use of a series of rapid, iterative loops, similar to an agile iteration for software. At the early “exploration” stages of the development lifecycle, each loop focuses on answering a key question that is determined to have a high degree of importance and uncertainty, in order to build a progressively clearer picture of the desired solution. Through these loops, the team is effectively building the user stories. A key artifact of each typically two- to four-week loop is a prototype used to test the part of the concept in question. Prototypes need to be fast and inexpensive – simple mockups, models, videos and simulations are appropriate. Prototypes are shared with a sampling of customers, the key questions tested and the learnings assessed to determine if the team can move on to a new objective for the next loop.
Teams. Clear roles and responsibilities and the right balance of authority and accountability are important for team success in an agile product development environment. Teams must be nimble and the individual members comfortable with ambiguity and experimentation. In the product development environment, agile teams are multidisciplinary teams of specialists that expand and contract depending on their current focus. This would be different from the skills needed to do a technology-feasibility loop. To support this model, agile product development teams are often put together with part-time or limited-time resources. A very small “core” stays constant, and there is a designated team leader throughout the development cycle.
Governance. While governance is not often identified as a key element of agile software development, it is critical within product development. In the agile environment, governance acts less like a go/no-go decision-maker and more like a coach to project teams. Governance also serves to mitigate “organizational antibodies” that try to impede or marginalize breakthrough innovations. Loop reviews done at the end of each loop to assess whether the key question has been addressed are discussions between project teams and their governance, using poster boards, prototypes and other visual aids to facilitate the conversation. To enable this environment, it is important that an agile governance group is comprised of individuals who can foster a culture of experimentation and learning, a sense of urgency and agility, and a passion for helping teams jump over hurdles (versus governance being the hurdle itself).
Integrating agile alongside phase-gate
The phase-gate and agile approaches are distinct in their implementation, and generally suited to different innovation objectives when applied in the context of companies with engineered products. We see companies adopting two general approaches when trying to introduce agile into an existing phase-gate process: integrating agile into a single innovation process and adding a partly parallel agile path.
Integrating agile into a single innovation process typically involves using iterative loops within the existing phase-gate process, but with the overall structure retained as-is. Our experience is that attempting to integrate approaches will sub-optimize at least one of them. A better solution is to run them side by side, so an organization can apply the right approach across an innovation portfolio of both incremental and breakthrough innovation. In this model the agile path is the right size to handle the anticipated flow of breakthrough innovation as per a company’s particular innovation strategy, which is usually substantially less volume than the phased path.
Breakthrough innovation is increasingly important for companies. However, outside of the software industry most organizations, especially those with complex engineered products and longer development lifecycles, struggle to deliver it systematically. This is principally because the agile approach needed to realize breakthroughs is a challenge to the established practices that have served them well.
 Arthur D. Little study: Systematizing Breakthrough Innovation, 2015
Arthur D. Little’s R&D best practice study
Australia says no further Facebook, Google amendments as final vote nears
By Colin Packham
CANBERRA (Reuters) – Australia will not alter legislation that would make Facebook and Alphabet Inc’s Google pay news outlets for content, a senior lawmaker said on Monday, as Canberra neared a final vote on whether to pass the bill into law.
Australia and the tech giants have been in a stand-off over the legislation widely seen as setting a global precedent.
Other countries including Canada and Britain have already expressed interest in taking some sort of similar action.
Facebook has protested the laws. Last week it blocked all news content and several state government and emergency department accounts, in a jolt to the global news industry, which has already seen its business model upended by the titans of the technological revolution.
Talks between Australia and Facebook over the weekend yielded no breakthrough.
As Australia’s senate began debating the legislation, the country’s most senior lawmaker in the upper house said there would be no further amendments.
“The bill as it stands … meets the right balance,” Simon Birmingham, Australia’s Minister for Finance, told Australian Broadcasting Corp Radio.
The bill in its present form ensures “Australian-generated news content by Australian-generated news organisations can and should be paid for and done so in a fair and legitimate way”.
The laws would give the government the right to appoint an arbitrator to set content licencing fees if private negotiations fail.
While both Google and Facebook have campaigned against the laws, Google last week inked deals with top Australian outlets, including a global deal with Rupert Murdoch’s News Corp.
“There’s no reason Facebook can’t do and achieve what Google already has,” Birmingham added.
A Facebook representative declined to comment on Monday on the legislation, which passed the lower house last week and has majority support in the Senate.
A final vote after the so-called third reading of the bill is expected on Tuesday.
