In the modern marketplace, innovation is essential for businesses and organizations to maintain a competitive advantage. In fact, 84 percent of CEOs believe that innovation is critical to growth. And yet, of those same CEOs, only 6 percent are satisfied with their innovation performance. In order to close that gap between belief and performance, leaders can design and implement a product innovation strategy that generates creativity, collaboration and shared success.
Some of the world’s most well-known, profitable companies today have gotten where they are because of regular periods of innovation. Take Apple, for example. Their release of products such as the iPod, iPhone and iPad disrupted the personal technology market in never-before-seen ways. But they haven’t just practiced disruptive innovation; Apple has also been a titan of sustaining innovation as they have regularly improved and advanced existing products.
Understanding product innovation and how to create a product innovation strategy can empower leaders of all kinds to produce positive outcomes within their teams, businesses and organizations.
What Is Product Innovation?
Product innovation refers to the process of creating something new and introducing it to the market. While the term “product” brings physical objects to mind, the process of product innovation also applies to services and processes. While the concept of product innovation typically refers to new releases, the term can also be used to describe incremental updates to existing items or services.
By nature, innovation involves change, which carries risk. From investors and employees to customers and the consumer base in general, responses to change can be varied and volatile. In order to increase the chances for buy-in that leads to successful product innovation, leaders can identify key stakeholders to bring into the product innovation strategy. Consider the various possible stakeholders in product innovation across various sectors:
- Business: investors, employees, customers, suppliers
- Education: students, teachers, parents, community leaders
- Nonprofit: beneficiaries/clients/recipients, volunteers, employees, donors, community members
Bringing key stakeholders into the product innovation strategy process can help leaders determine suitable types of innovation for their situations. Stakeholders are also essential for contributing creativity, critical thinking and new ideas to the innovation process. Leaders can demonstrate cultural awareness by identifying and inviting a diverse set of voices to participate in the innovation process.
How to Develop a Product Innovation Strategy
What do you want to contribute to the marketplace?
How is your organization uniquely suited to meet a need?
Why do customers trust your brand?
These are the types of questions that the process of determining a product innovation strategy can help leaders to answer. While there are many ways to collaborate and innovate a new product or service, most processes include a few essential tasks. By following these five steps to designing an effective product innovation strategy, leaders of all types can enhance their organizations, strengthen their teams and contribute meaningful products and services to consumers.
1. Define Your Objectives
A successful strategy depends on two ancient words: “Know thyself.” Innovation is powerful and important, but without clear goals, it isn’t guaranteed to serve the mission of your organization. Clear, measurable objectives are found at the center of all winning business strategies. In order to determine the objectives for a product innovation strategy, leaders can ask their teams and collaborators questions like:
- What do we want innovation to do for our organization?
- What would success look like?
- How can innovation serve our overall goals, mission, or company vision?
- What gap in the market, consumer desire, or social need are we aiming to address through innovation?
According to leading technological research and consulting firm Gartner, a lack of clear business objectives is one of the primary reasons that innovation programs fail. Gartner’s research shows that leaders often struggle to prioritize their team’s many ideas, are unsure how to align their innovative work with clear business outcomes and find themselves unable to maintain the excitement and momentum they felt at the beginning of an innovative project.
A servant leadership style can go a long way in helping teams define their objectives as leaders model humility and empathy in determining their objectives. Servant leadership is honest about limitations while celebrating the creativity, global perspective and experience each member brings to the team.
By defining objectives, servant leaders can help their organizations establish a blueprint that they can always return to when they aren’t sure what to prioritize. Clearly defined objectives can also help teams stay on task and maintain momentum as collaborators regularly return to their core reasons for innovation, concepts for the new product and desire to make an impact in the market.
2. Conduct Market Research
If defining your organization’s objectives is the “know thyself” component of developing a successful product innovation strategy, then conducting market research can be thought of as the phase governed by the anonymous quote “The future belongs to the curious.” Market research is the critical stage in which leaders, teams and collaborators get curious about the needs and desires of the consumers around them so that, eventually, they can pair what they know about themselves as an organization with what they’ve learned about the market in order to best create a meaningful, innovative product.
There are two types of market research: primary and secondary. Primary research refers to customer information that an organization pursues for itself, often through mechanisms such as focus groups, surveys and social media analytics. Secondary research is the vast amount of data and information that’s already available online, in databases or in reports. Budgets, desired information and timeline are all important factors for innovators to consider when determining whether to conduct primary or secondary research—or both.
In addition to shedding light on consumers, market research is also important for identifying competitors. Innovators can learn a lot from what their competitors are doing through market research, ensuring that they do not copy or tweak the approach or products of others but instead innovate something truly unique.
3. Establish Your Value Proposition
This critical step brings together the organizational knowledge of defining objectives and the consumer knowledge gained through market research. By defining a value proposition, innovators gain clarity about the ways their product or service can simultaneously meet the needs of consumers while meeting organizational goals. There are several questions that leaders and key stakeholders can ask in order to establish their value proposition, including:
- How will this innovation create a competitive advantage for our organization?
- What is the benefit of this innovation to consumers?
- How will this innovation affect current customers?
- How will this innovation reach new markets?
- What does this innovation provide that competitors do not?
While a value proposition primarily defines how an innovation will benefit customers, leaders may find that including a value proposition for employees or collaborators encourages additional buy-in and a sense of loyalty. Consider how the innovation—or the innovative process—brings value to employees, stakeholders and other internal individuals.
4. Harness Your Resources
Ethical, humble leaders are honest about the capabilities their organization does and does not have. This leadership approach shines in the resource-harnessing phase of product innovation strategy as teams consider their present capabilities and skills while acknowledging those they may need to build. Consider questions such as:
- How might this innovation conflict with our current organizational culture?
- What are the limitations of our financial position?
- What are the top skills represented on our collaborative team?
- What capabilities does this innovation require that we do not currently have?
- What would a dream team, budget and resource hub for this project look like?
- How can we do our best with what we have while reaching for more?
Self-aware, truthful responses to questions like these can help innovators leverage their existing resources and identify those they need to acquire.
5. Execute Your Innovation
With well-defined objectives, thorough market research, a clear value proposition and the necessary resources in hand, it’s time to make your innovation a reality. This phase includes establishing systems and techniques for product or service development and identifying assessment capabilities for measuring success. If the innovation requires something from customers—such as updating technology—consider the communication plan and what it will take to prepare consumers for the innovation launch.
While the execution phase may sound like the tail end of an innovation strategy, it’s important to remember that testing the innovation and assessing its success post-launch is critical to maintaining a competitive advantage as an organization that regularly practices innovation.
Create Sustainable Innovation as an Ethical Leader
The Online Ed.D. at Spalding University prepares creative innovators who lead positive change in organizations and society. Designed for working professionals, the 60-hour program can be completed in just two years. Coursework includes classes such as:
- Leading Innovative and Creative Change Across the Organization and Within the Community
- Ethical Leadership
- Global Leadership in Local and Transnational Contexts
Earning your Ed.D. in Leadership from Spalding equips you to inspire innovation in your workplace and your community. Connect with an enrollment advisor to get started.