Operations

Product Innovation

Product Innovation Jonathan Poland

Product innovation refers to the development and introduction of a product or service that significantly improves upon existing offerings, often by a factor of 10x or more. While many products are developed to stand out in a crowded market, product innovation may aim to completely disrupt the market and replace existing products with something new. This type of innovation is rare and can be challenging to achieve, as it requires a significant level of creativity and innovation. The following are common types of product innovation.

Time
Reducing time consumption including things that improve productivity or represent a customer convenience. For example, software that reduces the time for an interior decorator to produce a floor plan.

Efficiency
Reducing the inputs required to achieve a goal. For example, it currently costs around $50,000 a pound to launch things into orbit. It is believed that this can be reduced considerably.

Cost
Reducing the cost of products and services. For example, the cost per watt of solar panel modules dropped from around $75 in 1974 to less than $0.50 by 2020.

Performance
The performance of products and services as measured by a figure of merit. For example, the speed of computers has roughly doubled every two years since 1975.

Quality
Leaps forward in the quality of products in areas such as availability, durability and reliability.

Experience
The product experience including intangible elements such as concepts, feelings, taste, sight, sound, touch and smell.

Risk
Reducing risks such as improving the safety or sustainability of products.

Design-Driven Development

Design-Driven Development Jonathan Poland

Design-driven development is a product development approach that places a strong emphasis on design, with a focus on form, function, and user experience. Rather than seeing a product as a collection of features, this approach aims to create products that are useful and meaningful to customers. By considering the needs and preferences of customers from the beginning of the development process, design-driven development can help companies create products that are more likely to be successful in the market. The following are illustrative examples.

Form

Creating user interfaces, environments and physical things that have an attractive form. This involves viewing form as a primary business concern as opposed to an afterthought. In many cases, a design driven team might spend as much time on form as function.

Function

Incorporating features that integrate well with the rest of the design and are truly something customers find useful. Design driven development considers the possibility that a function will subtract from a design as opposed to add value.

Quality

Full consideration of non-functional requirements in areas such as speed, reliability and usability.

Experience

Thinking of products and services as an end-to-end experience. This requires connecting with customers to understand perceptions. For example, a banking website that requires 5 slow screens to get to a tool that customers most commonly use may find that customers perceive the site as an annoyance as opposed to a friendly tool.

Identity

In many cases, a firm spends a great deal of time communicating a brand identity but does little to incorporate that identity in products. Design-driven development has potential to give products an identity that reflects your brand. For example, if your brand identity embraces safety, make your products the safest on the market.

Design to Logistics

Design to Logistics Jonathan Poland

Design for logistics involves designing products with the entire supply chain in mind, including manufacturing, packaging, shipping, warehousing, merchandising, and repackaging for returns. This approach takes into consideration a range of factors, including cost efficiency, environmental impact, security, and marketing. By designing products with logistics in mind, companies can optimize their supply chain processes and reduce costs, while also considering the impact of their products on the environment and the needs of their customers. The following are common examples.

Manufacturing
Producing an entire furniture line from the same wood and standard parts in order to simplify planning, manufacturing and supply chain.

Flat Packs
Designing products to fit efficiently into a rectangular box.

Shipping
Designing products to fit in boxes that fit efficiently into standard shipping containers.

Merchandising
Products designed to fit on shelves or look attractive in a fixed size display unit.

Design to Value

Design to Value Jonathan Poland

Design to value refers to the design requirements and considerations that aim to maximize the value of a product or service for customers. This approach focuses on creating designs that offer the most benefit to customers while minimizing costs and other resources. By prioritizing customer value in the design process, companies can create products and services that meet the needs and preferences of their target market, increasing the likelihood of customer satisfaction and loyalty. The following are illustrative examples.

Market Research

Design to value is associated with market research and efforts to identify customer needs and preferences to drive product development. For example, a manufacturer of battery chargers may find that customers feel that current products have a strange chemical smell they find disturbing. Based on this, the manufacturer establishes the requirement that new designs not smell or include harmful substances.

Critical to Customer

Critical to customer is the identification of needs and preferences that drive customer motivation. There can be a significant difference between what customers say they want and what truly motivates purchases. For example, an ice cream manufacturer may find that customers say they want low calorie products but aren’t actually motivated to buy such products. As such, the firm bases design to value on elements that appear to drive motivation such as convenient packaging and luxurious flavors.

Competitive Intelligence

Design to value may seek to catch up or preempt the functions, features and quality of the competition. For example, a beverage company finds that a major competitor has established a roadmap to shift to all organic ingredients. The firm responds with an aggressive program to develop and test new organic formulations.

