People use many terms in the world of innovation interchangeably, two of which are ‘innovation pipeline’ and ‘innovation funnel.’

However, these are two different tools used in innovation, and knowing the difference can help you manage your innovation lifecycle better.

In this article, we will discuss what makes them different and what methodologies influence them.

Let’s start.

What is an innovation pipeline?

An innovation pipeline represents how an idea moves through every stage of a company’s innovation process. It is a framework that follows a step-by-step approach to ensure an organization’s consistent flow of ideas.

An idea moves through your innovation pipeline by completing a specific set of actions called ‘stages’ or ‘gates.’ For instance, after the submission of an idea, what follows next is:

  • A review of the problem
  • A review of the proposed solution
  • A review conducted by the innovation board
  • The building of the project plan
  • The approval of the plan given by the innovation team

What is an innovation funnel?

An innovation funnel is a tool that calls for a rigorous and ongoing comparison of every proposal to a set of guidelines, filters, and standards.

The innovation funnel makes it simpler to identify between ideas that are worth implementing and ideas that are not.

This way, an innovation team can minimize the number of uncertainties present in the process and focus on their innovation objectives instead.

Plus, they can get rid of ideas that won’t work and concentrate on those that would bring them significant results.

Hence, efficient use of resources happens, and every stage of the innovation process takes place consistently with every set procedure, along with highly-monitored results.

For instance, once an employee submits an idea:

  • The innovation team will review the problem at hand to see if the submitted idea matches the nature of the issue.
  • Second, they would review the proposed solution to determine if it addresses the problem.
  • The team will forward the idea to the innovation board if it does. If not, the idea is either kept for future use or discarded.
  • However, once the innovation board approves, the entire team will begin to work on building and developing the project plan.
  • After a while, the project gets implemented.

What is the difference between an innovation pipeline and an innovation funnel?

As you can see in the examples listed above:

  • An innovation pipeline focuses only on the step-by-step progression of an idea.
  • In contrast, an innovation funnel focuses more on an idea’s status to determine what happens next.

In short, an innovation pipeline simply shows what stages a company follows in handling or processing ideas, while an innovation funnel is more specific.

It mainly considers whether an idea is approved or not to determine the progress of the innovation process.

Meanwhile, another term many confuse for ‘innovation pipeline,’ and ‘innovation funnel’ is ‘innovation portfolio.’

An innovation portfolio is an overview of ideas or innovation projects shown in a two-dimensional or a three-dimensional perspective, accompanied by the right data points.

For example:

  • X: impact
  • Y: investment
  • Z: innovation score

The z point can also be any of the following:

  • Desirability, viability, feasibility
  • Small, medium large innovations
  • Horizons vs. impact and investment

An innovation portfolio functions as a chart that helps you gauge where your innovation projects stand in terms of two different parameters.

Moreover, an innovation portfolio is both a risk and time management tool. As businesses implement more innovation, they utilize more investments and resources, creating unwanted or unforeseen risks.

As a result, reducing risk becomes critical before increasing the visibility of your innovation portfolio. In addition, a company’s innovation portfolio also aids in evaluating how long it will take to launch a new initiative.

Through innovation portfolios, businesses can examine potential opportunities to exploit as leverage in entering new markets, utilizing new technologies, and producing new products and services.

Popular innovation methodologies

Four popular innovation methodologies have influenced how an innovation pipeline and innovation funnel work:

1. Stage-Gate

The Stage-Gate approach that companies often utilize in managing innovation.

It is an operational roadmap for taking products from conception to launch created in 2004 to identify the characteristics that distinguish successful innovation initiatives from those that failed.

Each gate contains elements that businesses can use in establishing a decision that is crucial to the continuation of the innovation process.

What are the phases in the Stage-Gate method?

The six stages of the stage-gate process include:

Ideation and discovery

Innovation teams implement activities for two purposes: to find new opportunities that the company can use to generate revenue and develop innovative technological, product, and service concepts.

Preliminary investigation and scoping

To explicitly define concepts, determine technical viability, and acquire a thorough understanding of an idea’s potential commercial implications, companies conduct quick and economic exploratory research and analysis.

Detailed investigation and building a business case

Businesses perform a thorough examination comprising market and technological experiments and primary research that results in a business case that contains information on the project’s justification, description, and planned development strategies.

Development

Organizations proceed to design the operations or manufacturing process for the ultimate full-scale production of the new product or service. The prototype goes through several early stages.

Testing and validation

Innovation teams run tests to confirm and assess the functionalities and impacts of all the proposed products, plans, processes, or changes, which may go through several revisions if deemed necessary.

Production and market launch

Mass manufacturing, marketing, selling, and distribution begin, signaling the transition from innovation to product lifecycle management.

As you can see, at each gate, innovation teams do two things: examine the quality of an idea and gather relevant data that decides whether the concept moves to the next stage or not.

Because each stage gradually grows in cost, companies can utilize the stage-gate approach to minimize the risks and uncertainties of every innovation initiative.

