According to Harvard Business School’s article, “Product Innovation: What Business Leaders Need to Know,” there are three key types of product innovation strategies that shape the market.
- Sustaining innovation, in which a business consistently provides the highest quality products to its best customers.
- Low-end disruption, in which an emerging company enters at the bottom of the market, providing a “good enough” product with a low-profit model.
- New-market disruption, in which an emerging company creates a new segment in an existing market and moves upmarket, gradually rendering the incumbent products obsolete.
Incorporating Innovation
It can be challenging for a business leader to balance sustaining innovations with current product offerings while attempting to create new products that break into new markets. In a Forbes article, “5 Tips for Product Innovation: Balancing Novelty and Necessity,” author Ryan Fritsch, co-founder of Cloud Paper, gives several factors to consider when balancing strategies and considering different types of innovation. These questions can help lead you to new approaches and develop new perspectives.
- Industry Retrospection: What has your industry done before and what could be done better? What problem does your product solve? Are there more problems it could solve?
- Industry Projection: What do the next ten years look like for your industry? Are there any emerging trends?
- Disruptive Industry Research: What are the aspects of your product or industry that no one is thinking about? What is so commonplace that no one has bothered to innovate it in years?
- Customer Research and Focus Groups. How do customers respond to your prototypes?
- Thinking Outside the Box. How is your product packaged? Could it be improved? What materials do you use? Could they be more sustainable?
“Innovation should not be a simple task on your to-do list, but rather an element of your business that is always considered and constantly in flux,” writes Fritsch. “In CPG, innovation is particularly crucial, as the demands of consumers are constantly evolving. We must be ready to pivot to meet shifting demands and that means investing in innovation in a variety of forms. Find a balance between renovating old products and introducing new ones and you will have a loyal customer base for years to come.”
Setting the Stage
A recent article on All Things Innovation, “Setting the Stage for Product & Brand Innovation,” further explored the delicate balance between product innovation and brand growth. Product innovation and brand growth are often tied together, as it is often said that you can’t have one without the other. Yet in a world filled with disruption, brands must innovate differently to survive and, indeed, thrive. Meaningful innovation drives strong brand growth. A brand growth strategy that focuses on disruptive innovation could be the winning ticket.
In addition, in a recent blog post, “Defining Disruptive Innovation,” All Things Innovation tackled this often misunderstood phrase. Disruptive innovation is often a phrase used to make a splash in the business world. Some may debate that the label has been applied carelessly at times to anyone shaking up the market. Yet, just what makes an innovation disruptive? It depends on your point of view. But some make the case that it still remains a gradual process of change, as a smaller competitor gains a foothold in a low-end or new market, and moves its product upmarket to challenge the incumbents. Disruptive innovation encompasses a transformation at the core of the business and the marketplace.
Staying Agile
What steps can companies take to focus on product innovation? We asked ChatGPT about the process. A theme emerged of dedication to the product innovation mission, by investing and gathering resources to further the company’s goals.
- Create a dedicated team of innovators: Establish an in-house team or outsource to a third party that specializes in product innovation and development. This team should be responsible for identifying new products, services, materials, processes and ideas.
- Invest in research and development: Companies should invest resources into researching the needs of their target market as well as exploring emerging technologies and trends within the industry. Consider creating a budget specifically devoted to R&D initiatives that will ultimately lead to more successful product innovations.
- Analyze customer feedback: Collecting customer feedback is essential when it comes to understanding what people want from your products or services. Utilize surveys, interviews, focus groups and other methods of gathering data on customer preferences so you can better understand how you can meet those needs with innovative solutions.
- Prioritize collaboration: Encourage open communication between departments such as marketing, engineering, production teams etc., who all have valuable insight about potential product improvements or new offerings that could benefit customers’ lives or experiences with your company’s products/services.
- Develop an agile process: Implement an agile process which focuses on iterative improvements over long projects by breaking down tasks into smaller chunks while allowing for quick changes if needed due to changing markets conditions or user feedback.
Getting the Job Done
A key takeaway in learning more about this category of innovation is that it is important for business leaders to set the tone and build a foundation for a strong product innovation strategy. Harvard Business School further notes that another key point is the “jobs to be done” theory. Identify your customers’ jobs to be done. Consumers hire a product to do a job or function.
“Consider what job customers hire your product to do. Are there other jobs they need done that you could solve by improving the product? Conducting market research with existing customers can offer insights into the variety of jobs people are hiring your product to do and highlight opportunities to innovate.”
Video courtesy of Professor Mark Wolters
