Modern merchandise can result in elevated market share, higher buyer loyalty, and diversified income streams. Most innovation efforts, nonetheless, include important threat of failure. Putting the client on the middle of the product innovation course of is essential, however many product managers wrestle to shift their mindset from designing services 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 development. I first realized concerning the following framework within the Innovation Dash enterprise schooling course supplied by Part. This adaptation, which will be utilized in virtually any business, has allowed me to take a practical 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 online business inside your goal market.
- Reframe buyer issues to design the fitting resolution.
- Higher perceive your prospects.
- De-risk and prioritize innovation concepts.
Figuring out Product Growth Threat
Chances are you’ll be acquainted with the Ansoff matrix, a grid-style planning device that plots out the forms of development that come up from new and current product growth and growth into new and current markets.
I additionally discover the matrix useful for visualizing innovation methods and evaluating threat degree. Right here’s what every quadrant represents:
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Market Penetration = Low Threat
Enhance by optimizing an current product for an current market. -
Product Growth = Medium Threat
Improve by providing a brand new product to an current market. -
Market Growth = Medium Threat
Increase by launching an current 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 development paths along with your crew, 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 assist you to and your crew 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 sorts: 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 prepared 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 greatest ally: It is very important attain out and speak to as many potential prospects as doable to grasp their views, what they’re making an attempt to realize, and the obstacles 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 net 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 major explanation why enterprise vacationers need to fly: Flying is environment friendly, protected, and normally nice. It discovered the 4 major obstacles 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 Resolution
Step one in designing an answer is to grasp how your present providing matches within the general 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 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 carefully. This could supply the client 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 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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Taking a look at this by the Ansoff matrix lens, these concepts every fall into a unique quadrant. Journey-share app integration could be market penetration (low threat); the Loyalty community could be product growth (medium threat); curated journey packages could be diversification (excessive threat).
Prioritize New Concepts
Prioritize the expansion alternatives by performing an evaluation utilizing the RIME (attain, influence, monetization, and energy) framework. For InnovateAir, all three concepts have broad attain and influence by way of the buyer worth proposition. The variations are within the monetization potential and the hassle required.
A buyer loyalty community might be an important function, however implementing a social media platform could be difficult as a result of knowledge privateness laws 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 akin to Expedia or Hotwire are low; nonetheless, 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 influence general monetization.
One of the best thought seems to be ride-share app integration, as a result of its broad attain, influence, means to monetize, and the average effort and value required to develop and launch. It’s also the bottom threat. 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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Affect |
Larger enterprise traveler satisfaction with a extra optimized end-to-end expertise |
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Monetization |
Common value per journey: $62 |
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Effort |
Price = growth prices + advertising prices + partnership allowance prices |
Utilizing the outcomes, InnovateAir product managers developed a speculation that when integrating ride-share apps with dwell airport info by way of the app, prospects could 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 might be examined by working with ride-sharing corporations and conducting an A/B check in a goal market. The elevated spend per experience was a horny proposition that might be shared between InnovateAir and the respective ride-sharing corporations. 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 Check
An ideal device 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 crew 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 somewhat 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 dwell flight, airport, and site visitors info. A profitable end result could be 25% of vacationers utilizing the function, and greater than 50% utilizing it for all their floor transportation wants.
Concentrate on the Buyer Expertise
To unlock new development alternatives, right now’s most modern corporations don’t focus completely on the merchandise they promote, however somewhat on the client expertise. By following the product innovation framework laid out right here, your product crew can determine a technique to deal with key ache factors on your current market that may drive further income, bettering your general choices. Leveraging this framework mitigates the danger concerned with modern product growth, guaranteeing new merchandise are aligned with enterprise wants and capabilities and have sturdy 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 research as an example some extent. The writer has no information of any such industrial initiatives on the a part of these ride-sharing corporations.