Thousands - if not millions - of products are brought into the world every year. These range from brand new products to improvements on existing things. Normal pizza to stuffed crust pizza? This is product innovation. Huge brick phone to sleek touchscreen? Innovation.
Product innovation has been around for centuries - since, well... the wheel, which is an innovation in itself. But in today's society, where we need to be up to date with every trend, this can make or break a business. And when a certain type of product starts to falter, companies must quickly change their game plan and come up with something else before they lose.
The process of developing new products or updating older products is called innovation and it is a must when running a business. For companies that invest timeproduct research and development, it can be very lucrative and rewarding when successful. So how do you do it? And more importantlyHow do you avoid a massive flop?We have some tips.
What is product innovation?
Product innovation refers to changes that improve design, materials, feel, looks, capacity, functionality, and overall user experience. An improvement can be tangible, like a physical product, or intangible, like software or services.
Product innovation helps companies stay relevant in their market and continue to grow and improve over time.A company's ability to innovate is considered essential for its long-term viability.
Companies need to get out of their comfort zone and get creative when designing new products.
Take Apple for example. The release of the first iPhonechanged the look and use of phones forever, thanks to its elegant touchscreen and internet connectivity. The result? The iPhone developed a cult following, dominating the market for years and skyrocketing Apple's profits. So why is product innovation important? Simply. If you want your business to stay afloat (at least), you need to build products that people want to buy.
What is the difference between product innovation and process innovation?
Product innovation is what you design and create, including the quality of the materials used. Process innovation refers to how you make, distribute, and sell it.
A practical example: Google masters both forms of innovation. The company invested millions in its Android operating system and increased device sales by investing in its website, creating effective advertising campaigns, and even partnering with other companies. The result? Android is a worthy opponent for Apple.
Why is product innovation important?
Many people think that if you already have a successful business, there is no need to innovate.But that's just not true.
- Product innovation is good for the bottom line.Companies that introduce new products make higher profits than companies that don't. Companies in the top quartile of new product launches have an average return on sales that is more than three times that of those in the bottom quartile.
- Diversification brings new opportunities.Product innovations drive expansion by opening up new market opportunities. It also helps companies diversify their business and target completely different customer groups.
- Anticipating your customers' needs drives customer loyalty.If you keep innovating, customers will never see you as irrelevant or outdated.
- Innovation helps you keep up with the market.Whether you innovate or not, other companies will. And these competitors could potentially steal your customers. Innovations help you differentiate your business and move forward.
Innovation is good business. The problem is that while most people see improvement, few can come up with ideas of their own.
This is because it is difficult to recognize the opportunity and even more difficult to develop, fund, create and commercialize this idea. Innovation also carries a significant risk:95% of all new products fail.When you consider the money that goes into development and release,it's pretty frightening.
TheGoogle GlassesDisaster is proof that product innovation, even with the largest product development team and billions of dollars behind it, is not easy. But don't let us put you off! Here are some tips to help you do that.
5 quick and easy steps to flawless product innovation
- Brainstorm ideasbased on customer and competitor research. Include a mix of data collection methods, including focus groups, surveys, and customer studies.
- develop concepts satisfy customer needs. Conduct further analysis to ensure these products fit the competitive landscape. Does the product solve a problem or simplify a process? Is it superfluous?
- Validate concepts through testing. Along the way, keep collecting feedback and be sure to hear what's working (and kill what's not).
- Use customer segmentation to assess the marketand determine which of your concepts is the most profitable.
- Refine your concept through prototyping.Develop oneMinimum Viable Product (MVP)to control costs and limit waste. And why stop there? Keep iterating until your product is the best it can be.
How to innovate: best practice
Here are some important things to keep in mind.
First and foremost – do your research
Understand what your customers want. Talk to them about how your product could be improved and what areas you can branch out into.
This way you can make products that people need and want –and not something that just sounds like a good idea. It's important not to fall into the trap of staying in your own bubble instead of asking potential customers what's important to them.
Asking for feedback is also important to avoid making big mistakes.
Crowdfunding sites are a great way to do this cheaply, but they come with many pitfalls. The people who promise your project are not always representative of your target markets. There are countless ways to collect feedback, from conducting interviews and sending out surveys to hiring a market research company. The most important thing is to put the customer at the center of what you do.