Lobby group DIGI, which represents Facebook, Google and other online platforms like Twitter Inc, meanwhile said on Monday that its members had agreed to adopt an industry-wide code of practice to reduce the spread of misinformation online.
Under the voluntary code, they commit to identifying and stopping unidentified accounts, or “bots”, disseminating content; informing users of the origins of content; and publishing an annual transparency report, among other measures.
(Reporting by Byron Kaye and Colin Packham; Editing by Sam Holmes and Hugh Lawson)
GSK and Sanofi start with new COVID-19 vaccine study after setback
By Pushkala Aripaka and Matthias Blamont
(Reuters) – GlaxoSmithKline and Sanofi on Monday said they had started a new clinical trial of their protein-based COVID-19 vaccine candidate, reviving their efforts against the pandemic after a setback in December delayed the shot’s launch.
The British and French drugmakers aim to reach final testing in the second quarter, and if the results are conclusive, hope to see the vaccine approved by the fourth quarter after having initially targeted the first half of this year.
In December, the two groups stunned investors when they said their vaccine would be delayed towards the end of 2021 after clinical trials showed an insufficient immune response in older people.
Disappointing results were probably caused by an inadequate concentration of the antigen used in the vaccine, Sanofi and GSK said, adding that Sanofi has also started work against new coronavirus variants to help plan their next steps.
Global coronavirus infections have exceeded 110 million as highly transmissible variants of the virus are prompting vaccine developers and governments to tweak their testing and immunisation strategies.
GSK and Sanofi’s vaccine candidate uses the same recombinant protein-based technology as one of Sanofi’s seasonal influenza vaccines. It will be coupled with an adjuvant, a substance that acts as a booster to the shot, made by GSK.
“Over the past few weeks, our teams have worked to refine the antigen formulation of our recombinant-protein vaccine,” Thomas Triomphe, executive vice president and head of Sanofi Pasteur, said in a statement.
The new mid-stage trial will evaluate the safety, tolerability and immune response of the vaccine in 720 healthy adults across the United States, Honduras and Panama and test two injections given 21 days apart.
Sanofi and GSK have secured deals to supply their vaccine to the European Union, Britain, Canada and the United States. It also plans to provide shots to the World Health Organization’s COVAX programme.
To appease critics after the delay, Sanofi said earlier this year it had agreed to fill and pack millions of doses of the Pfizer/BioNTech vaccine from July.
Sanofi is also working with Translate Bio on another COVID-19 vaccine candidate based on mRNA technology.
(Reporting by Pushkala Aripaka in Bengaluru and Matthias Blamont in Paris; editing by Jason Neely and Barbara Lewis)
Don’t ignore “lockdown fatigue”, UK watchdog tells finance bosses
By Huw Jones
LONDON (Reuters) – Staff at financial firms in Britain are suffering from “lockdown fatigue” and their bosses are not always making sure all employees can speak up freely about their problems, the Financial Conduct Authority said on Monday.
Many staff at financial companies have been working from home since Britain went into its first lockdown in March last year to fight the COVID-19 pandemic.
One year on, the challenges have evolved from adapting to working remotely to dealing with mental health issues, said David Blunt, the FCA’s head of conduct specialists.
“During this third lockdown, there has been a greater impact on mental well-being, with many people struggling with job security, caring responsibilities, home schooling, bereavements and lockdown fatigue.”
Bosses should continually revisit how they lead remote teams, he said.
“The impact of COVID-19 is creating a huge workload for those considered to be high performers, while the remote environment potentially makes it much more challenging for those who were previously considered low performers to change that perception,” Blunt told a City & Financial online event.
Companies should consider “psychological safety” or ensuring that all employees feel confident about speaking out and challenging opinions.
“We’ve heard varying reports of how successful this has been,” Blunt said.
Pressures in the financial sector were highlighted this month when accountants KPMG said its UK chairman Bill Michael had stepped aside during a probe into comments he made to staff.
The Financial Times said Michael, who later apologised for his comments, had told staff to “stop moaning” about the impact of the pandemic on their work lives.
Blunt was speaking as the FCA next month completes the full rollout of rules that force senior managers at financial firms to be personally accountable for their decisions to improve conduct standards.
There have only been a “modest” number of breaches reported to regulators so far as firms worry about being “tainted” but more cases will become public as sanctions are revealed, Blunt said.
“Regulators won’t be impressed by lowballing the figures.”
(Reporting by Huw Jones; Editing by Mark Heinrich)
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