Progressive merchandise can result in elevated market share, larger buyer loyalty, and diversified income streams. Most innovation efforts, nevertheless, include important danger of failure. Inserting the client on the middle of the product innovation course of is essential, however many product managers battle to shift their mindset from designing services and products to designing buyer experiences.
I’ve spent greater than 20 years researching and making use of innovation strategies to create consumer experiences that promote sustainable and significant development. I first discovered in regards to the following framework within the Innovation Dash enterprise schooling course provided by Part. This adaptation, which might be utilized in virtually any trade, has allowed me to take a practical method to the improvement course of. By making use of this product innovation technique, you can be well-positioned to:
- Uncover latent alternatives for your corporation inside your goal market.
- Reframe buyer issues to design the correct resolution.
- Higher perceive your clients.
- De-risk and prioritize innovation concepts.
Figuring out Product Growth Danger
Chances are you’ll be accustomed to the Ansoff matrix, a grid-style planning software that plots out the sorts of development that come up from new and present product improvement and enlargement into new and present markets.
I additionally discover the matrix useful for visualizing innovation methods and evaluating danger stage. Right here’s what every quadrant represents:
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Market Penetration = Low Danger
Enhance by optimizing an present product for an present market. -
Product Growth = Medium Danger
Improve by providing a brand new product to an present market. -
Market Growth = Medium Danger
Increase by launching an present product in a brand new market. -
Diversification = Excessive Danger
Diversify by creating a brand new product for a brand new market.
The Product Innovation Framework in Motion
Upon getting reviewed the potential development paths along with your workforce, use this four-stage framework to information your product innovation course of:
- Perceive buyer issues.
- Design an answer.
- Prioritize new concepts.
- Experiment and check.
These steps will aid you and your workforce determine new alternatives and create new experiences whereas avoiding the pitfalls that may lead innovation initiatives astray. To see the framework in motion, we’re going to look at how fictitious airline firm InnovateAir may leverage it to drive innovation as a part of a development technique.
Perceive Buyer Issues
InnovateAir’s product managers started by segmenting the market primarily based on traveler varieties: leisure vs. enterprise. A sound segmentation technique should seize key variations in buyer conduct and wishes.
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Leisure Traveler |
Enterprise Traveler |
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InnovateAir’s product managers decided that enterprise vacationers are keen to pay extra as a result of they’re usually time-pressed (and utilizing the corporate bank card)—so this section has the most effective potential for development. Additional market analysis signifies that enterprise vacationers are most involved about flight delays, incomes loyalty factors, seat availability, ease of journey to and from the airport, and the velocity of airport safety.
Curiosity is a product supervisor’s finest ally: It is very important attain out and discuss to as many potential clients as potential to grasp their views, what they’re making an attempt to attain, and the boundaries they want to overcome. InnovateAir’s product managers performed a number of interviews with enterprise vacationers and recognized the totally different jobs-to-be-done (JTBD) utilizing a internet of abstraction method. They then analyzed the first JTBD, which is flying from Metropolis A to Metropolis B.
By delving deeper and asking “Why,” product managers can perceive the useful, social, and emotional outcomes of the consumer expertise. This train pinpointed three primary the reason why enterprise vacationers wish to fly: Flying is environment friendly, secure, and often nice. It discovered the 4 primary boundaries for enterprise vacationers to be value, stress, lack of productiveness, and flight delays or cancellations.
Based mostly on this train, InnovateAir’s product managers can hypothesize that the first JBTD for a enterprise traveler is to fly from Metropolis A to Metropolis B in essentially the most hassle-free, environment friendly, and productive method potential.
Design a Answer
Step one in designing an answer is to grasp how your present providing suits within the total consumer journey. Typically, your services or products is simply half of the general consumer expertise. For InnovateAir, the traveler’s journey contains the flying expertise in addition to related actions corresponding to reserving, attending to the airport, and clearing airport safety. Audit your buyer’s wider journey to seek out gaps that present alternatives for innovation that understand clear advantages.
