What Is an Innovation Process? – Definition
An innovation process is a systematic, repeatable workflow that guides the creation, evaluation, development, and implementation of innovations. It forms the operational backbone of innovation management and translates the innovation strategy into concrete results.
Unlike one-off creative insights, a defined innovation process makes innovation plannable and manageable—without restricting the necessary creativity. It creates transparency about which ideas are in the pipeline, what stage they are at, and what resources are required.
For Austrian SMEs, a lean, pragmatic innovation process is particularly valuable: it prevents good ideas from getting lost in day-to-day operations and ensures that limited resources are focused on the most promising projects.
The 6 Phases of the Innovation Process
A complete innovation process typically comprises six core phases:
Phase 1 – Idea Generation: The process begins with the systematic search for innovation opportunities. Sources include customer feedback, market analyses, technological trends, employee ideas, and open innovation. Methods such as Design Thinking, Jobs-to-be-Done analyses, and innovation workshops provide structured input.
Phase 2 – Idea Evaluation & Selection: The most promising ideas are selected from the multitude of options. Criteria include strategic fit, market potential, feasibility, and resource requirements. Systematic idea management ensures that no valuable ideas are lost.
Phase 3 – Concept Development: Selected ideas are developed into robust concepts. Tools such as the Business Model Canvas, Lean Canvas, and Value Proposition Design are used to define the business model behind the innovation.
Phase 4 – Prototyping & Validation: Concepts are made tangible as prototypes and tested with real users. Rapid prototyping and Lean Startup methodology enable fast learning cycles with minimal resource investment. The goal: demonstrate product-market fit.
Phase 5 – Implementation: Validated concepts are developed to market readiness. This includes technical implementation, building production or infrastructure, and developing a go-to-market strategy.
Phase 6 – Scaling & Optimization: After successful market entry, the focus shifts to scaling the innovation and continuous optimization based on market feedback and performance data.
Innovation Process Models Compared
There are various models that structure the innovation process differently:
| Model | Approach | Strength | Suitable for |
|---|---|---|---|
| Stage-Gate | Linear phases with decision gates | Clear structure, risk control | Product innovation, regulated industries |
| Design Thinking | User-centric, iterative | Customer understanding, creativity | Service innovation, UX design |
| Lean Startup | Build-Measure-Learn cycles | Fast validation, cost efficiency | Digital business models, startups |
| Agile/Scrum | Sprints, incremental delivery | Flexibility, team dynamics | Software development, digital products |
In practice, successful companies often combine elements from different models—e.g., Design Thinking in the early phase, Lean Startup for validation, and Agile for implementation.
7 Success Factors for the Innovation Process
- Strategic Anchoring: The innovation process must be derived from the innovation strategy and contribute to corporate objectives
- Leadership Commitment: Without active support from senior management, innovation processes fail due to internal resistance
- Customer Centricity: The customer journey and real customer problems must be at the center—not internal technology enthusiasm
- Cross-functional Teams: Innovation emerges at the intersection of disciplines—pure R&D silos are rarely successful
- Resource Allocation: Dedicated budget and dedicated time for innovation—not just “when day-to-day business permits”
- Error Tolerance: A strong innovation culture that allows for experimentation and calculated failure
- Metrics & Learning: Clear KPIs and systematic retrospectives to continuously improve the process
Tools and Methods in the Innovation Process
Proven tools are available for each phase of the innovation process:
- Idea Phase: Design Thinking, brainstorming, trend analysis, Jobs-to-be-Done interviews, SWOT analysis
- Evaluation Phase: Scoring models, portfolio matrices, competitive analysis, feasibility studies
- Concept Phase: Business Model Canvas, Lean Canvas, Value Proposition Canvas, Buyer Personas
- Validation Phase: Prototyping, MVP tests, A/B tests, customer interviews
- Market Launch: Go-to-market strategy, pitch deck, pricing strategy
- Scaling: OKR for goal management, growth metrics, scaling strategies
Innovation Process for SMEs: Pragmatic and Lean
For Austrian SMEs, the innovation process does not need to be as complex as for large corporations. A pragmatic four-step approach:
- Collect: Monthly idea sessions with the team + systematic customer feedback
- Evaluate: Quarterly review with clear criteria (impact, effort, strategic fit)
- Test: Validate the top 3 ideas as small experiments with minimal budget
- Implement: Bring validated concepts into implementation—with a clear owner and timeline
Leverage innovation funding in Austria to finance external support and expertise. Professional innovation coaching can accelerate the establishment of a functioning innovation process.
The 5 Most Common Mistakes in the Innovation Process
- Too many ideas, too little focus: The funnel is not narrowed enough at the beginning—resources are spread across too many projects
- Skipping validation: Jumping directly from idea to implementation without consulting the market—a classic product-market fit mistake
- Process as an end in itself: The process becomes a bureaucratic monster that slows down innovation instead of fostering it
- Lack of decision-making culture: Projects are not terminated even when evidence speaks against them—so-called “zombie projects”
- Silo thinking: Innovation remains locked in the R&D department instead of being anchored as a cross-functional task throughout the entire organization
Professionalize Your Innovation Process
From the first idea to market launch—we help you build a lean, effective innovation process that fits your organization.
Frequently Asked Questions About the Innovation Process
How long does an innovation process take?
This depends heavily on the type of innovation. Incremental product improvements can be implemented in a few weeks. New business models or technological innovations typically take 6–18 months from idea to market entry. What matters is not the absolute duration, but the speed of learning cycles: the faster you validate and iterate, the more efficient the overall process becomes.
Does every company need a formal innovation process?
Not every company needs a complex stage-gate process. But every company that wants to innovate sustainably needs a certain level of structure. For a 5-person startup, a simple Kanban board-based process is sufficient. For a 50-person SME, a lean 4-phase model is recommended. The right question is not “whether,” but “how formal” the process should be.
How do I measure the success of my innovation process?
Proven KPIs include: number of ideas in the pipeline, conversion rate per phase (how many ideas make it to the next gate), time-to-market, innovation revenue (revenue share from products/services younger than 3 years), ROI of individual innovation projects, and employee participation in the idea process. Supplement quantitative metrics with qualitative feedback from team retrospectives.
What is the difference between innovation process and product development?
The innovation process is broader than product development. It begins with strategic idea generation and also encompasses business model innovation, process innovation, and organizational innovation. Product development is a subset of the innovation process that focuses on the technical realization of a specific product.