Product Differentiation

Product differentiation is the unique value of a product relative to the competition. Design to value may be focused on unique value as opposed to total value in order to differentiate products in a crowded market. For example, a camera manufacturer that seeks to produce the most durable camera on the market that can endure extreme conditions and shocks.

Brand Image

Brand image is the set of ideas and emotions that customers hold towards a brand. Design to value may be focused on developing brand image such as a luxury cosmetics company that develops an unusually expensive handbag using costly materials and fine workmanship to serve as a symbol of the brand.

Customer Experience

Design to value is often applied beyond product design to the end-to-end customer experience. For example, the design of a hotel lobby may seek to maximize value to guests with luxurious, impressive or useful features.

Lead Users

The challenge of design to value is discovering leaps forward in value as opposed to addressing minor customer problems with existing products and services. A common way to overcome mediocre ideas for improvement is to engage those users who are pushing your products to their edges. For example, an bicycle manufacturer that acquires new ideas for value from professional athletes, extreme bicycling enthusiasts and people who commute 30 miles or more daily with their products.

Marketing Experimentation

Design to value is a common approach to marketing experimentation. For example, a fashion company develops 12 new models of shoes based on customer preferences and brand image to test with customers.

Problem Solving

Internal efforts to design structures, technologies, processes and procedures may apply a design to value approach by identifying, prioritizing and solving problems. For example, an airline that identifies gaps in a customer service process that can be fixed with new tools to improve customer service.

Soft Launch

Soft Launch Jonathan Poland

A soft launch is a product launch that is limited in scope, such as a release to a small group of customers. This type of launch is often used to test a product or service and gather data for improvement before a full rollout. Soft launches can help minimize the risks associated with launching a product or service, including poor customer reception or operational failures that could disrupt the business. By launching to a smaller group of customers, companies can reduce the impact of potential failures and gather valuable feedback to inform future development and marketing efforts. The following are illustrative examples of a soft launch.

Lead Users

Releasing first to customers who are pushing your products to their limits. For example, a snowboarding company releases a snowboard that uses a new lightweight material to a handful of professional snowboarders to generate publicity and refine the product.

Customer Pilot

Releasing the product to your existing customers or a small number of customers on an invitation-only basis. For example, an insurance company offers a new travel insurance product to existing customers before rolling out a marketing campaign to generate demand.

Employee Pilot

Offering the product or service to employees and their families first. This can serve as a dry run to work out problems before releasing to customers. For example, tax preparation software that is used by employees to submit taxes before rolling the product out to a large number of customers.

Location Pilot

Releasing the product or service in a limited number of locations such as a restaurant chain that tests a new menu item in 10 locations before full rollout.

Digital Channels

Releasing the product or service on your website or app before launching to other channels. Digital channels lend themselves to surveys and other methods of gauging customer reactions such as A/B testing.

Phased Launch

Launching the product’s functionality and features in phases. For example, a credit card that is initially released with manual processes and a lack of technology integration meaning that customers can’t access things like online statements. The product is improved with a number of rollout phases whereby support and features are added.

Minimum Viable Product

Minimum viable product is the practice of evolving a product with a process of aggressive and constant change. This tends to reduce the footprint of product launches as they are typically incremental and easy to backout. For example, a software company that plans to develop a full ERP platform might start by releasing a small tool for operations managers. The product might be updated hundreds of times before it could be considered a full ERP platform.

Product Risk

Product Risk Jonathan Poland

Product risk refers to the potential for negative consequences that may result from the development, production, or use of a product. When developing a new product, it is important for companies to carefully consider and mitigate potential risks in order to protect the safety of their customers and the overall success of the product.

There are several types of product risks that companies should be aware of, including:

  1. Safety risks: These are risks that could cause harm or injury to the user, such as products with faulty components or design flaws.
  2. Quality risks: These are risks that could affect the quality or reliability of the product, such as manufacturing defects or problems with raw materials.
  3. Legal risks: These are risks that could result in legal liability for the company, such as products that do not comply with relevant regulations or standards.
  4. Financial risks: These are risks that could have an impact on the financial performance of the company, such as cost overruns or delays in production.
  5. Inventory risks: These are problems with inventory such as shortages in one channel and excess inventory issues in another.
  6. Compliance risks: A product that is deemed to violate laws, regulations or standards. In some cases, a product can attract new regulations if it is perceived to damage markets, the environment or quality of life.

To mitigate product risk, companies should have robust processes in place for identifying and evaluating potential risks at all stages of the product lifecycle. This may include conducting safety and quality tests, seeking legal counsel, and implementing risk management strategies such as product recalls or redesigns.

In summary, product risk is an important consideration for companies when developing new products. By taking the necessary steps to identify and mitigate potential risks, companies can protect the safety of their customers and the overall success of their products.