This way, businesses can grow to create organizational preparedness and coordination in preparing their audience to embrace their new product, service, or technology.

Hence, this approach aims to create a new, profitable product that will benefit both the market and the business.

2. Design Thinking

Another innovation methodology is design thinking, a continuous, non-linear, iterative process that studies users, questions presumptions, reframe difficulties, and develops original ideas for prototyping and testing.

Design thinking method

This approach works best when dealing with ambiguous or unidentified situations. The five significant actions of design thinking include:

Empathizing

The design thinking process begins with knowing who your consumers are and what they require on a deeper level.

You must genuinely empathize with your target audience to create real business value and build user-centered products and services. Hence, businesses must understand their customers’ problems and propose a viable solution.

You can do this by reaching out to your customers and conducting user interviews — anything that allows you to get in touch with them and understand what you can help them with.

Defining

At this point, you must use all the information you’ve gathered in the first step to create a problem statement and direct the ideation process.

These problem statements will guide your product teams in effectively identifying what you need to address your customers’ concerns.

Ideating

After understanding their difficulties and what contributes to them, you can proceed to the ideation stage to brainstorm their much-needed solutions.

You can then prototype all your selected concepts and try them out on members of your intended demographic.

Prototyping

By prototyping, you can convert the concepts you’ve created in the earlier stages into practical solutions that you can subsequently test with actual people.

Usually, you begin with limited prototypes that only represent the essence of your proposed solutions and improve them in any way as you get more user input.

Testing

Testing your prototype aims to understand which elements of your idea are successful.

In the testing phase, you distribute a prototype to your participants and encourage them to use it to solve the problems you’ve found in the first and second steps.

This way, you will better grasp how actual customers engage with your product, including the issues they encounter and their thoughts and feedback upon using it.

3. Lean Startup

The lean startup methodology is a strategy for managing and growing businesses that involves testing, making improvements, and producing products depending on thorough research and user feedback.

By concentrating exclusively on attributes that customers’ inputs have substantiated, this process of business management and product development intends to produce products faster by evaluating them through MVPs or minimum viable products.

For context, an MVP, or a minimum viable product, usually refers to a product or service with just enough features to meet the consumer’s needs or to test a theory for business research or consumer insight.

It’s an improved version of a prototype. You can read more about their differences here.

The lean startup method eliminates inefficient behaviors in a company’s early product development phases. Hence, it increases the likelihood of long-term success for the business.

Lean startup method

Unlike the prior methodologies in this article, the lean startup method only has three significant steps — build, measure, and learn.

Build

The first step in this process is developing a minimal viable product, which is a service or good with just enough functionality to make clients happy. At the same time, you test your hypothesis that the product may be profitable.

Measure

Evaluate the performance of your MVP and use the data you’ve collected from your customers to improve your product. Give it new features and enhance it according to the input you’ve received from them.

Note that you should be able to drop the primary product without using too many resources if you discover that the MVP’s concept isn’t taking off with the clients who received it.

Learn

Measuring the results of the goods you’ve purchased and got early consumers’ feedback is insufficient.

It’s crucial to take note of the information and input you’ve received. Learn from your collected data and apply it to your product if you want to produce something that not only benefits your audience but something that you can genuinely sell effectively.

Four stages of innovation

The four stages of innovation illustrate how innovation happens:

  • Ideation includes generating concepts and researching the problem and its proposed solutions.
  • Project selection, on the other hand, involves evaluating all the ideas conceived in the ideation process and deciding on the best concept.
  • Product development centers on bringing the product or service to life.
  • Commercialization refers to launching a product or service and modifying it to meet consumer needs.

Both the innovation pipeline and funnel are tactical

The innovation funnel and pipeline are tactical tools, but the innovation portfolio is strategic.

While you can use the latter for your daily operational processes, maintaining the velocity of ideas, and monitoring your innovation teams, you can use the former to create long-term business health and attain strategic priorities.

But can you use both pipeline and funnel?

You can’t anticipate that every innovation-related concept will result in a successful endeavor, product, or service.

Your innovation team will be in a solid position to meet objectives and sales targets if you fine-tune your innovation pipeline and funnel engagement methods.

As such, you can always refer to both, but using your innovation funnel will always be better as this approach is more specific and status-focused. It filters out all the bad ideas and helps you focus on concepts that bring significant effects.

On our software, you can actually configure each idea mission to be either a funnel or a pipeline depending on the type of stage you put:

Idea stage status type owner

The moment you include a gate type —the mission becomes a funnel.

On the other hand, you can use your innovation funnel and portfolio to understand your innovation initiative from the minute details to the broad picture without exerting extra effort and unnecessary resources.

To do this, you have two choices:

  • Integrate both into a single facet and use both initiatives in viewing innovation projects.
  • Or filter out all ideas into the funnel first and allow them to successfully leave the funnel before placing them into your portfolio.

Download the ultimate guide to idea management today to establish a systematic method for gathering excellent ideas, selecting the finest, classifying priceless insights, and implementing them into your organization’s business operations.