Mitigate Threat With a Product Innovation Technique

Modern merchandise can result in elevated market share, better buyer loyalty, and diversified income streams. Most innovation efforts, nevertheless, include important danger of failure. Putting the shopper on the heart of the product innovation course of is vital, however many product managers battle to shift their mindset from designing services 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 progress. I first discovered in regards to the following framework within the Innovation Dash enterprise training course supplied by Part. This adaptation, which may be utilized in nearly 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 appropriate answer.
• Higher perceive your clients.
• De-risk and prioritize innovation concepts.

Figuring out Product Improvement Threat

You could be acquainted with the Ansoff matrix, a grid-style planning device that plots out the forms of progress that come up from new and current product growth and enlargement into new and current markets.

I additionally discover the matrix useful for visualizing innovation methods and evaluating danger stage. Right here’s what every quadrant represents:

• Market Penetration = Low Threat
  Enhance by optimizing an current product for an current market.
• Product Improvement = Medium Threat
  Improve by providing a brand new product to an current market.
• Market Improvement = 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 attainable progress paths together with your staff, 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 enable you to and your staff 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 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 varieties: leisure vs. enterprise. A sound segmentation technique should seize key variations in buyer conduct and wishes.

InnovateAir’s product managers decided that enterprise vacationers are prepared to pay extra as a result of they’re usually time-pressed (and utilizing the corporate bank card)—so this section has one of the best 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 greatest ally: You will need to attain out and speak to as many potential clients as attainable to grasp their views, what they’re making an attempt to realize, and the boundaries they wish to overcome. InnovateAir’s product managers carried out 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 practical, social, and emotional outcomes of the consumer expertise. This train pinpointed three primary the explanation 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.

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 attainable. 

Design a Answer 

Step one in designing an answer is to grasp how your present providing suits within the total consumer journey. Usually, 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 comparable to reserving, attending to the airport, and clearing airport safety. Audit your buyer’s wider journey to search 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 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 belongings. Consider methods you’ll be able to repurpose these to develop new options or experiences. That is what it seemed like for InnovateAir:

Taking a look at this by way of 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 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, influence, monetization, and energy) framework. For InnovateAir, all three concepts have broad attain and influence when it comes to the buyer worth proposition. The variations are within the monetization potential and the hassle required.

A buyer loyalty community might be a terrific 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 comparable to Expedia or Hotwire are low; nevertheless, vacationers would then have alternatives to search out even decrease costs for a similar packages on aggregator websites, and this is able to dilute the income potential and influence total monetization.

The most effective thought seems to be ride-share app integration, attributable to its broad attain, influence, skill to monetize, and the average effort and value 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:

Utilizing the outcomes, InnovateAir product managers developed a speculation that when integrating ride-share apps with dwell airport info by way of the app, clients 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 firms and conducting an A/B take a look at in a goal market. The elevated spend per experience was a pretty proposition that might 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 Take a look at

A terrific 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 staff designed a take a look at concentrating on InnovateAir Loyalty enterprise vacationers within the US with an intra-state vacation spot to see if they’d guide their airport ride-shares utilizing the InnovateAir app relatively than Uber or Lyft. They created the flexibility to guide 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 final 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 progress alternatives, at present’s most modern firms don’t focus solely on the merchandise they promote, however relatively on the shopper expertise. By following the product innovation framework laid out right here, your product staff can determine a strategy to handle key ache factors to your current market that may drive further income, bettering your total choices. Leveraging this framework mitigates the chance concerned with modern product growth, guaranteeing new merchandise are aligned with enterprise wants and capabilities and have robust ROI potential, all whereas providing a brand new, worthwhile buyer expertise.

Word: Any references to Uber and Lyft are made purely within the context of this fictitious case research as an example a degree. The creator has no data of any such industrial initiatives on the a part of these ride-sharing firms.