Phased Implementation

Phased Implementation Jonathan Poland

Phased implementation is a method of developing and introducing a business, brand, product, service, process, capability, or system by dividing the work into phases. This approach is used to reduce complexity and minimize implementation risk. It can also shorten the time it takes to bring a product or service to market, and it allows for adjustments to be made based on real-world feedback. By breaking the work into smaller phases, it becomes easier to manage and oversee the implementation process.

Here are some examples:

  1. Launching a new software application: This could involve implementing different features or functionalities in phases, such as rolling out basic features first and then adding more advanced features later.
  2. Rolling out a new product line: A company might launch a new product line in stages, starting with a limited number of products and gradually introducing more over time.
  3. Implementing a new business process: A company might phase in a new process for managing orders, for example, by introducing it in one department or location first and then expanding it to other areas.
  4. Upgrading a system: A company might phase in an upgrade to their IT infrastructure, such as a new version of an operating system, by rolling it out to a small group of users first and then gradually expanding it to the rest of the organization.
  5. Introducing a new marketing campaign: A company might roll out a new marketing campaign in stages, such as testing it in a small market before expanding it to a larger area.

Early Adopters

Early Adopters Jonathan Poland

Early adopters are individuals who quickly adopt an innovation. Marketing and selling innovative products can be challenging as it may require customers to change their habits or learn new things. This is where early adopters play a crucial role. By adopting the product early on, they can help generate word of mouth and social momentum, which can help drive widespread adoption of the product. The following are common types of early adopter.

Industry Insiders

True innovation represents a leap forward in value. The first people who are likely to recognize this value are industry insiders. For example, developers are often early adopters of innovative technology.

Lead Users

Users who are pushing your products to their limits such as a professional snowboarder who is likely to recognize the value of a snowboard with superior performance.

Enthusiasts

Enthusiasts of your product category. For example, fashion enthusiasts are likely to be early adopters of new approaches to fashion.

Loyal Customers

Fans of your brand who are likely to adopt any products you release. Firms with a loyal customer base generally enjoy an accelerated path to product adoption.

Status Seekers

Customers who pride themselves as being at the forefront of a product category. For example, conspicuous conservation whereby customers view environmentally friendly products as a status symbol.

Open To Change

Customers who are open to change if it is valuable to them.

Adoption Rate

Adoption Rate Jonathan Poland

Adoption rate refers to the speed at which users begin to utilize a new product, service, or feature. It is often used to predict and evaluate the effectiveness of marketing efforts and internal changes. The following are illustrative examples of an adoption rate.

Innovation

Adoption rate is associated with innovation. In some cases, a leap forward in value isn’t immediately appreciated. An innovation that is destined to change the world may suffer from slow sales and a lack of interest for years or even decades. The reason for this is that innovation may require customers to change their way of thinking, modify their routines and learn things. People don’t easily change for a new product, even if it is valuable to them.

Early Adopters

Early adopters are people who are open to your innovation. This is often because they are enthusiasts, advanced users or generally open minded. Early marketing for an innovative product usually focuses on early adopters. If you get enough early adopters using a valuable new product, service, process, technique or idea it can quickly snowball to the rest of your target market.

Invitation Only

One way to engage early adopters is to launch early versions of your product or service on an invitation-only basis. This makes those you invite feel good and can trigger a fear of missing out that generates more demand. This works best if your product has significant publicity or status amongst likely early adopters. If you are unknown an “invitation” just looks like a marketing gimmick.

Unsought Products

An unsought product is a product that generates no desire in people. This has several variations including products associated with misfortune such as fire extinguishers and funeral services. It is often possible to sell unsought products if people feel they need them. However, the adoption rate is slow at best and you shouldn’t expect a sudden jump in adoption.

Failed Products

Products may lack adoption simply because they aren’t valuable to customers. This includes products that fail to appeal to customer needs and preferences. Pricing, distribution and promotion can also be factors in product failure. For example, a product that is too expensive for the value offered.

Early & Late Majority

Products can hit an extremely high adoption rate on the back of word of mouth and social status. This can occur because a product is innovative, fashionable or interesting in some way. It can also occur due to the brute force marketing efforts of a large firm. When the majority start adopting something it tends to happen quickly because the majority copy one another with enthusiasm.

Laggards

Laggards are independent thinkers or people who are simply out of touch with social trends or your market. A product that has been adopted by the majority will once again have a slow adoption rate as the last 20% of a market are laggards.

Internal Adoption

Beyond product development, it is common to track the adoption rate for internal changes. For example, a project that launches a new technology tool may target an internal adoption rate of 2000 users / month. If there is no mandate to use the tool, this may require internal communications such as presentations to generate demand.

Functions & Features

Product development teams may also track the adoption rate of new functions and features. For example, a photo editing platform might track how many users try a new filter. This information is used to tune product strategy.

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