July 13, 2024
Mitigate Danger With a Product Innovation Technique

Modern merchandise can result in elevated market share, better buyer loyalty, and diversified income streams. Most innovation efforts, nevertheless, include vital danger of failure. Putting the shopper on the middle of the product innovation course of is vital, however many product managers battle to shift their mindset from designing services to designing buyer experiences.

I’ve spent greater than 20 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 Section. This adaptation, which may be utilized in nearly any business, has allowed me to take a realistic method to the event 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 proper answer.
  • Higher perceive your clients.
  • De-risk and prioritize innovation concepts.

Figuring out Product Improvement Danger

Chances are you’ll be aware of the Ansoff matrix, a grid-style planning device that plots out the kinds of development that come up from new and current product growth and growth into new and current markets.

An Ansoff matrix showing types of growth that arise from product development and market expansion.

I additionally discover the matrix useful for visualizing innovation methods and evaluating danger stage. 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
    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

After you have reviewed the potential development paths along with your staff, 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 assist you and your staff establish 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 primarily based on traveler varieties: leisure vs. enterprise. A sound segmentation technique should seize key variations in buyer habits and wishes.

Leisure Traveler

Enterprise Traveler

  • Represents 88% of vacationers and 25% of revenue
  • Extra price-sensitive
  • Much less time-pressed
  • Represents 12% of vacationers and 75% of revenue
  • Much less price-sensitive
  • Extra time-pressed

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 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 greatest ally: It is very important attain out and speak to as many potential clients as potential to grasp their views, what they’re attempting to realize, and the boundaries they need 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 web of abstraction method. They then analyzed the first JTBD, which is flying from Metropolis A to Metropolis B.

Business travelers want to fly because it is efficient, safe, and pleasant. Barriers are the other flight activities, cost, and delays/cancellations.

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 explanation why enterprise vacationers need to fly: Flying is environment friendly, protected, and normally nice. It discovered the 4 predominant boundaries 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 potential. 

Design a Resolution 

Step one in designing an answer is to grasp how your present providing matches within the total consumer journey. Usually, your services or products is simply half of the general consumer 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.

The user journey spans booking, travel to the airport, check-in, navigating the airport, waiting to board, flying, arrival, and leaving the airport.

For InnovateAir, the journey audit recognized that completely 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 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 belongings. Consider methods you’ll be able to repurpose these to develop new options or experiences. That is what it appeared like for InnovateAir:

Stock

Innovation

  • Robust logistics capabilities and entry to real-time flight data
  • Monitor document of creating partnerships with complementary suppliers (rental automotive corporations, inns, and so on.)
  • Rising InnovateAir Loyalty community buyer base (100 million+)
  • Digital platform (app and web site) and engineering expertise
  • Ride-share app integration: Share real-time flight data to streamline attending to and from the airport.
  • InnovateAir Loyalty community: Allow clients to study from each other and maximize journey effectivity by sharing their experiences.
  • Curated journey packages: Leverage AI methods comparable to collaborative filtering to permit enterprise vacationers to get probably the most out of their journey finances.

this by way of the Ansoff matrix lens, these concepts every fall into a unique quadrant. Journey-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 shopper worth proposition. The variations are within the monetization potential and the hassle required.

A buyer loyalty community may very well be an amazing function, however implementing a social media platform can be difficult on account of 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; nevertheless, 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 impression total monetization.

The most effective thought seems to be ride-share app integration, on account of its broad attain, impression, capacity to monetize, and the reasonable effort and price 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:

RIME

Key Assumptions and Sizing

Attain

InnovateAir enterprise vacationers: 16.8 million per yr
Whole journeys: 230 million per yr
Present ride-share uptake: 70%
Whole addressable market: 160 million journeys per yr

Affect

Higher enterprise traveler satisfaction with a extra optimized end-to-end expertise
Anticipate 75% uptake from enterprise vacationers by yr 5

Monetization

Common value per journey: $62
Whole potential yearly spend by InnovateAir enterprise vacationers on ride-sharing journeys: $10 billion
Willingness to pay for ride-sharing is obvious
5% extra fare for the built-in expertise is an affordable speculation

Effort

Value = growth prices + advertising prices + partnership allowance prices
Key danger: Uber/Lyft willingness to associate

Utilizing the outcomes, InnovateAir product managers developed a speculation that when integrating ride-share apps with dwell airport data through the app, clients can be keen to pay an additional 5%, with a present common spend of round $62 per journey. The product managers thought-about 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 journey was a horny proposition that may very well 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

A terrific device 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 staff 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 ebook their airport ride-shares utilizing the InnovateAir app relatively 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 site visitors data. A profitable final result can 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, in the present day’s most modern corporations don’t focus completely on the merchandise they promote, however relatively on the shopper expertise. By following the product innovation framework laid out right here, your product staff can establish a approach to deal with key ache factors in your current market that can drive extra income, enhancing your total choices. Leveraging this framework mitigates the danger concerned with modern product growth, making certain new merchandise are aligned with enterprise wants and capabilities and have sturdy ROI potential, all whereas providing a brand new, worthwhile buyer expertise.

Notice: Any references to Uber and Lyft are made purely within the context of this fictitious case research for instance some extent. The creator has no information of any such business initiatives on the a part of these ride-sharing corporations.