Learn to fail quickly
Product innovation involves incremental testing and refinement to find out what works and what doesn't. The goal is to make improvements in the shortest possible time with as little waste of money as possible. The faster you can do this, the faster you will learn.
With every “failure,” learn to adapt quickly to make your innovation work. Maybe you need to change the way you lead focus groups or adjust your pricing strategy based on what you learn from customer feedback.
Use MVPs as a roadmap for improvement. Set up a first product with just enough features to release to the public and test with real people. The purpose is to get it into clients' hands quickly, before they spend weeks or months reworking something nobody wants.
Stay true to your core values
Your corporate culture sets the beliefs and behaviors in your organization. These core values should guide everything you do as a company. So when you're innovating, don't get too distracted by what the competition is doing. Focus on staying true to your core values and doing what's right for your business and your customers
Don't neglect costs
The financial health of your company affects everything from employee salaries to R&D budgets. Try not to get caught up in all the bells and whistles of creating The Next Big Thing if it means neglecting the overall health of your business.
How project management software can help
Even the best product ideas can fail if you don't have an efficient process to manage and develop them. How will you assign jobs? Measure progress and success? Do you communicate between distant team members? Identify bottlenecks in the manufacturing processes?
project management softwarecan help companies innovate without breaking the bank. It provides a unified platform for team collaboration, allowing employees around the world to quickly share ideas and coordinate schedules in real time. This, in turn, makes it much easier for everyone to successfully work towards a common goal —a must in the fast-paced world of product innovation.
Product innovation is important because it can help you create new spaces in a seemingly crowded market. By identifying the gaps and imposing yourself into a new space, you can find an audience and satisfy consumer needs in a way that is new and refreshing.Why is it important to learn about innovation? ›
Innovation plays a key role in introducing novelty to existing product lines or processes, leading to increased market share, revenue, and customer satisfaction. Sometimes innovation is used to upgrade the operating systems of the business or to introduce modern technologies for automation.How do you explain product innovation? ›
A product innovation is the introduction of a good or service that is new or significantly improved with respect to its characteristics or intended uses.What is product innovation quizlet? ›
Improvements and revisions to existing products.What is product innovation and examples? ›
Product or service innovation: This focuses on creating a new product, service, or product feature. Examples range from the internet to the pivoting head of Gillette razor blades. Process innovation: This refers to changes made to make a process more efficient.What is the most important factor in product innovation? ›
The 8 key factors involved in new product development are Knowledge Management, Market Orientation, New Product Development Process, New Product Development Speed, New Product Development Strategies, New Product Development Teams, Technology and Top Management Support.What are three reasons why innovation is important? ›
- Competitive advantage.
- Maximize ROI.
- Increased productivity.
- Positive impact on company culture.
Simply put, innovation is about successfully implementing a new idea and creating value for your customers and stakeholders. Innovation starts with a new idea. It could be a plan for an improved product or service; it could be an updated method for running your operations; it could also be a new business model.What is the best definition of innovation? ›
: a new idea, method, or device : novelty. : the introduction of something new.What makes a good product innovation? ›
A product or an idea becomes innovative when it stands out from the rest and truly makes the customers' lives easier. A successful change that can convert knowledge and ideas into benefit – in the form of new or improved products / services is capable of being innovative.
New innovative products can introduce new technologies or a new way to do something. For example, when the gas and electric-powered lawn mower came out, it made mowing lawns a little less manual. With the introduction of engine-powered mowers, people now had another option when it came to cutting their lawns.What is the impact of product innovation? ›
The use of these technologies results not only in increased quality, but also in more satisfied customers. These changes lead to more efficient operations, and in turn increase the profits of the companies. Thus, this study argues that product innovation has a positive effect on organizational performance.What are the types of product innovation? ›
There are three types of product innovation: new product innovation, incremental changes of existing products, and new product features.What are the two types of product innovation? ›
Thus product innovation can be divided into two categories of innovation: radical innovation which aims at developing a new product, and incremental innovation which aims at improving existing products.How do you create a product innovation? ›
Develop new products that answer the needs of their consumers or create new demand for them. Continuously improve on their core products and make incremental innovation their second nature. Redefine the competition by taking existing products to new channels or markets.What are the 4 types of innovation with examples? ›
- Radical innovation. As the name suggests, a radical innovation really changes the circumstances of a brand, whether in terms of market or of business dynamics. ...
- Incremental innovation. ...
