Modern merchandise can result in elevated market share, higher buyer loyalty, and diversified income streams. Most innovation efforts, nonetheless, include important 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 methods to create person 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 virtually any trade, has allowed me to take a practical strategy to the improvement course of. By making use of this product innovation technique, you may be well-positioned to:
- Uncover latent alternatives for what you are promoting inside your goal market.
- Reframe buyer issues to design the precise resolution.
- Higher perceive your clients.
- De-risk and prioritize innovation concepts.
Figuring out Product Improvement Danger
You could be accustomed to the Ansoff matrix, a grid-style planning instrument that plots out the varieties 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 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
Increase 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 doable development paths together 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 check.
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 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 based mostly on traveler varieties: 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 usually 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 velocity 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 doable to grasp their views, what they’re making an attempt to attain, and the boundaries 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 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 person expertise. This train pinpointed three fundamental explanation why enterprise vacationers wish to fly: Flying is environment friendly, protected, and often nice. It discovered the 4 fundamental boundaries for enterprise vacationers to be price, 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 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 suits within the general person journey. Typically, your services or products is simply half of the general person 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 seek out gaps that present alternatives for innovation that notice clear advantages.
For InnovateAir, the journey audit recognized that totally different suppliers serve the person throughout their journey however there’s restricted information-sharing amongst them, so alternative exists to combine floor and flight transportation extra carefully. This might 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 regarded like for InnovateAir:
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Stock |
Innovation |
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Taking a look at this by means of the Ansoff matrix lens, these concepts every fall into a unique quadrant. Trip-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, affect, monetization, and energy) framework. For InnovateAir, all three concepts have broad attain and affect by way of the buyer worth proposition. The variations are within the monetization potential and the trouble required.
A buyer loyalty community may very well be an awesome function, however implementing a social media platform could be difficult attributable to 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 comparable to 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 could dilute the income potential and affect general monetization.
One of the best thought seems to be ride-share app integration, attributable to its broad attain, affect, 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 check 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 yr |
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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 |
Value = improvement 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 through the app, clients could 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 affordable assumption that may very well be examined by working with ride-sharing firms and conducting an A/B check in a goal market. The elevated spend per trip was a pretty proposition that may very well be shared between InnovateAir and the respective ride-sharing firms. 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 check their hypotheses with clear and goal standards.
The InnovateAir product workforce designed a check focusing 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 somewhat 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 could be 25% of vacationers utilizing the function, and greater than 50% utilizing it for all their floor transportation wants.
Concentrate on the Buyer Expertise
To unlock new development alternatives, immediately’s most progressive firms 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 workforce can determine a technique to deal with key ache factors in your current market that can drive extra income, enhancing your general choices. Leveraging this framework mitigates the chance concerned with progressive product improvement, making certain new merchandise are aligned with enterprise wants and capabilities and have robust ROI potential, all whereas providing a brand new, precious buyer expertise.
Observe: Any references to Uber and Lyft are made purely within the context of this fictitious case research as an example a degree. The writer has no information of any such industrial initiatives on the a part of these ride-sharing firms.
