Progressive merchandise can result in elevated market share, higher buyer loyalty, and diversified income streams. Most innovation efforts, nevertheless, include vital danger 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 20 years researching and making use of innovation methods to create consumer experiences that promote sustainable and significant development. I first realized concerning the following framework within the Innovation Dash enterprise training course supplied by Part. This adaptation, which will be utilized in nearly any business, has allowed me to take a realistic method to the growth course of. By making use of this product innovation technique, you may be well-positioned to:
- Uncover latent alternatives for your small business inside your goal market.
- Reframe buyer issues to design the correct answer.
- Higher perceive your clients.
- De-risk and prioritize innovation concepts.
Figuring out Product Improvement Danger
It’s possible you’ll be conversant in the Ansoff matrix, a grid-style planning device that plots out the kinds of development that come up from new and present product growth and growth into new and present markets.
I additionally discover the matrix useful for visualizing innovation methods and evaluating danger degree. 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 Improvement = Medium Danger
Improve by providing a brand new product to an present market. -
Market Improvement = Medium Danger
Broaden 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
After you have reviewed the doable development paths along with your group, use this four-stage framework to information your product innovation course of:
- Perceive buyer issues.
- Design an answer.
- Prioritize new concepts.
- Experiment and take a look at.
These steps will enable you and your group determine 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 development technique.
Perceive Buyer Issues
InnovateAir’s product managers started by segmenting the market based mostly on traveler varieties: leisure vs. enterprise. A sound segmentation technique should seize key variations in buyer habits 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 typically time-pressed (and utilizing the corporate bank card)—so this phase 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 pace of airport safety.
Curiosity is a product supervisor’s finest ally: You will need to attain out and discuss to as many potential clients as doable to grasp their views, what they’re attempting to realize, and the boundaries they wish to overcome. InnovateAir’s product managers performed a number of interviews with enterprise vacationers and recognized the completely 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 practical, social, and emotional outcomes of the consumer expertise. This train pinpointed three important explanation why enterprise vacationers need to fly: Flying is environment friendly, secure, and normally nice. It discovered the 4 important boundaries for enterprise vacationers to be value, 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 essentially the most hassle-free, environment friendly, and productive method doable.
Design a Answer
Step one in designing an answer is to grasp how your present providing matches within the general consumer journey. Typically, your services or products is simply half of the general consumer expertise. For InnovateAir, the traveler’s journey consists of the flying expertise in addition to related actions akin 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 completely 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 intently. This is able to 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 property. Consider methods you’ll be able to repurpose these to develop new options or experiences. That is what it appeared like for InnovateAir:
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Stock |
Innovation |
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Taking a look at this by means of the Ansoff matrix lens, these concepts every fall into a unique quadrant. Trip-share app integration could be market penetration (low danger); the Loyalty community could be product growth (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, impression, monetization, and energy) framework. For InnovateAir, all three concepts have broad attain and impression by way of the buyer worth proposition. The variations are within the monetization potential and the trouble required.
A buyer loyalty community could possibly be a terrific characteristic, however implementing a social media platform could be difficult on account of knowledge privateness laws and the engineering experience wanted. Curated journey packages are additionally a compelling concept, and the switching prices to assemble InnovateAir-recommended packages on aggregator websites akin 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 is able to dilute the income potential and impression general monetization.
One of the best concept seems to be ride-share app integration, on account of its broad attain, impression, potential to monetize, and the reasonable effort and price required to develop and launch. It is usually the bottom danger. 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:
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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 |
Larger 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 = growth prices + advertising and marketing prices + partnership allowance prices |
Utilizing the outcomes, InnovateAir product managers developed a speculation that when integrating ride-share apps with stay 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 of this to be an affordable assumption that could possibly be examined by working with ride-sharing firms and conducting an A/B take a look at in a goal market. The elevated spend per trip was a pretty proposition that could possibly be shared between InnovateAir and the respective ride-sharing firms. The general income alternative based mostly 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 Take a look at
An excellent device for de-risking innovation is testing. Product groups can run easy, low-cost experiments to take a look at 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 ebook their airport ride-shares utilizing the InnovateAir app quite than Uber or Lyft. They created the power to ebook a ride-share on the level of check-in for departing and arriving flights, and built-in this with stay flight, airport, and site visitors data. A profitable final result could be 25% of vacationers utilizing the characteristic, and greater than 50% utilizing it for all their floor transportation wants.
Give attention to the Buyer Expertise
To unlock new development alternatives, as we speak’s most revolutionary firms don’t focus completely on the merchandise they promote, however quite on the shopper expertise. By following the product innovation framework laid out right here, your product group can determine a option to handle key ache factors in your present market that can drive extra income, bettering your general choices. Leveraging this framework mitigates the chance concerned with revolutionary product growth, guaranteeing new merchandise are aligned with enterprise wants and capabilities and have sturdy ROI potential, all whereas providing a brand new, worthwhile buyer expertise.
Notice: Any references to Uber and Lyft are made purely within the context of this fictitious case research as an example some extent. The creator has no data of any such industrial initiatives on the a part of these ride-sharing firms.
