When a company wants to innovate, it needs to address both the efficiency as well as the effectiveness of the innovation process: efficiency, because we do not want to spend time and effort on aspects that do not add any value and focus on the value adding part of the work. Effectiveness has to be included too, because we do not want to end up developing the wrong product, whether or not the process thereof is efficient. Effective innovation is creating a product that adds value for both the customer and for the company that sells it. Effective innovation requires true customer understanding to create a valuable product proposition in combination with a clear understanding on how you can earn money with that proposition. Efficient innovation requires a clear understanding on what process steps add to creating that proposition and what steps don’t as well as the ability to remove or minimize those non value adding tasks.
In lean product development implementations, improving effectiveness and efficiency should be clearly balanced: for example, identifying the customer interests for a new product through customer observation improves effectiveness – creating an oobeya [one room with visual project overviews on the wall] improves efficiency through improving communication, knowledge flow, review and reporting