For better or for worse, 2020 has shown us how important innovation is as a core competency. Most organizations have had to engage in some type of new product innovation—whether that be creating entirely new products or features to meet more urgent customer needs or innovating existing products to be delivered virtually.
Unfortunately, most organizations are finding they don’t have the skills, processes or even the culture to successfully innovate. Here are the top 7 mistakes my team and I see companies making:
We recently released a white paper that explores each mistake and shares how to avoid making them. You can download the full white paper here. Here is a short summary:
Mistake #1: Focusing on Processes Before People
Organizations that fail to develop successful new products typically don’t fail because their leader isn’t a visionary. It’s not that the team isn't creative or smart. It's often because, as humans, we tend to favor the routine, the known, and the comfortable. Innovation takes us outside our comfort zones into uncharted territory. It almost always requires new skills, significant behavior change, and even new organizational structures.
Unfortunately, I see many organizations underinvest in making sure they have the right behaviors and skills to support new product innovation. It starts with the leadership team modeling behaviors, such as embracing experimentation, getting comfortable with hypotheses instead of formal strategies, and encouraging diversity of thought.
For digital product innovation, the leadership team will also need to develop new skills, such as increasing their technical acumen. The organization likely needs to invest in bringing in new skills such as UI/UX design, engineering, analytics, product management, product marketing, and perhaps even a different sales approach.
Mistake #2: Starting Too Big or Too Perfect
Many organizations lose money on new product development and/or get lapped by competitors because they take too long to build and launch a product. Worse, they invest too much in a product with poor market fit. These organizations often use long waterfall development processes with “stage gates” to advance to the next level of investment. It can take many months, if not years, before they start receiving real market feedback on their ideas.
Successful product innovators adopt a more rapid, experimental approach to product development that is deliberately structured as a “build, measure, learn loop” built off of Eric Ries’s Lean Start-up principles. We:
The point is that our products do not have to be perfect to go to market. They should be good. They just don’t have to be done. We release the version that will delight customers enough to try it, then learn from what happens when they put it to work.
Mistake #3: Aligning to Favor Existing Business, Rather Than New Products
Alignment is an incredibly important component of successfully executing a product innovation strategy. A lack of alignment between shareholders on the investment required to build and launch new products is a recipe for failure. Additionally, a lack of alignment between organizational leaders on performance measures to evaluate success will doom products before they can launch.
Many new business ventures or product launches fail because organizations use the same metrics and processes to assess and manage new product launches that they use for their existing products and services. This often means new product launches get killed too early because they generate less revenue, lower profit margins, and use more resources as they go through the launch process and fail to “compete” for focus and funding with existing products and services.
Mistake #4: Developing Products that Don’t Solve an Urgent & Expensive Customer Problem
The number one mistake I see companies make is developing a new product that does not solve an urgent and expensive customer problem. Sometimes it happens when an organization falls in love with new technology and jumps to developing a product that uses the technology. Or an organization gets so focused on leveraging existing intellectual property and they forget to ask if customers really need or want it. Other times our client’s product team thinks they have identified an urgent and expensive customer problem. But it’s really only a frequently cited problem.
In all of these cases, money is wasted developing and launching new products that not enough customers will buy. Product development needs to start with uncovering the urgent and expensive problem customers can turn to us to solve. Upfront market research that captures the voice of the customers will save countless hours developing a non-viable product.
Mistake # 5: Designing and Developing in a Vacuum
Even if we take the time to conduct upfront market research to identify the urgent and expensive problems of attractive customer segments, many organizations still design and develop in isolation. Potential buyers or users don’t see the product until it is beautifully finished. When we design and develop products in a vacuum we risk missing features that the customers want and need to successfully use the product.
The most successful companies take a co-creation approach both to design and to development. Co-creation is simply involving people outside the product team in the development and ideation of a product. This includes ideating with employees outside of the core team, with customers, and with developers during the design phase.
Mistake #6: Fear of Cannibalization Hinders Sales & Marketing
Another hindrance to good product innovation is the tendency to protect what we already have. Many organizations run away from products that they fear might cannibalize revenue from existing products or services.
However, if we don't risk disrupting ourselves, someone else will. The faster pace of change, enabled by technology and the increased access to capital, have substantially increased the number of competitors most companies have, especially, digitally disruptive competitors. When we protect what we have, we run the risk of one of them making those sacred products and services obsolete.
Businesses that are willing to risk cannibalizing at least some of their existing revenue streams are more likely to survive. Many executives get caught up in the fear that more scalable (often less expensive) products will detract from, or worse destroy, their existing business. In truth, new products cannibalizing our existing businesses is the best-case scenario. Sooner or later, our revenue will erode from competitors if we aren’t willing to risk business as usual.
Mistake #7: Stopping at the MVP
“Build, measure, learn loops” are only helpful if we commit to iterating on our product based on what we have learned. This is hard for organizations who have a history of long R&D cycles or that are not used to staffing post-launch teams to learn what the market likes or dislikes so they can make the product better.
The most successful innovators form hypotheses, measure what they are learning against those hypotheses, develop new hypotheses about the next stage of growth, and reserve investment dollars and people to make the product better. A Build, Measure, Learn approach to product innovation is only valuable when we make changes based on what we learn. That means we need to accept that we will have made some mistakes, listen to customers when they point out those mistakes and fix them in our next product iteration.
The Vecteris Product Innovation Pathway
Vecteris uses a new product innovation method that is designed to help organizations avoid the top seven innovation mistakes. It accelerates product innovation efforts, brings more customer-focus and it helps organizations evolve their culture to be more innovation-friendly.
As I mentioned, you can download the full white paper here. We take a much deeper look at each of the mistakes and we also include tactics to avoid them. Or please reach out to me at email@example.com to talk through product innovation challenges you might be facing.