July 17, 2024
Mitigate Threat With a Product Innovation Technique

Progressive merchandise can result in elevated market share, better buyer loyalty, and diversified income streams. Most innovation efforts, nonetheless, include vital danger of failure. Inserting the shopper on the heart 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 twenty years researching and making use of innovation methods to create person experiences that promote sustainable and significant progress. I first discovered concerning the following framework within the Innovation Dash enterprise schooling course provided by Section. This adaptation, which may be utilized in virtually any business, has allowed me to take a practical method to the event course of. By making use of this product innovation technique, you can be well-positioned to:

  • Uncover latent alternatives for what you are promoting inside your goal market.
  • Reframe buyer issues to design the correct resolution.
  • Higher perceive your clients.
  • De-risk and prioritize innovation concepts.

Figuring out Product Growth Threat

It’s possible you’ll be accustomed to the Ansoff matrix, a grid-style planning software that plots out the varieties of progress that come up from new and current product improvement and enlargement 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 Threat
    Enhance by optimizing an current product for an current market.
  • Product Growth = Medium Threat
    Improve by providing a brand new product to an current market.
  • Market Growth = Medium Threat
    Broaden by launching an current product in a brand new market.
  • Diversification = Excessive Threat
    Diversify by creating a brand new product for a brand new market.

The Product Innovation Framework in Motion

Upon getting reviewed the doable progress paths together 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 to and your staff 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 primarily based 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 typically time-pressed (and utilizing the corporate bank card)—so this phase 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 finest ally: You will need to attain out and discuss to as many potential clients as doable to grasp their views, what they’re attempting to attain, and the obstacles 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 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 purposeful, 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, secure, and often nice. It discovered the 4 foremost 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 doable. 

Design a Resolution 

Step one in designing an answer is to grasp 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 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 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 carefully. 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 property. Consider methods you possibly can 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 info
  • Monitor document of building partnerships with complementary suppliers (rental automobile firms, motels, and many others.)
  • 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 info 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 akin to collaborative filtering to permit enterprise vacationers to get essentially the most out of their journey finances.

this by means of the Ansoff matrix lens, these concepts every fall into a special quadrant. Journey-share app integration could be market penetration (low danger); the Loyalty community could be product improvement (medium danger); curated journey packages could 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 trouble required.

A buyer loyalty community might be an excellent characteristic, however implementing a social media platform could be difficult as a result 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 akin 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 may dilute the income potential and impression general monetization.

One of the best concept seems to be ride-share app integration, as a result of its broad attain, impression, capability to monetize, and the average effort and value required to develop and launch. It is usually 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 12 months
Whole journeys: 230 million per 12 months
Present ride-share uptake: 70%
Whole addressable market: 160 million journeys per 12 months

Impression

Higher enterprise traveler satisfaction with a extra optimized end-to-end expertise
Count on 75% uptake from enterprise vacationers by 12 months 5

Monetization

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

Effort

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

Utilizing the outcomes, InnovateAir product managers developed a speculation that when integrating ride-share apps with reside airport info through the app, clients could be keen to pay an additional 5%, with a present common spend of round $62 per trip. The product managers thought of this to be an inexpensive assumption that might be examined by working with ride-sharing firms and conducting an A/B take a look at in a goal market. The elevated spend per trip was a lovely proposition that might be shared between InnovateAir and the respective ride-sharing firms. 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 Take a look at

An excellent 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 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 e book their airport ride-shares utilizing the InnovateAir app somewhat than Uber or Lyft. They created the power to e book a ride-share on the level of check-in for departing and arriving flights, and built-in this with reside flight, airport, and visitors info. A profitable end 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 progressive firms don’t focus solely on the merchandise they promote, however somewhat on the shopper expertise. By following the product innovation framework laid out right here, your product staff can establish a strategy to handle key ache factors in your current market that may drive further income, enhancing your general choices. Leveraging this framework mitigates the chance concerned with progressive product improvement, making certain new merchandise are aligned with enterprise wants and capabilities and have robust ROI potential, all whereas providing a brand new, worthwhile buyer expertise.

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