Modern merchandise can result in elevated market share, higher buyer loyalty, and diversified income streams. Most innovation efforts, nonetheless, include important threat of failure. Inserting the shopper on the heart of the product innovation course of is essential, however many product managers battle 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 discovered in regards to the following framework within the Innovation Dash enterprise schooling course supplied by Part. This adaptation, which will be utilized in nearly any business, has allowed me to take a practical strategy to the growth course of. By making use of this product innovation technique, you may be well-positioned to:
- Uncover latent alternatives for your enterprise inside your goal market.
- Reframe buyer issues to design the correct answer.
- Higher perceive your clients.
- De-risk and prioritize innovation concepts.
Figuring out Product Improvement Danger
It’s possible you’ll be conversant in the Ansoff matrix, a grid-style planning instrument that plots out the varieties 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 stage. Right here’s what every quadrant represents:
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Market Penetration = Low Danger
Enhance by optimizing an present product for an present market. -
Product Improvement = Medium Danger
Improve by providing a brand new product to an present market. -
Market Improvement = Medium Danger
Broaden 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 potential development paths along with your group, 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 make it easier to and your group establish 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 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 section has the very best 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 finest ally: You will need to attain out and speak to as many potential clients as potential to know their views, what they’re attempting to attain, and the limitations they need 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 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 predominant the reason why enterprise vacationers need to fly: Flying is environment friendly, secure, and often nice. It discovered the 4 predominant limitations for enterprise vacationers to be value, stress, lack of productiveness, and flight delays or cancellations.
Based mostly 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 potential.
Design a Resolution
Step one in designing an answer is to know how your present providing suits within the total 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 reminiscent of 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 totally different suppliers serve the consumer throughout their journey however there’s restricted information-sharing amongst them, so alternative exists to combine floor and flight transportation extra intently. This could 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 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 via the Ansoff matrix lens, these concepts every fall into a distinct quadrant. Experience-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 hassle required.
A buyer loyalty community could possibly be an ideal characteristic, however implementing a social media platform can be difficult resulting from 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 reminiscent of 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 may dilute the income potential and influence total monetization.
The perfect thought seems to be ride-share app integration, resulting from its broad attain, influence, skill to monetize, and the average effort and value required to develop and launch. It is usually 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:
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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 value per journey: $62 |
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Effort |
Value = growth 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 info through 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 of this to be an inexpensive 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 trip was a beautiful proposition that could possibly 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 awesome instrument 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 group 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 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 consequence can be 25% of vacationers utilizing the characteristic, and greater than 50% utilizing it for all their floor transportation wants.
Give attention to the Buyer Expertise
To unlock new development alternatives, at present’s most revolutionary corporations don’t focus completely on the merchandise they promote, however somewhat on the shopper expertise. By following the product innovation framework laid out right here, your product group can establish a option to handle key ache factors to your present market that may drive further income, enhancing your total choices. Leveraging this framework mitigates the danger concerned with revolutionary product growth, making certain new merchandise are aligned with enterprise wants and capabilities and have robust ROI potential, all whereas providing a brand new, invaluable buyer expertise.
Notice: Any references to Uber and Lyft are made purely within the context of this fictitious case examine as an instance some extent. The writer has no data of any such industrial initiatives on the a part of these ride-sharing corporations.
