Mitigate Threat With a Product Innovation Technique

Revolutionary merchandise can result in elevated market share, larger buyer loyalty, and diversified income streams. Most innovation efforts, nevertheless, include vital threat of failure. Inserting the shopper on the middle of the product innovation course of is vital, however many product managers wrestle to shift their mindset from designing services and products to designing buyer experiences.

I’ve spent greater than twenty years researching and making use of innovation methods to create consumer experiences that promote sustainable and significant progress. I first discovered concerning the following framework within the Innovation Dash enterprise training course supplied by Section. This adaptation, which may be utilized in nearly any business, has allowed me to take a realistic method to the event course of. By making use of this product innovation technique, you may be well-positioned to:

• Uncover latent alternatives for what you are promoting inside your goal market.
• Reframe buyer issues to design the correct resolution.
• Higher perceive your prospects.
• De-risk and prioritize innovation concepts.

Figuring out Product Improvement Threat

Chances are you’ll be acquainted with the Ansoff matrix, a grid-style planning software that plots out the forms of progress 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 threat stage. Right here’s what every quadrant represents:

• Market Penetration = Low Threat
  Enhance by optimizing an present product for an present market.
• Product Improvement = Medium Threat
  Improve by providing a brand new product to an present market.
• Market Improvement = Medium Threat
  Develop by launching an present product in a brand new market.
• Diversification = Excessive Threat
  Diversify by creating a brand new product for a brand new market.

The Product Innovation Framework in Motion

After getting reviewed the doable progress paths along with your group, use this four-stage framework to information your product innovation course of:

1. Perceive buyer issues.
2. Design an answer.
3. Prioritize new concepts.
4. Experiment and take a look at.

These steps will make it easier to and your group establish new alternatives and create new experiences whereas avoiding the pitfalls that may lead innovation tasks astray. To see the framework in motion, we’re going to look at how fictitious airline firm InnovateAir might leverage it to drive innovation as a part of a progress technique.

Perceive Buyer Issues

InnovateAir’s product managers started by segmenting the market primarily based on traveler sorts: leisure vs. enterprise. A sound segmentation technique should seize key variations in buyer conduct and desires.

InnovateAir’s product managers decided that enterprise vacationers are prepared to pay extra as a result of they’re typically time-pressed (and utilizing the corporate bank card)—so this section has the most effective potential for progress. 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: You will need to attain out and speak to as many potential prospects as doable to know their views, what they’re attempting to realize, and the obstacles they need 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 web 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 purposeful, social, and emotional outcomes of the consumer expertise. This train pinpointed three important the explanation why enterprise vacationers wish to fly: Flying is environment friendly, secure, and often nice. It discovered the 4 important obstacles for enterprise vacationers to be price, stress, lack of productiveness, and flight delays or cancellations.

Primarily based 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 probably the most hassle-free, environment friendly, and productive method doable. 

Design a Answer 

Step one in designing an answer is to know how your present providing suits within the total consumer journey. Usually, your services or products is barely 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 may provide the shopper a extra seamless end-to-end journey expertise that may optimize productiveness and cut back stress.

Carry out a competency audit to take inventory of your group’s capabilities and belongings. Consider methods you’ll be able to repurpose these to develop new options or experiences. That is what it regarded like for InnovateAir:

Taking a look at this via the Ansoff matrix lens, these concepts every fall into a special quadrant. Experience-booking app integration can be market penetration (low threat); the Loyalty community can be product improvement (medium threat); curated journey packages can be diversification (excessive threat).

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 shopper worth proposition. The variations are within the monetization potential and the hassle required.

A buyer loyalty community could possibly be an amazing function, however implementing a social media platform can be difficult as a consequence of knowledge 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 might dilute the income potential and affect total monetization.

The most effective thought seems to be ride-booking app integration, as a consequence of its broad attain, affect, capacity to monetize, and the average effort and price required to develop and launch. Additionally it is the bottom threat. That is the expertise that InnovateAir’s product managers determined to prioritize and take a look at first.

InnovateAir’s product managers analyzed the assumptions and proof for this expertise utilizing the RIME framework:

Utilizing the outcomes, InnovateAir product managers developed a speculation that when integrating ride-booking apps with reside airport info through the app, prospects can be prepared to pay an additional 5%, with a present common spend of round $62 per experience. The product managers thought of this to be an affordable assumption that could possibly be examined by working with ride-booking corporations and conducting an A/B take a look at in a goal market. The elevated spend per experience was a gorgeous proposition that could possibly be shared between InnovateAir and the respective ride-booking corporations. The general income alternative primarily based on the present penetration of airport ride-booking journeys made by InnovateAir’s enterprise vacationers translated right into a wholesome approximation of $1.5 billion over 5 years.

Experiment and Check

An important 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 group designed a take a look at focusing on InnovateAir Loyalty enterprise vacationers within the US with an intra-state vacation spot to see if they’d e-book their airport rides utilizing the InnovateAir app somewhat than Uber or Lyft. They created the flexibility to e-book a experience on the level of check-in for departing and arriving flights, and built-in this with reside flight, airport, and visitors info. A profitable consequence can 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 progress alternatives, at this time’s most modern corporations don’t focus solely on the merchandise they promote, however somewhat on the shopper expertise. By following the product innovation framework laid out right here, your product group can establish a approach to tackle key ache factors in your present market that can drive extra income, enhancing your total choices. Leveraging this framework mitigates the chance concerned with modern product improvement, making certain new merchandise are aligned with enterprise wants and capabilities and have robust ROI potential, all whereas providing a brand new, worthwhile buyer expertise.

Observe: Any references to Uber and Lyft are made purely within the context of this fictitious case research for instance some extent. The creator has no information of any such industrial initiatives on the a part of these ride-booking corporations.