By ADRIENNE TAN
Innovation is one of those buzzy words. CEOs want it, strategists write about it, marketers talk about it, and product managers strive to deliver it. Yet despite all this attention, it is still uncommon to see organisations building innovation into their mode of operation.
Organisations that do consider innovation tend to focus on new technological gambles that are dubbed to be ‘innovative’ but fail to deliver a commercial return.
What they don’t realise is that at the heart of any effective innovation program, you’ll find good product management in practice. In fact, the essential purpose of product management is to execute the principles of innovation.
When faced with challenges, we conceive new solutions to try to solve our problems. These new solutions can change the way we live our lives.
That change is essential to innovation. In fact, the word innovate is derived from the Latin “innovatus”, which means “to renew or change”.
The problem is that organisations often think that innovation is the process of working on new technologies – with AI being the current new technology of choice. But true innovation is not about new technology – it’s about making changes and finding new ways to deliver value to customers.
Innovation exists when a problem is solved in a new way that is significantly better than the previous solution (with better meaning either faster, cheaper, easier, more reliable etc), or a currently unsolved problem is solved and thus changing the way things are done.
Importantly, good innovation is NOT merely incremental improvements or feature enhancements that are devised to counter a capability from a competitor or to address a problem impacting performance, because these measures do not lead to significant leaps in product value.
Every product has a lifecycle.
Products logically step through a gestation or development period within the organisation and an introduction period in the marketplace, and then consequently move from growth to maturity and eventually decline.
Companies that innovate can essentially extend the lifecycle of a product. A better version of the product can mean that the product’s lifecycle can return from maturity back to a growth stage or from decline to maturity.
Companies that fail to maintain the pace of innovation may see their products – and their reason for being in business – become irrelevant.
Innovation will also put a company on the offensive, as it is through innovation that it can create a change in value for the market and thereby surpass competitive threats.
But to reap the rewards of innovation, the process must not be used as a laboratory for testing and launching new ideas with the hope that one of the new ideas generated takes flight in the marketplace. This approach is a costly exercise and can be likened to ‘gambling’. For innovation to succeed, there must be a method for identifying lucrative opportunities and a process for execution.
The products that product managers launch and support in the marketplace exist in a dynamic and competitive environment. For a product to be successful, it must deliver value to its users, and it must do so in a way that is different from the competitive alternatives.
A product delivers value to users when it addresses a need, solves a problem or meets an end goal. Further, the product must be delivered at a price point that leaves buyers feeling that they have received a fair exchange for their money.
For a product to remain successful over time, it must continuously deliver more value than the competition. This may be difficult to achieve as new competitors enter the market, giving buyers more choices and prices. Profits, therefore, tend to be driven downwards.
To combat this effect, product managers must constantly look for a competitive edge that enables their product to continue to contribute positively to the profitability of the organisation.
If the goal of strategic product management is to create value and generate profit for organisations through change, then we can argue that the goal of product management is very much aligned with the goal of innovation.
Organisations can find it difficult to innovate when their product management teams are focused on the minutia of ‘day-to-day’ – leading them to fail to prioritise activities that deliver new solutions to the market.
Organisations with poor product management practices have misguided expectations. They expect their product managers to perform strategic tasks but tend to load them largely with operational and maintenance activities. They see product management as a support function to sales, marketing and engineering.
Product managers that are operationally focused are not given the time to rise above the detailed everyday product issues to understand and discover customer needs and problems. They do not have the opportunity to engage in conversations, ask questions, or observe their customers.
In this case, product managers will not have the capacity to derive innovative solutions for the organisation.
This is a consistent product management problem across many industries. To facilitate and deliver on innovation, organisations should look to deploy good product management practices.
Ideas can come emerge from anywhere within an organisation: from customer visits, contextual enquiry, quantitative market research, market observations or from customer complaints.
Importantly, these ideas need to be collated and channelled through a review process to determine ideas that have merit.
A point of failure in innovation is the ability to distinguish good ideas from a large pool of ideas. These ideas should be fed into a product management framework to manage, distil and eventually execute the right ideas, turning them into profitable products.
There are three stages in the product development process in which product managers can quickly drive innovation before their organisation typically starts committing money and resources to develop the product further. In the Brainmates Product Development Framework, these stages are called Ideate, Explore and Focus. To capture the importance of innovation, these three stages are all part of an Innovate Phase.
In the Ideate stage, product managers should make sure they understand the value of the idea to customers and to their organisation. This involves putting together a hypothesis around who is the customer, what problem the idea would solve for them, and the benefits to the customer and to the organisation. This level of understanding of each of the ideas in the “ideas pool” helps the product manager to drive decisions about which ideas look most promising to take further.
Once a promising idea has been identified, the next stage of the product development process – the Explore stage – is to validate the idea hypothesis from a market perspective: What is the target market of that hypothesised customer? Do they actually have the hypothesised problem, and is the problem impactful enough to them that they would pay to have the problem solved?
The idea also needs to be validated from an organisational perspective: are we confident that the idea would generate financial benefit for our organisation, and do we think we have the capability to develop the idea at an acceptable cost and time. This Focus stage involves doing some initial financial modelling of the idea and putting together the commercial case behind the idea, often in the form of a Product Opportunity Assessment.
By the end of the Innovate phase, the product manager should have confidence in whether this idea is worth pursuing, from both a customer and organisational perspective. The product manager has the information they need to make the case – for agreement to go forward to develop a compelling solution for the idea.
Good product management is all about innovation, as it is a practice that looks to the market and users for problems that are worth solving – problems that, when solved, will deliver value to the user and rewards for the business.
To be successful in achieving these goals, product management requires hard work, time, and a robust repeatable process. If product management is effectively resourced and is outwardly focused on understanding users and buyers in the marketplace, it can be the engine room for innovation in any company.
However, if product management is forced to manage day-to-day operational activities, it will not have the opportunity to innovate.
Organisations that seek to deliver innovation to the market should resource their product management teams to enable them to focus on new market opportunities and disruptive market change.