Three Steps to Improve Innovation Success Rate

SCQA
Product flops are painful…and too common. New product
success rates range from  10% to 50% depending on the
market segment. The question of how you measure success
is a topic for later. In a broad sense, business success
amounts to a correspondence between prediction and
reality.
As a development team, we set out to build a superior
product. We are creative and keen to design features we
believe are likely to deliver customer benefits. However,
profits are hit-or-miss. The failure of products in the
marketplace results in needless dissipation of human
effort and corporate finances.
The fundamental need is one for greater efficiency.
Widget makers focus on manufacturing productivity,
farmers on  crop yield. Likewise, innovation-driven
companies need a focus on improving their batting average
with product development.
Development cost, time to market, and the evolution of
revenue and profitability over time have to be
predictable. To succeed at innovation, companies must
ensure that the ideas they choose to implement will
actually end up creating value in practice.
Giving this problem further attention, could help move
the needle in a meaningful way for an innovation economy.
So the question is, what are the critical success factors
for the practice of innovation?
There are many elements to this, of course, covering each
of the linked steps in the innovation process. But, the
greatest inconsistency in results still seems to come
from inadequate pre-development activity. The initial
steps can determine the course of a project.
From the reading so far, the things that ring true for me
can be captured in three factors.
Be thorough in understanding real user needs. Break down
user activity into stages so that you can look at ways to
improve efficiency in each stage. Speak with users in
their work environment. Grasping the user’s yardstick of
value is key. Matching product features to areas of
strongest unmet needs gives greatest value creation. Our
tendency is to shape a product around our own initial
presumptions of user needs. Get good information first,
then develop ideas.
Take the time to create a detailed functional description
of the product. This allows you to think through the
different aspects of a product before investing any
development dollars. Discuss this with customers as a
validation and use the functional specification as a
basis for building technical specifications. It helps
reduce project delays and frustration caused by feature
creep.
Build over time a trustworthy system for value estimation
of a product concept. Forecasting may be inexact but is
necessary for investment decisions. Calibrate your
financial model against appropriate benchmarks like the
history of a similar product in your company. NPV
calculation and the Bass Diffusion model are two useful
things to have in your toolkit.
That’s it for now. I hope to develop these three points
in more detail and post some usable tools, spreadsheets
etc.

Product flops are painful…and too common. New product success rates range from 10% to 50% depending on the market segment. As a development team, we set out to build a superior product. We are creative and keen to design features we believe are likely to deliver customer benefits. However, profits are hit-or-miss.

Improving innovation efficiency can pay big dividends. To succeed at innovation, companies must ensure that the ideas they choose to implement will actually end up creating value in practice.

The initial steps often set the course for a project. A solid front-end process is a critical success factor.

1) Be thorough in understanding real user needs. Break down user activity into stages so that you can look at ways to improve efficiency in each stage. Speak with users in their work environment. Grasping the user’s yardstick of value is key. Matching product features to areas of strongest unmet needs gives greatest value creation. Our tendency is to shape a product around our own initial presumptions of user needs. Get good information first, then develop ideas.

2) Take the time to create a detailed functional description of the product. This allows you to think through the different aspects of a product before investing any development dollars. Discuss this with customers as a validation and use the functional specification as a basis for building technical specifications. Build software wireframes and 3D renderings for hardware if possible. This helps reduce project delays and frustration caused by feature creep.

3) Build over time a trustworthy system for value estimation of a product concept. Forecasting may be inexact but is necessary for investment decisions. Calibrate your financial model against appropriate benchmarks like the history of a similar product in your company. NPV calculation and the Bass Diffusion model are two useful things to have in your toolkit.

Here are links to 3 articles that I found useful.

Turn Customer Input into Innovation (PDF) : The ideas here are proven and make a solid case for taking a detailed approach.

Bass Diffusion Model (Wikipedia): Reputed to be the most popular model in the field of marketing. Lots of paper on this topic if you search Google Scholar.

Success Factors in Product Innovation (PDF) : Another great article to tap into the wisdom of an experienced practitioner and researcher.

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