Beneficial Innovation Strategies

In my recent article → Winning in a Down Economy or Building Businesses in Turbulent Times, I have recommended an innovation study made by the Boston Consulting Group.

In this article I was mainly interested in their view on innovation strategies to counter fight the current economic crisis.

Innovation strategies

However, this study comes with further interesting insights into the innovation strategies of top performing businesses. Among them, I want to focus now on the following findings:

• Theme 1: Innovative companies are superior investments, and investments into innovation pay back multiple times
• Theme 2: Experiences show, that most companies have very many great ideas. What is mostly missing is the ability to turn these ideas into entrepreneurial success. Top innovators master both, creativity, and execution.

PM Contribution

Here some ideas of how Product Management will contribute in these times to both, innovation, and the ability to turn innovation into economic success.

New ideas are rarely in short supply. In fact, as we see every day in our innovation practice and our work with companies, most organizations have an abundance of good and even great ideas. But generating ideas and being able to turn those ideas into cash are two entirely different things. The world’s top innovators have mastered both and do not get distracted by the mantra often heard in the press and from pundits that the problem is a need for “breakthrough ideas.” That simply is not true, as this year’s survey again proves. – Boston Consulting Group

Product Management helps you understand your market and your customers

Wir leben in einer Zeit vollkommener Mittel und verworrener Ziele (We are living in times of perfect tools, but irritating goals) – Albert Einstein

In particular in this down economy it is more than ever important, to understand your company, the markets, and your customers.

As many things may have changed, it is essential to revisit and recheck your existing understanding in these areas. Here some ideas for questions to ask/ fields to revisit:

• Which are the current customer pain points?
• How do customers take their purchasing decisions now?
• On which investment plans and topics focus the customers?
• Do we still target the right customer segments, or did our competive advantage change?
• Are our products still relevant to customers, as they still solve existing customer pain points?
• Do we still have the ability to execute, as our cash flow stream is still healthy, and our company employs the currently needed business models?

The deep market intimacy Product Managements gains here will later on help you to create a roadmap which puts forward ideas that have a good chance to be successful.

Product Management helps you identify the right priorities and focus

Zwei Dinge sind zu unserer Arbeit nötig: Unermüdliche Ausdauer und die Bereitschaft, etwas, in das man viel Zeit und Arbeit gesteckt hat, wieder wegzuwerfen (We need the following for our work: Never-ending endurance and the willingness to cast things away, although we have invested a lot of time and effort into them)– Albert Einstein

The current crisis is nothing more than a disruption to many existing business models, because the purchasing power slumped globally, and many priorities have changed. This means that many customers have changed their priorities, when looking into your innovations.

Just as an example, think about a technology company, which employed a premium product strategy in the past. The current crisis has widely absorbed the funds of their (potential) customers, and made them cautious. These customers might not any longer be in the position or willing to continue to buy premium products. Instead they might be interested in good-enough solutions, and new purchase models. This disruption is not easy to manage, as Clayton Christensen taught us with his → innovator’s dilemma.

Business Opportunities

Product Management methods identify and shape your future business opportunities, as this function is in the unique position to combine the market view with the technology/product view. This unique capability is essential, when looking for a new orientation for your solution portfolio.

First of all these methods help you understand, where the new opportunities are, and then they help you to identify the most relevant areas to go for, from the customer perspective (remember the market sensing in the previous phase?).

Here some questions, which help you, identify the future focus of your products, and which help you clarify the new priorities:

• Which (new) market problems lead to which demand, and why?
• Do customers use new or changed buying criteria?
• Do the service related requirements change, and why?
• Is there any significant change in our win-loss statistics, and why?
• How can your innovation help our customers to succeed in the current economic climate?
• Not all customers might currently understand the changes that took place: What is, what your customers really need, but cannot express yet?

Product Management helps you turn ideas into competitive advantage

In these times, more than ever, value is, what counts. Most companies are cautious and they are hesitant to invest into long-term projects. Every day it is more complicated to lend money, so that many companies take a very careful view to their cash position.