For InnovateAir, the journey audit recognized that totally different suppliers serve the consumer throughout their journey however there may be restricted information-sharing amongst them, so alternative exists to combine floor and flight transportation extra carefully. This might provide the client a extra seamless end-to-end journey expertise that may optimize productiveness and scale back stress.
Carry out a competency audit to take inventory of your group’s capabilities and belongings. Consider methods you possibly can repurpose these to develop new options or experiences. That is what it seemed like for InnovateAir:
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Stock |
Innovation |
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this via the Ansoff matrix lens, these concepts every fall into a special quadrant. Experience-share app integration could be market penetration (low danger); the Loyalty community could be product improvement (medium danger); curated journey packages could be diversification (excessive danger).
Prioritize New Concepts
Prioritize the expansion alternatives by performing an evaluation utilizing the RIME (attain, affect, monetization, and energy) framework. For InnovateAir, all three concepts have broad attain and affect when it comes to the buyer worth proposition. The variations are within the monetization potential and the trouble required.
A buyer loyalty community may very well be an awesome function, however implementing a social media platform could be difficult attributable to information privateness rules and the engineering experience wanted. Curated journey packages are additionally a compelling thought, and the switching prices to assemble InnovateAir-recommended packages on aggregator websites corresponding to Expedia or Hotwire are low; nevertheless, vacationers would then have alternatives to seek out even decrease costs for a similar packages on aggregator websites, and this could dilute the income potential and affect total monetization.
The perfect thought seems to be ride-share app integration, attributable to its broad attain, affect, potential to monetize, and the average effort and value required to develop and launch. Additionally it is the bottom danger. That is the expertise that InnovateAir’s product managers determined to prioritize and check first.
InnovateAir’s product managers analyzed the assumptions and proof for this expertise utilizing the RIME framework:
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RIME |
Key Assumptions and Sizing |
|---|---|
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Attain |
InnovateAir enterprise vacationers: 16.8 million per 12 months |
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Impression |
Higher enterprise traveler satisfaction with a extra optimized end-to-end expertise |
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Monetization |
Common worth per journey: $62 |
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Effort |
Value = improvement prices + advertising prices + partnership allowance prices |
Utilizing the outcomes, InnovateAir product managers developed a speculation that when integrating ride-share apps with reside airport data through the app, clients could be keen to pay an additional 5%, with a present common spend of round $62 per trip. The product managers thought-about this to be an affordable assumption that may very well be examined by working with ride-sharing firms and conducting an A/B check in a goal market. The elevated spend per trip was a lovely proposition that may very well be shared between InnovateAir and the respective ride-sharing firms. The general income alternative primarily based on the present penetration of airport ride-share journeys made by InnovateAir’s enterprise vacationers translated right into a wholesome approximation of $1.5 billion over 5 years.
Experiment and Check
An ideal software for de-risking innovation is testing. Product groups can run easy, low-cost experiments to check their hypotheses with clear and goal standards.
The InnovateAir product workforce designed a check concentrating on InnovateAir Loyalty enterprise vacationers within the US with an intra-state vacation spot to see if they might e book their airport ride-shares utilizing the InnovateAir app quite than Uber or Lyft. They created the flexibility to e book a ride-share on the level of check-in for departing and arriving flights, and built-in this with reside flight, airport, and visitors data. A profitable end result could be 25% of vacationers utilizing the function, and greater than 50% utilizing it for all their floor transportation wants.
Deal with the Buyer Expertise
To unlock new development alternatives, immediately’s most progressive firms don’t focus solely on the merchandise they promote, however quite on the client expertise. By following the product innovation framework laid out right here, your product workforce can determine a solution to deal with key ache factors in your present market that can drive extra income, bettering your total choices. Leveraging this framework mitigates the danger concerned with progressive product improvement, guaranteeing new merchandise are aligned with enterprise wants and capabilities and have robust ROI potential, all whereas providing a brand new, useful buyer expertise.
Word: Any references to Uber and Lyft are made purely within the context of this fictitious case examine as an example some extent. The creator has no information of any such business initiatives on the a part of these ride-sharing firms.
