Product Innovation: Importance in Product Management (2021)

Introduction

According to Business Dictionary, Product Innovation is defined as “the development and market introduction of a new, redesigned, or substantially improved good or service”. So as you see it, it’s not entirely about a new product, it also about bringing in innovation in your existing product. In both cases, you are trying to capture a yet untapped area of the market or provide additional features that your original product did not offer.

Humans have evolved over the centuries and so has the need to innovate and the pace at which innovation is taking place. Innovation has taken place in every sphere of human life. There is no area of human existence that has not been innovated. There is no doubt the advancements that the human race has made, is a result of all the product innovation.

There are 2 major contributors to innovation. The first is the perpetual hunger of the human race for more. More comfort, more earnings, more control, and so on. The second and most important ingredient is creativity. No product innovation can be worth it’s salt without creativity. Creative thinking is the root of all the great innovations that have changed the course of the human race over the centuries. Innovation has catapulted whole countries to a developed nation with much greater standards of living than others. Alright, that is enough about innovation and the human race.  Let’s get deeper into product innovation.

1. Product Innovation
2. Process to achieve Product Innovation
3. Advantages and Disadvantage of Product innovation
4. Stages of Product Innovation

1. Product Innovation

A product can be a final product or the process that goes into delivering the final product, be it goods or service.

As the definition goes product innovation can be seen as 

a ) New Product innovation. Also called Radical Innovation in the formal world

b) Existing Product innovation, also coined as Incremental Innovation- the addition or removal of features in a product that makes it more attractive to customers or consumers.

Both have been studied and researched well with theories and standard procedures that have been defined to get the final product, either a new product or an innovation in an existing product. We will talk about the processes later, for now, let’s look at what drives these innovations.

A scientific temperament

As humans have been evolving, with increasing levels of education and better higher education, the average scientific temperament of humans has grown leaps and bounds, especially so in recent history. With scientific temperament comes the thought of challenging the status quo. To not accept something as it is for a long time, analyze, get ideas, and change it for the better. Many corporates are driving this thinking in their workforce, which they hope will drive process improvement of better products, increasing the overall health of the organization. With every new generation, there will be more and more innovators who will bring about even more innovation in the years to come.

Consumer driven market

Today’s consumer is an unsatisfied lot unlike yesteryear’s when consumers of a product remained loyal and emotionally attached to a product.  It’s a world of optics now more than ever. The new consumer with more spending power is ready to discard a fairly new product in favor of one that is brand new in the market. The flashier the better, and thus the mad race begins. The pace at which mobile phone companies are dishing out new models is maddening.  

This consumer behavior of wanting new products or products with new features drives product innovation at organizations in the business of consumer electronics, be it mobile devices or display units like LEDs. The businesses have to continually innovate in order to keep their position in the market.

Increasingly social consumer and markets

With the proliferation of social media, any product cannot afford to depend on a single product to stay and do well in a market. Social media has introduced new avenues for marketing new products and services, unlike the past when the average consumer wasn’t exposed to so much content. With a slew of ways to seek the attention of a consumer, it is very difficult to hold on to your customer, unless you innovate, and offer new appealing features and services.

2. Process to achieve Product Innovation

Various theories exist that explain product innovation, what drives it and how is it achieved. A couple of them are Outcome-Drive Innovation and Jobs-to-be-Done(JTBD).

JTBD is used extensively as part of a methodical approach to product innovation. It is a theory of consumer action or rather based on consumer action, describing mechanisms that prod a consumer to adopt a new product or service. Although this article is not about this theory, it deserves a little more to be mentioned before we proceed.

The theory states that markets grow, change, evolve whenever consumers have a Job To Be Done, and then buy a product to complete it. As an example, let’s take the case of smartphones. With social media, almost everybody wants to upload a good snap or pic as they call it in social media lingo, for which they need a better camera, which translates to a smartphone with a great camera, and thus the need is generated and finally, the consumer is netted.

While Product innovation is a subject most discussed in the meeting rooms or slack channels of Research and Development departments, it is something that can be driven at every level and in each vertical within the organization. Here are a few documented ways to achieve innovation in a holistic manner.

Start at the bottom of the pyramid, use a multi-faceted approach.

Now, what does this mean? It merely encourages organizations to start a wave of innovation across the entire org, not just at the top level. Forbes suggests starting with the ‘4Ps’ namely Profit models, processes, products, and policies. Basically breaking down innovation into these individual challenges allowing the organization to be more agile.

Empowerment of Employees

Building a culture where every employee realizes some level of acceptable autonomy to think independently and figure out new ways to solve problems. It all comes down to teamwork, not individual stars and leaders pulling all along, it will never go far.

Choosing the approach to Innovation Metrics Wisely

Isolate what is a game-changer for your organization and build your approach to innovation metrics from there.

Encourage action on innovative ideas

Ensure that there is a process of selection to pick up the few best ideas and take action on them and maintain visibility on the progress of these ideas to materialization.

Culture of Continuous improvement

Make sufficient investments in teams that look after innovation in every process and drive ideation and innovation in every group in the organization. Constituting a team that is tasked with this responsibility and then monitor the performance of this team for the conversion of ideas to innovation is a good way to drive innovation in any organization.

3. Advantages and Disadvantage of Product innovation

Lets talk about advantages , some are obvious.

• Expansion, growth, and a competitive edge.
• Brand switching or increase in market share.

If your product innovation makes your product or service stand out and is attractively presented to the consumer, your market share is bound it increase and in the end, you get to have the bigger piece of the pie.

Some disadvantages of product innovation are

• High costs and high risk of failure
• Counter effect of product innovation

Some product innovations are just added features on the same product which in the long run isn’t significant. So unless the organization innovates with a new product, it is bound to be driven away from the market.

4. Stages of Product Innovation

Market Research

Businesses can either choose to conduct their own market research called Primary Market Research which is more specific to the capabilities and requirements of the business conducting it giving it clearer insights into key differentiators in the market that the new product can feature. Businesses can choose to do a Secondary Market Research, which is based on data openly available about the market and the current gaps. This isn’t as pointed as the former one but, it is a cost-effective option.

Product Development and Testing

This stage is also known as prototyping. A prototype is kind of a test of the product in simulated market conditions or made available to a select group of individuals giving the business more insight into the functioning of the product.

Feasibility Study

Finally, the business would want to look at legal, financial aspects of the product entry into the market, creating sales forecasts, price optimization basis the cost of production and profitability estimates. Other important aspects looked at are Safety and Intellectual Property Rights.

Conclusion

To begin innovating get your Product Innovation Charter ready

Now, what are a product innovation charter and its importance? The Product Innovation Charter or PIC is a written document from the senior management of the company to chart the company’s new product strategy and to guide the team in the right direction. It is created so that product teams are clear on the expectations of the final product and work towards getting there while being on the same page. It is a comprehensive and detailed document providing direction and focus to teams expected to design, develop, and deploy the new product.

Interested to learn all about Product Management from the best minds in the industry? Check out our Product Management Certification. This 6-month-long program takes place online through live instructor-led sessions. It is the only program in India that offers the ‘Bring Your Own Product (BYOP)’ feature so that learners can build their product idea into a full-blown product, and go through an entire Product Development lifecycle. Not only this, but this is the only program in India with a curriculum that conforms to the 5i Framework. Post completion, learners receive a joint certification from the Indian Institute of Management, Indore, and Jigsaw Academy. 

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