Product Innovation GAIN
Search Product Innovation and you will find a plethora of useful definitions. The Business Dictionary, Wikipedia and several others cover every aspect from design to material.
I like this definition:
Product/service innovation is the result of bringing to life a new way to solve the customer’s problem – through a new product or service development – that benefits both the customer and the sponsoring company.
Key to the success of product innovation is contained in words – benefits both. While it is easy to satisfy one party, it is usually a little more difficult meeting both!
How do we know when Product innovation is required? Our existing product may be flying off the shelves, and our clients may be giving raving reviews. Should we even consider Product innovation?
The emphatic answer is YES. Yes, you should consider it. Yes, you should investigate it. Yes, you must continuously look to innovate. The reason we find in my previous article – where I quoted Drucker – and here it is again:
Business exist to create customers, and as this is the most important purpose of a business - the two main functions to achieve this is marketing and innovation.
Innovation is a PROACTIVE approach to finding (or retaining) a customer. You need to take a detailed view of the current product. Does it match customer requirements and expectations? If the answer is Yes, should consider how long your existing offering will still satisfy these. If NO, you need to act and start the innovation process immediately.
You need a Big Enough Market Insight (BEMI) to determine if (no surprises here):
The market is big enough
Big Enough is ambiguous and variable. Market size can grow or shrink with changes in pricing, features or even material selection. ( Example: moving from mild steel to stainless steel may increase the market share in the Marine side, but lose on an agricultural product sales as the pricing is above what the market is prepared to pay)
- How many of the customers ask for product innovation?
- For what percentage of sales do this group account?
- How much extra will a customer willingly pay?
Will the intended innovation create or maintain a market that is valuable enough?
- What percentage of your customers will benefit?
- How will your customer profile change with the introduction of product innovation?
- Will you get more significant market share and higher turnover?
- How does the innovation relate to bottom-line numbers?
Finally - how certain are you that this will relate to a benefit for Customer and Company?
Is it an excellent idea or innovators dream but dead donkey financially? Adding a Jet engine to a lawnmower may be an innovators dream – and fun. But it may not provide value to the majority of law-abiding citizens who want to ride their sit-on mowers at more leisurely and safe speeds.
Decision making may be much less clear cut. Several actors may mean the innovation process is one that evolves rather than following linear steps. Here are some constraints you may encounter.
- The change you had in mind may cost too much to maintain value for both parties.
- Or your innovation may require an extended time to bring to market
- Customers may start to desert you for a competitor that already provides a less dramatic but useful upgrade.
So, how do you get some clarity on what your innovation should be? While no recipe for success exist, some guidelines may assist you in moving smoothly in and between innovation cycles
- Look for the smallest possible improvement you can make that will yield the highest potential gain for both of you.
- Work on what is essential for the customer – not on what is interesting for you to make.
- Sensible companies think several steps ahead and work back from the endgame they want
- Break innovation into smaller chunks or cycles that you can roll out independently. An MVP (Minimum Viable Product) can be used to check market acceptance.
- Technical people love to find or develop technical solutions for what they believe the most applicable innovation should be. The reality is that innovation ideas – even in a Technical sector, is often found by looking at demographics, economics or other social dynamics.
- Don’t let Technocrats persuade you that technology in product innovation is required – humans will use your product, so ask human questions.
Use innovation to (and based on) GAIN
G – Grounded (in research)
A – Applicable
I – Inspirational
N – New/Needed
Next week we will look at an example of how adhering to the GAIN framework for innovation; can provide significant value to company and customer.