Instead they look for incremental improvements, investments that pay back in a very short time, and they prefer solutions and business models, which do not consume too much of their valuable cash.

Innovative companies really understand their buyer’s needs, because they have worked on their distinctive competence. They and their innovations fall into the following categories:

• They address an important and relevant market problem
• They offer measurable, and realistic value to their core customers
• They employ proven and available resources and capabilities
• They only invest into areas, where they have a competitive advantage
• Their investment achieves a positive return in a short timeframe

Once Product Management knows your focus, priorities, strength and weaknesses, it helps you create products with distinctive features that really matter.

Product Management helps you execute on your vision

In a depressed economy, customers tend to be more sophisticated than in bullish times. In these times, execution on your vision at foremost requires that it is easy to do business with your company.

It furthermore must be fun for customers, to consume your products. Especially in economically depressed times, not only customer problems and superior products are important, but the complete customer experience around these products moves into the center of gravity.

In the go-to market phase, Product Management in particular needs to work on service-oriented breakthroughs. These breakthroughs need to be designed in a way, that they make it easy for customers to buy and to use the products, and to receive the support, they need. Here some ideas of how you find service-oriented offers, which complement your innovation to a completely positive customer experience:

• Eliminate offerings, and options, which just make sense to you, but not to your customers, and which interupt the sales cycle.
• Offer supporting content that makes it easy for potential customers to analyze your products and identify those particular features that make sense to their needs.
• Divide the complete product into several pieces, which can be consumed independently. This gives potential customers the possibility to divide the purchasing process into several phases, and to generate the cash for the next purchase from the benefits of the former purchase.
• Offer possibilities to your customers to defer payments, so that even cost driven purchases are possible for them. As the economic stress increases in times like ours, it is nevertheless important to have an eye on the risk that your customers are not any longer in the position to pay (this again makes a split product interesting)
• Work on the reliability of your company, and your offerings, as customer relationships increasingly evolve into trusted relationships
• Offer support and services that simplifies the purchasing process, and the product consumption.

Once methods from product management helped you improve the total customer experience you can now turn into to your network.

Networks win over Lonely Stars

Um ein tadelloses Mitglied einer Schafherde sein zu können, muß man vor allem ein Schaf sein (To be a flawless member of a flock of sheep, you need at foremost to be a sheep) – Albert Einstein

A superior product, and the focus on the complete customer experience, requires you to be best in class in several areas. On the other hand, each business needs to somehow concentrate on its core competencies. That is the basic reason for the growing importance of networks and alliances – internally and externally.

First of all you need to evolve your internal network, and need to understand that all of your stakeholders are an important part of it. It makes sense to open your processes to all your experts, and to invite them to participate. More than ever, it is important to be realistic in your communication about the current situation, the future innovation strategies, and the status.

The external network is not less important. Open the doors as far as possible and invite external experts from customers and the entire community to participate in your innovation processes. Here the use of the potential of the Web 2.0 and social media is a first step to get your complete messages across.

Roadmap to the Future

In the current climate it is more essential than ever that you organize your innovation around things that matter, and that add value to customers. Your Product Management helps you collapse all the customer intimacy; innovation, ideas, analysis and valuation into a roadmap that helps you align your organization to the future.

The most important questions for each item on this roadmap are as follows:

• Does the innovation align with our strategy?
• Is this innovation what our customers want to buy?
• Can we implement the innovation most effectively and profitably, and how do we do that?

Weiterführende Informationen

Das Original dieses Artikels ist auf →Der Produktmanager erschienen (©Andreas Rudolph). Regelmäßige Artikel gibt es über die (→Mailingliste), oder indem Sie →mir auf Twitter folgen. In der Online Version finden Sie hier die versprochenen weiterführenden Links:

This entry was posted on Freitag, Mai 1st, 2009 at 3:36 pm. It is filed under Thema des Tages, Wirtschaft and tagged with Corporate Strategy, English Content, Management, PM Strategie, Stabilisierung. You can follow any responses to this entry through the RSS 2.0 feed.