- Disruptive innovation. ...
- Technological innovation.
Product innovation can result in a decrease in production cost and time and the improvement of certain processes or the elimination of certain barriers from the production process or consumption.What is the most important step in innovation? ›
An important part is establishing the specifications of any given idea. Commercialization is the stage that involves the change of focus developments to persuasion. After the idea is clarified and a business plan is developed, it will be ready for diffusion and implementation.What are the most important skills required for innovation? ›
creativity, critical thinking, and complex problem solving. All three of these skills are essential to developing and bringing to life a new innovation that solves a real problem and provides meaningful value.What is the most important innovation of all time? ›
|1||Printing Press||allowed literacy to greatly expand|
|2||Electric Light||powered countless social changes|
|3||Automobile||increased personal mobility and freedom|
|4||Telephone||spread communication across wide areas|
The ultimate goal of business innovation is to increase revenue, no matter what's happening in the market. Innovation is not about making small changes or simply using new technology just because it's available; it's a change in a company's core business that sustains its growth and revenue.Why is innovation important for business success? ›
Innovation helps you stay ahead of the competition.
Innovative thinking can help you predict the market and keep up with customer needs. If your business doesn't innovate, you'll watch innovative companies bring new ideas to the marketplace, and you'll have to scramble to keep up.
The innovations include technological inventions such as wind turbines, photovoltaic cells, concentrated solar power, geothermal energy, ocean wave power and many other emerging innovations.What is innovation in one sentence? ›
Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services.What is one example of an innovation? ›
Examples of product innovations:
Lego has been changing the materials of its famous bricks to biodegradable oil-based plastics. The first electric vehicles introduced in the car's market were also an innovation, and new batteries with longer ranges that keep coming out are also an example of innovation.
- Sustaining, or incremental innovation.
- Breakthrough innovation.
- Disruptive innovation.
- Basic research.
- Invent: Creating something purely new.
- Iterate: Improving upon your invention for better usage.
- Interrupt (Disrupt): Doing things in a new way so much as to make the old things obsolete.
Earning higher revenue: Increasing a company's sales and profits. Inspiring future creativity: Encouraging new ideas from employees and competitors to continue innovating. Reducing costs: Saving money spent on product manufacturing or other businesses related expenses through process improvement.Can you give me an example of product? ›
A computer would be an excellent example of a business product. With remote work, a computer became necessary for every company.What is the importance of technology in product innovation? ›
Technological innovation strives to improve an existing product, i.e., provide a new product or process with new technological features to set it apart from the competition. When the new updates are introduced to the market, they are regarded as innovations, benefiting the broader public and the company.
Innovation process: The product development process can be broadly navigated in three stages: Ideation, Feasibility, and Capability.What are the 4 P's of innovation? ›
When it comes to implementing innovation, what is the starting place and how can you identify areas in need of an innovative approach? Take a business leader approach and start with the four “Ps” of innovation—paradigm, process, position and product.What are 3 benefits of innovation? ›
- improved productivity.
- reduced costs.
- increased competitiveness.
- improved brand recognition and value.
- new partnerships and relationships.
- increased turnover and improved profitability.
Essentially, there are three types of innovation: radical, incremental, and disruptive.What is product innovation in business? ›
Product innovation is the process of creating a new product—or improving an existing one—to meet customers' needs in a novel way. There are three key types of innovation: Sustaining innovation, in which a business consistently provides the highest quality products to its best customers.What is the main point of innovation? ›
The purpose of innovation is to create business value. Value can be defined in many ways, such as incremental improvements to existing products, the creation of entirely new products and services, or reducing cost.What is innovation best answer? ›
Innovation can be a new idea, product or method that is translated into a good or service that creates value or for which customers are willing to pay. The essence of innovation is improvement – the ability to create something better and launch it to the world.How does innovation improve productivity? ›
The more innovative a company is, the more it can drive productivity. In turn, this increased productivity allows the workforce to be more creative and innovative. On and on the cycle goes as the company grows. Innovation is crucial for SMEs who need to do more with less.What are the 3 keys of innovation strategy? ›
Key Take Aways
- Innovation is work. ...
- Successful innovators play to their strengths. ...
- Successful innovations have an impact.
There are six stages in the process of innovation: generating ideas, capturing ideas, beginning innovation, developing a business-effectiveness strategy, applying business improvement, and decline.