Mitigate Threat With a Product Innovation Technique

Progressive merchandise can result in elevated market share, better buyer loyalty, and diversified income streams. Most innovation efforts, nevertheless, include vital danger of failure. Putting the shopper 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 twenty years researching and making use of innovation strategies to create person experiences that promote sustainable and significant development. I first discovered concerning the following framework within the Innovation Dash enterprise schooling course provided by Section. This adaptation, which will be utilized in nearly any trade, has allowed me to take a realistic method to the event 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 fitting answer.
• Higher perceive your clients.
• De-risk and prioritize innovation concepts.

Figuring out Product Improvement Threat

You might be acquainted with the Ansoff matrix, a grid-style planning device that plots out the kinds of development that come up from new and current product improvement 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
  Develop 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

Upon getting reviewed the doable development 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 aid you and your staff 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 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 sorts: leisure vs. enterprise. A sound segmentation technique should seize key variations in buyer habits and wishes.

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 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 velocity 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 attain, and the obstacles they need 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 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 useful, social, and emotional outcomes of the person expertise. This train pinpointed three fundamental the reason why enterprise vacationers need to fly: Flying is environment friendly, protected, and normally nice. It discovered the 4 fundamental 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 total person journey. Usually, your services or products is just half of the general person 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 notice clear advantages.

For InnovateAir, the journey audit recognized that completely different suppliers serve the person throughout their journey however there may be restricted information-sharing amongst them, so alternative exists to combine floor and flight transportation extra intently. This might supply 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 via the Ansoff matrix lens, these concepts every fall into a distinct quadrant. Experience-share app integration can be market penetration (low danger); the Loyalty community can be product improvement (medium danger); curated journey packages can 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 shopper worth proposition. The variations are within the monetization potential and the trouble required.

A buyer loyalty community could possibly be a fantastic function, however implementing a social media platform can be difficult because of 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 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 might dilute the income potential and impression total monetization.

The perfect thought seems to be ride-share app integration, because of its broad attain, impression, capacity to monetize, and the reasonable 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 data by way of the app, clients can be keen to pay an additional 5%, with a present common spend of round $62 per journey. The product managers thought of this to be an affordable assumption that could possibly be examined by working with ride-sharing corporations and conducting an A/B take a look at in a goal market. The elevated spend per journey was a beautiful proposition that could possibly be shared between InnovateAir and the respective ride-sharing corporations. 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

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 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 slightly 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 data. A profitable consequence can be 25% of vacationers utilizing the function, and greater than 50% utilizing it for all their floor transportation wants.

Give attention to the Buyer Expertise

To unlock new development alternatives, at this time’s most modern corporations don’t focus solely on the merchandise they promote, however slightly on the shopper expertise. By following the product innovation framework laid out right here, your product staff can determine a approach to tackle key ache factors on your current market that can drive extra income, enhancing your total choices. Leveraging this framework mitigates the chance concerned with modern product improvement, guaranteeing new merchandise are aligned with enterprise wants and capabilities and have sturdy ROI potential, all whereas providing a brand new, priceless buyer expertise.

Be aware: 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 data of any such business initiatives on the a part of these ride-sharing corporations.