Progressive merchandise can result in elevated market share, higher buyer loyalty, and diversified income streams. Most innovation efforts, nonetheless, include important danger of failure. Inserting the client on the heart of the product innovation course of is essential, 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 strategies to create person experiences that promote sustainable and significant development. I first discovered concerning the following framework within the Innovation Dash enterprise training course supplied by Part. This adaptation, which could be utilized in virtually any business, has allowed me to take a realistic strategy to the improvement course of. By making use of this product innovation technique, you’ll be well-positioned to:
- Uncover latent alternatives for your online business inside your goal market.
- Reframe buyer issues to design the precise answer.
- Higher perceive your prospects.
- De-risk and prioritize innovation concepts.
Figuring out Product Improvement Danger
You might be acquainted with the Ansoff matrix, a grid-style planning software that plots out the varieties of development that come up from new and current product improvement and growth into new and current 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 current product for an current market. -
Product Improvement = Medium Danger
Improve by providing a brand new product to an current market. -
Market Improvement = Medium Danger
Broaden by launching an current 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
Upon 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 show you how to 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 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 primarily based on traveler sorts: leisure vs. enterprise. A sound segmentation technique should seize key variations in buyer habits and desires.
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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 perfect 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 attainable to know their views, what they’re attempting to attain, and the limitations they wish to overcome. InnovateAir’s product managers performed a number of interviews with enterprise vacationers and recognized the totally different jobs-to-be-done (JTBD) utilizing a internet 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 practical, social, and emotional outcomes of the person expertise. This train pinpointed three major explanation why enterprise vacationers wish to fly: Flying is environment friendly, protected, and often nice. It discovered the 4 major limitations 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 know how your present providing matches within the general person journey. Typically, your services or products is barely half of the general person 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 search out gaps that present alternatives for innovation that understand clear advantages.
For InnovateAir, the journey audit recognized that totally 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 carefully. This could provide 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’ll be able to 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 via the Ansoff matrix lens, these concepts every fall into a special quadrant. Journey-share app integration could be market penetration (low danger); the Loyalty community could be product improvement (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 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 an incredible function, however implementing a social media platform could be difficult as a consequence of information 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; nonetheless, 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 impression general monetization.
The most effective concept seems to be ride-share app integration, as a consequence of its broad attain, impression, capability to monetize, and the reasonable effort and value required to develop and launch. Additionally it is 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 |
Better 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 |
Price = improvement prices + advertising and marketing prices + partnership allowance prices |
Utilizing the outcomes, InnovateAir product managers developed a speculation that when integrating ride-share apps with dwell airport data by way of the app, prospects could be keen to pay an additional 5%, with a present common spend of round $62 per experience. The product managers thought-about this to be an inexpensive assumption that might 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 experience was a lovely proposition that might 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 Check
An ideal software 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 might ebook their airport ride-shares utilizing the InnovateAir app somewhat 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 dwell flight, airport, and visitors data. A profitable consequence 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 development alternatives, at this time’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 workforce can determine a option to tackle key ache factors on your current market that can drive extra income, bettering your general choices. Leveraging this framework mitigates the danger concerned with modern product improvement, making certain new merchandise are aligned with enterprise wants and capabilities and have robust ROI potential, all whereas providing a brand new, worthwhile buyer expertise.
Be aware: 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 information of any such business initiatives on the a part of these ride-sharing corporations.
