Modern merchandise can result in elevated market share, better buyer loyalty, and diversified income streams. Most innovation efforts, nevertheless, include important danger of failure. Putting the client on the middle of the product innovation course of is vital, 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 progress. I first realized concerning the following framework within the Innovation Dash enterprise schooling course provided by Part. This adaptation, which may be utilized in nearly any business, 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 enterprise inside your goal market.
- Reframe buyer issues to design the correct resolution.
- Higher perceive your prospects.
- De-risk and prioritize innovation concepts.
Figuring out Product Improvement Danger
It’s possible you’ll be acquainted with the Ansoff matrix, a grid-style planning software that plots out the varieties of progress 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 danger 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
Upon getting reviewed the potential progress paths together 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 check.
These steps will show you how to and your group determine 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 progress 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 conduct and wishes.
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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 one of the best 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 speak to as many potential prospects as potential to grasp their views, what they’re attempting to realize, and the obstacles they wish to overcome. InnovateAir’s product managers performed 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 purposeful, social, and emotional outcomes of the person expertise. This train pinpointed three important the reason why enterprise vacationers wish to fly: Flying is environment friendly, protected, and often nice. It discovered the 4 important obstacles 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 Resolution
Step one in designing an answer is to grasp how your present providing matches within the total 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 akin 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 completely 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 belongings. Consider methods you possibly can repurpose these to develop new options or experiences. That is what it appeared like for InnovateAir:
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Stock |
Innovation |
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this by way of the Ansoff matrix lens, these concepts every fall into a unique 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, affect, monetization, and energy) framework. For InnovateAir, all three concepts have broad attain and affect when it comes to the buyer worth proposition. The variations are within the monetization potential and the trouble required.
A buyer loyalty community could possibly be an awesome characteristic, however implementing a social media platform can be difficult as a result 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 akin 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 might dilute the income potential and affect total monetization.
The perfect thought seems to be ride-share app integration, as a result of its broad attain, affect, skill to monetize, and the average 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 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 12 months |
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Influence |
Higher 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 |
Price = 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 reside airport info by way of 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 inexpensive assumption that could possibly be examined by working with ride-sharing firms and conducting an A/B check in a goal market. The elevated spend per experience was a pretty proposition that could possibly 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 ideal software 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 group designed a check 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 power 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 site visitors info. A profitable final result can be 25% of vacationers utilizing the characteristic, and greater than 50% utilizing it for all their floor transportation wants.
Deal with the Buyer Expertise
To unlock new progress alternatives, at present’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 group can determine a solution to tackle key ache factors in your present market that may drive further income, enhancing your total choices. Leveraging this framework mitigates the chance concerned with progressive product growth, making certain new merchandise are aligned with enterprise wants and capabilities and have robust ROI potential, all whereas providing a brand new, beneficial buyer expertise.
Be aware: Any references to Uber and Lyft are made purely within the context of this fictitious case examine for instance some extent. The creator has no data of any such industrial initiatives on the a part of these ride-sharing firms.
