The Funnel Mechanism is a well known structure for dealing with innovation.

Innovation, ideas and conceived features for a product

• need to be sifted and vetted in a structured manner
• in order to create a manageable development environment
• for producing a successful product that will be taken up by the market.

The key is to subject ideas to a series of appropriate tests as they mature. Innovation ideas are managed through a series of gates from whence they can move to different stages.

Registration

• The first stage where projects are entered into the process.
• Must pass common sense hurdles
• Innovations and ideas start here and may jump to subsequent stages

Blue Sky

• No limits, mad brainstorming
• Certain common sense questions must be passed concerning feasibility and the defined market.

Business Analysis

• Comprehensive market study and competitive analysis
• Certain assumptions are made which will be tested in subsequent stages
• Conceptual development

Real World Validation

• Primary learning stage
• Economic and technical feasibility accepted
• Agile processes used to test assumptions with a prototype in the field
• Results used to update market knowledge and refine the product

Pilot Production

• Limited field trials with production units in the market
• Agile processes used to test concept and value proposition further with the market
• Result fed back to refine product

Production

• Exit from development process
• Full-scale production with prepared product
• Further innovation fed into the business analysis stage