Innovation is the lifeblood of many companies and market leaders in particular. For many of these companies, a meaningful and sustainable competitive advantage is not driven by a first mover advantage or pricing advantage. It is driven by the ability of these companies to delight and surprise consumers with new and/or superior performing products which improve the quality of their lives by resolving important issues and satisfying unmet needs. But, if it is so easy to define what a product innovation strategy is, why are there so many companies, including Top Fortune 50 companies and market leaders, stumbling in driving innovation and falling short in delivering on their innovation goals?
Our approach to Product Innovation Strategy is anchored in the business strategy itself. As a strategy firm, we believe that a good growth strategy and a good understanding of how to increase profitability and grow market share; for instance, are critical to drive a robust innovation strategy. The most transparent benefits are in guiding the decisions of senior management in regard to allocating the right and needed resources to innovation and, more importantly, engaging the product and technology development leadership in a better understanding of what product or service is needed and why.
Our analysis of what’s working and what’s not working in driving a good and productive Product Innovation Strategy and maximizing innovation efforts identified the following pitfalls:
- Wrong balance of innovation mix. A typical innovation strategy would consist of a mix of sustaining innovation, disruptive innovation, and commercial innovation with each one contributing a certain percentage to growth objectives and utilizing a proportionate percentage of resources. A typical mix would be 65%, 20% and 15%, respectively. This mix; however, could vary by business category, growth needs, competitive challenges, geographies, and other factors. Sustaining innovation normally gets the lion share of budget, resources, and focus because it is mostly related to supporting the existing business. This is where things risk getting out of control. Driven by the need to provide “market news,” the innovation process gets hijacked by short-term and less meaningful deliverables which; at best, are incremental. However, this is enough to use up available resources and distract them from working on what really matters. Spending time working on small modifications will not leave enough time to work on the big new stuff.
- A lack of a deep understanding of the target consumer. This is the selected consumer with whom the brand’s Points of Difference and product benefits resonate best and mean the most. This is because consumer needs are more segmented than ever, making a “mass” approach to marketing increasingly less effective. A good understanding of various consumer segments, consumer and customer insights, is essential in creating successful products, strong brands, and a strong business.
- A lack of discipline in driving an inherently chaotic process. This is because the approach to product innovation should be open to creativity away from organizational roadblocks which risk limitations on learning and experimentation. After all it is counterproductive to waste money, time, and scientific talent to come up with minor improvement – a tweaked formula, a freshened fragrance, or a marginally improved product which falls short of being a game changer.
To address and pre-empt these potential issues, our approach to drive a Product Innovation Strategy that delivers on objectives, we begin every engagement with three key steps:
“The Valen Group did an outstanding job defining the strategy to deliver short-term and long-term growth. The work that the Valen group led to extend the STA-BIL brand beyond fuel additives is culminating into breakthrough concepts and products which will lead the brand’s entry into new market categories with a competitive edge relative to very well entrenched iconic national brands” | STA-BIL Brand Team, Gold Eagle
- A thorough understanding of the company’s vision, the growth goals, the business strategy, and the business issues at hand.
- An assessment of the organization, innovation process, and innovation environment. We utilize some of the best creativity and problem solving applied theory to explore not just individual abilities, but also elements of the company culture, decision making methods, and tools/processes to identify ways to improve the innovation outcomes.
- Establishing innovation metrics to determine if the innovation process is truly effective. This helps in setting clear expectations, managing effectively the “what” not the “how,” and efficiently reporting progress to stakeholders.
Once we are actively partnering with our clients, we help develop the Product Innovation Strategy by building the following elements:
- Innovation principles. They provide a framework and a discipline for what is in and what is out, including success metrics that are critical to secure organization alignment and assessing progress towards delivering against objectives.
- Strategic targeting through consumer segmentation. A clear definition of the target “WHO” consumer leads to more accurate choices and a more actionable translation of these choices to guide an innovation strategy that is in line with the business strategy and actionable.
- Benefit domains. We operate against a principle of domain driven innovation based on segmentation differentiating benefits. In contrast with single product concepts, benefit domains have legs. They drive a robust and sustainable pipeline of ideas and technologies to deliver against each of the chosen benefit areas. We leverage benefit domain based innovation by turning it into a 3 to 5-year innovation roadmap.
- Innovation Pacing. This is intended to maximize the impact of each initiative and create synergy across initiatives, turning the pipeline into streams of initiatives that are well coordinated and well leveraged.
Another area where we drive focus and preservation of resources is by forcing, early on, an alignment to what the Product Innovation Strategy will not do. This is equally important to what is agreed to do. Our observations confirm that in a large organization where various functions within multifunctional teams may have different agendas, an early alignment and agreement to what the organization will not engage in doing is crucial. Changing that alignment because of an updated business strategy, changing business environment, or changing competitive pressure is perfectly fine and doable when implemented through a change management process.
Since 2000, the Valen Group has worked in growth and innovation strategies serving clients who are leaders in innovation. That experience and sole focus shape our philosophy and comprehensive view in what organizational factors are important in innovation. We have assembled and use a set of proven best practices that meld the best from entrepreneurs, practice, and academia from the fields of creativity, problem solving, market research, consumer and customer insights, and product development. We have experience in developing the next new product or service to fill a growth pipeline need or engaging in transformational innovation developing new business models or new ventures for step-change growth.
About our Product Innovation Strategy. We work with you and your team to
design, develop and execute a growth-focused product innovation strategy that
meets your needs and address your challenges.