Mitigate Danger 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. 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 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 progress. 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 trade, has allowed me to take a realistic strategy to the growth course of. By making use of this product innovation technique, you can be well-positioned to:

• Uncover latent alternatives for your small business inside your goal market.
• Reframe buyer issues to design the fitting resolution.
• Higher perceive your prospects.
• De-risk and prioritize innovation concepts.

Figuring out Product Improvement Danger

You could be accustomed to the Ansoff matrix, a grid-style planning software that plots out the sorts of progress that come up from new and current product growth 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:

• 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 potential progress paths together with your workforce, 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 provide help to and your workforce 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 may leverage it to drive innovation as a part of a progress 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.

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 section has the most effective potential for progress. 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 discuss to as many potential prospects as potential to know their views, what they’re attempting 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 practical, social, and emotional outcomes of the person expertise. This train pinpointed three foremost the explanation why enterprise vacationers need to fly: Flying is environment friendly, protected, and often nice. It discovered the 4 foremost 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 potential. 

Design a Answer 

Step one in designing an answer is to know how your present providing matches within the general person journey. Usually, 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 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 is able to supply 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 belongings. Consider methods you may repurpose these to develop new options or experiences. That is what it regarded like for InnovateAir:

this via the Ansoff matrix lens, these concepts every fall into a special quadrant. Trip-share app integration can be market penetration (low danger); the Loyalty community can be product growth (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 when it comes to the buyer worth proposition. The variations are within the monetization potential and the trouble required.

A buyer loyalty community may very well be an amazing characteristic, however implementing a social media platform can be difficult resulting from 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 comparable 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 may dilute the income potential and impression general monetization.

The very best thought seems to be ride-share app integration, resulting from its broad attain, impression, means to monetize, and the reasonable effort and value required to develop and launch. It’s also 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 reside airport data through the app, prospects can be keen to pay an additional 5%, with a present common spend of round $62 per experience. The product managers thought of this to be an affordable assumption that may very well 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 pretty proposition that may very well 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 amazing 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 focusing on InnovateAir Loyalty enterprise vacationers within the US with an intra-state vacation spot to see if they might guide their airport ride-shares utilizing the InnovateAir app moderately than Uber or Lyft. They created the power to guide a ride-share on the level of check-in for departing and arriving flights, and built-in this with reside flight, airport, and visitors data. A profitable final 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 progress alternatives, right now’s most progressive corporations don’t focus solely on the merchandise they promote, however moderately on the client expertise. By following the product innovation framework laid out right here, your product workforce can establish a technique to tackle key ache factors in your current market that may drive extra income, enhancing your general choices. Leveraging this framework mitigates the danger 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, beneficial buyer expertise.

Observe: Any references to Uber and Lyft are made purely within the context of this fictitious case research for example a degree. The writer has no information of any such industrial initiatives on the a part of these ride-sharing corporations.