Westinghouse: building a step-ladder to usable innovation

September 20, 2018

There's a reason research and development funding accounts for about 3% of GDP. It's the same reason Amazon, despite already being among the world's leading global enterprises, spent $22.6 billion on R&D last year, and why the pharmaceutical industry as a whole dedicates 18 percent of its entire budget to R&D: Everyone is trying to secure their future in a rapidly changing world.

Consider the example of Westinghouse Electric Company, the subject of a recent Wellspring webinar. The company has its roots in 17th-century railway air brakes. Now, it provides 60% of the nuclear reactors in the US, and 50% of nuclear technology worldwide. The story of how Westinghouse shifted from Reconstruction-era trains to nuclear power is long and storied. 

Along the way, they’ve learned how to innovate, and to pivot through economic cycles. The cornerstone of that capability is a sustainable set of innovation practices. Let’s explore how a company like Westinghouse can affordably facilitate the creation of usable innovation to help the business thrive well into its future.  

Stabilizing innovation's peaks and valleys

The path to innovation is often circuitous and unpredictable. Many enterprises have failed to internalize this lesson. The alternative – putting too much stock in trying to be awarded the most patents or have the most creative culture – will yield innovations in fits and starts, many of which will never actually see the market.

By taking calculated risks, Westinghouse drives the pace of innovation rather than reacting to it. They manage innovation uncertainty in the same way that a bank might manage risk: with formal guidelines, bumpers, and checks and balances. These process controls help govern how opportunities move back-and-forth between key phases of innovation. 

1. Discovery

This is the conceptualization phase. At this point, all you really have are ideas. Money is limited, and there is not a significant amount of time.

The goal at this phase is to get an idea for the scope and the potential benefits of an innovation opportunity. This isn't to stifle creativity – in fact, it's the exact opposite. Fewer cost and bandwidth commitments mean there is inherently less at stake in this phase. The grading criteria is pass or fail, and the risks for failure are minimal.   

2. Incubation

A concept that shows promise will move into incubation, whereby the innovation team sets out to reduce the amount of uncertainties through experimentation. A key precept during this phase is to maximize what Cenk Guler, Innovation Program Manager at Westinghouse, calls "learning per dollar spent."

This is also the point at which we see the simultaneous development of risk-tolerance and promotion of the opportunity. Innovation teams need to qualitatively and quantitatively demonstrate the potential value of an innovation project, and they need to do so in a structured, organized way in order to earn more funding.

Westinghouse, for instance, has a 48-page "program plan" that is both digestible enough for new employees to easily understand, and comprehensive enough to facilitate a clear set of innovation workflows. 

3. Acceleration 

Finally, a project can either move back into the discovery phase if it proves commercially inviable, or forward into the acceleration phase if it holds promise. If it's the latter, the innovation and product teams finalize concept design, and validate the business and technology assumptions. Once the business case is deemed acceptable, the organization can commit to investment.

Throughout these innovation stages (especially incubation), Guler notes that Westinghouse strives to achieve a balance "between freedom for creatives and rigor to make money." For instance, the innovation team needs to confer with licensing, legal, HR, and others for a reality check. This helps temper what might otherwise turn into unsustainable, aimless ingenuity.

Piecing the phases together

Each phase of innovation exists as a rung on a step ladder, following formal innovation guidelines and processes to govern your organization’s behavior as projects move between those rungs. Assuming you've calibrated and implemented suitable governing processes, only the best innovation opportunities would make it to the top – where failures are much risker and costlier. The due diligence at every phase of innovation management allows teams to explore radical ideas and chase blue-sky opportunities, while limiting risk at each step and maximizing the chances of success throughout. 

To learn more about Westinghouse’s innovation governance and processes, start by watching the complete webinar.




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