Progressive merchandise can result in elevated market share, larger buyer loyalty, and diversified income streams. Most innovation efforts, nonetheless, include important threat of failure. Inserting the client on the heart 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 discovered concerning the following framework within the Innovation Dash enterprise training course provided by Part. This adaptation, which may be utilized in nearly any trade, has allowed me to take a realistic strategy to the growth course of. By making use of this product innovation technique, you’ll be well-positioned to:
- Uncover latent alternatives for your small business inside your goal market.
- Reframe buyer issues to design the correct resolution.
- Higher perceive your clients.
- De-risk and prioritize innovation concepts.
Figuring out Product Growth Danger
Chances are you’ll be accustomed to the Ansoff matrix, a grid-style planning device that plots out the sorts 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 threat degree. Right here’s what every quadrant represents:
Market Penetration = Low Danger
Enhance by optimizing an present product for an present market.
Product Growth = Medium Danger
Improve by providing a brand new product to an present market.
Market Growth = Medium Danger
Increase 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 getting reviewed the attainable development paths along with your workforce, 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 workforce 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 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 conduct and desires.
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 greatest ally: You will need to attain out and discuss to as many potential clients as attainable to know their views, what they’re attempting to attain, and the boundaries they want to overcome. InnovateAir’s product managers carried out a number of interviews with enterprise vacationers and recognized the completely different jobs-to-be-done (JTBD) utilizing a net of abstraction strategy. 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 consumer expertise. This train pinpointed three essential the reason why enterprise vacationers need to fly: Flying is environment friendly, secure, and normally nice. It discovered the 4 essential 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 attainable.
Design a Answer
Step one in designing an answer is to know how your present providing matches within the total consumer journey. Usually, your services or products is just half of the general consumer expertise. For InnovateAir, the traveler’s journey contains the flying expertise in addition to related actions resembling 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 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 might provide the client a extra seamless end-to-end journey expertise that may optimize productiveness and scale back stress.
Carry out a competency audit to take inventory of your group’s capabilities and property. Consider methods you may repurpose these to develop new options or experiences. That is what it regarded like for InnovateAir:
this by means of the Ansoff matrix lens, these concepts every fall into a special quadrant. Journey-share app integration can be market penetration (low threat); the Loyalty community can be product growth (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, 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 trouble required.
A buyer loyalty community might be an excellent characteristic, however implementing a social media platform can be difficult because 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 resembling 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 might dilute the income potential and influence total monetization.
The perfect thought seems to be ride-share app integration, because of its broad attain, influence, means to monetize, and the average effort and value 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:
Key Assumptions and Sizing
InnovateAir enterprise vacationers: 16.8 million per 12 months
Larger enterprise traveler satisfaction with a extra optimized end-to-end expertise
Common value per journey: $62
Value = growth prices + advertising prices + partnership allowance prices
Utilizing the outcomes, InnovateAir product managers developed a speculation that when integrating ride-share apps with reside airport info by way of the app, clients can be keen to pay an additional 5%, with a present common spend of round $62 per trip. The product managers thought-about this to be an inexpensive 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 trip 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 Check
An incredible 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 workforce 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 ebook their airport ride-shares utilizing the InnovateAir app fairly than Uber or Lyft. They created the flexibility to ebook a ride-share on the level of check-in for departing and arriving flights, and built-in this with reside flight, airport, and visitors info. A profitable end result can be 25% of vacationers utilizing the characteristic, and greater than 50% utilizing it for all their floor transportation wants.
Concentrate on the Buyer Expertise
To unlock new development alternatives, in the present day’s most progressive firms don’t focus completely on the merchandise they promote, however fairly on the client expertise. By following the product innovation framework laid out right here, your product workforce can determine a technique to deal with key ache factors to your present market that may drive further income, bettering your total choices. Leveraging this framework mitigates the chance concerned with progressive product growth, guaranteeing new merchandise are aligned with enterprise wants and capabilities and have robust ROI potential, all whereas providing a brand new, priceless buyer expertise.
Word: Any references to Uber and Lyft are made purely within the context of this fictitious case research for example a degree. The creator has no data of any such industrial initiatives on the a part of these ride-sharing firms.