Mitigate Danger With a Product Innovation Technique


Modern merchandise can result in elevated market share, higher buyer loyalty, and diversified income streams. Most innovation efforts, nonetheless, include vital threat of failure. Putting the shopper on the heart of the product innovation course of is vital, however many product managers wrestle 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 strategies to create person experiences that promote sustainable and significant progress. I first realized concerning the following framework within the Innovation Dash enterprise training course provided by Part. This adaptation, which could be utilized in virtually any trade, has allowed me to take a practical 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 enterprise inside your goal market.
  • Reframe buyer issues to design the appropriate resolution.
  • Higher perceive your prospects.
  • De-risk and prioritize innovation concepts.

Figuring out Product Growth Danger

You could be acquainted with the Ansoff matrix, a grid-style planning instrument that plots out the sorts of progress that come up from new and present product growth and enlargement into new and present 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 threat stage. Right here’s what every quadrant represents:

  • Market Penetration = Low Danger
    Enhance by optimizing an present product for an present market.
  • Product Growth = Medium Danger
    Improve by providing a brand new product to an present market.
  • Market Growth = 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

After getting reviewed the attainable progress paths along 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 check.

These steps will enable you and your workforce 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 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 desires.

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 phase has the perfect 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 finest ally: It is very important attain out and discuss to as many potential prospects as attainable to grasp their views, what they’re attempting to attain, and the obstacles they want to overcome. InnovateAir’s product managers carried out 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.

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 purposeful, social, and emotional outcomes of the person expertise. This train pinpointed three fundamental the explanation why enterprise vacationers need to fly: Flying is environment friendly, protected, and often nice. It discovered the 4 fundamental obstacles 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 attainable. 

Design a Resolution 

Step one in designing an answer is to grasp how your present providing suits within the general person journey. Usually, your services or products is just half of the general person expertise. For InnovateAir, the traveler’s journey consists of the flying expertise in addition to related actions corresponding 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 understand 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 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 intently. This is able to supply the shopper a extra seamless end-to-end journey expertise that may optimize productiveness and scale back stress.

Carry out a competency audit to take inventory of your group’s capabilities and property. Consider methods you may repurpose these to develop new options or experiences. That is what it regarded like for InnovateAir:

Stock

Innovation

  • Robust logistics capabilities and entry to real-time flight info
  • Observe file of building partnerships with complementary suppliers (rental automotive firms, accommodations, and many others.)
  • Rising InnovateAir Loyalty community buyer base (100 million+)
  • Digital platform (app and web site) and engineering expertise
  • Ride-booking app integration: Share real-time flight info to streamline attending to and from the airport.
  • InnovateAir Loyalty community: Allow prospects to study from each other and maximize journey effectivity by sharing their experiences.
  • Curated journey packages: Leverage AI strategies corresponding to collaborative filtering to permit enterprise vacationers to get probably the most out of their journey finances.

Taking a look at this by the Ansoff matrix lens, these concepts every fall into a distinct quadrant. Journey-booking app integration could be market penetration (low threat); the Loyalty community could be product growth (medium threat); curated journey packages could be diversification (excessive threat).

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 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 excellent characteristic, however implementing a social media platform could be difficult on account of knowledge privateness laws and the engineering experience wanted. Curated journey packages are additionally a compelling concept, and the switching prices to assemble InnovateAir-recommended packages on aggregator websites corresponding 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 is able to dilute the income potential and impression general monetization.

One of the best concept seems to be ride-booking app integration, on account of its broad attain, impression, capability to monetize, and the reasonable effort and value required to develop and launch. It is usually the bottom threat. 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:

RIME

Key Assumptions and Sizing

Attain

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

Affect

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

Monetization

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

Effort

Value = growth prices + advertising and marketing prices + partnership allowance prices
Key threat: Uber/Lyft willingness to companion

Utilizing the outcomes, InnovateAir product managers developed a speculation that when integrating ride-booking apps with dwell airport info by way of the app, prospects 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-booking firms and conducting an A/B check in a goal market. The elevated spend per trip was a gorgeous proposition that may very well be shared between InnovateAir and the respective ride-booking firms. The general income alternative based mostly on the present penetration of airport ride-booking 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 e book their airport rides utilizing the InnovateAir app relatively than Uber or Lyft. They created the power to e book a trip on the level of check-in for departing and arriving flights, and built-in this with dwell flight, airport, and visitors info. A profitable final result could 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, right this moment’s most modern firms 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 workforce can establish a option to deal with key ache factors to your present market that may drive extra income, bettering your general choices. Leveraging this framework mitigates the chance 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, useful buyer expertise.

Be aware: Any references to Uber and Lyft are made purely within the context of this fictitious case research as an example a degree. The creator has no data of any such industrial initiatives on the a part of these ride-booking firms.

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