Mastering the Art of Product Innovation with Minimal Risks
The New York Times’ Nick Bilton recently published his 1000th blog post on the New York Times Bits blog, where he has covered new and emerging technology since 2009. The note he took in ringing in his 1000th post? That technology changes very, very rapidly, and this rate of change has a profound effect on companies, for better or in many cases for worse.
The rise and rapid fall of companies like BlackBerry and Nokia (Nokia was the world’s leading phone maker in 2009 for the 13th year running) is likely to be a harbinger of things to come for companies in industries throughout the business world. Organizations that fail to innovate or adapt to changing consumer appetites will perish, and quickly. Modern enterprises can no longer be satisfied to live in the here and now. They must envision the future that awaits their consumer and explore their own place in that world.
The relentless pursuit of product innovation – be it via exploring new technologies, revamping existing products, or entering entirely new markets – should be top-of-mind for any C-level executives today. But how can companies master the art of product innovation while keeping financial risk at acceptable levels? This is the question that we will explore in this article.
Why Innovate in the First Place?
Bilton points out that in December 2009, when his first Bits blog post was published, Apple’s market capitalization was $180 billion. Four Decembers later, their market cap had nearly tripled, to $500 billion. Not every company has it in them to revolutionize the music, TV, publishing, and consumer electronics industries. Suffice it to say, however, that if you don’t consider yourself a technology leader in your space, then the opposite is probably true.
Innovation requires risk, but the greatest risk of all – doing nothing – will pave a quick path to nonexistence. Just because innovation generally means that you are creating something “new,” that doesn’t mean that innovation has to be a risky venture. Here are a few ways you can get moving in the right direction while ensuring that your risk in any innovative product development effort you take on is limited:
Set drop dead dates. Put stakes in the ground at pre-determined points in time where the stakeholders of an innovation product will make “Go/No Go” decisions regarding whether to end a project or extend its life cycle. Software development projects are not meant to continue in Kafkaesque perpetuity. Select 3, 6, 9, and 12-month points in time where projects will either be deep sixed or will live to see the light of day for three more months.
Allow your team to work in a silo. This may sound counterintuitive, but allowing your innovation team to work in a silo can actually give them necessary freedom from outside or undue influence from stakeholders. Apple’s secrecy surrounding new product designs and launches is legendary and was well-documented in Fred Vogelstein's article on the making of the original iPhone last year. Google's increasingly public "X" Lab, the formerly secret cutting edge R&D Lab where Google Glass and Google's self-driving cars were dreamt up, is not on Google's campus and many Googlers weren't even aware of its existence according to a Nick Bilton article on the lab from 2011.
Get user feedback. While giving an innovation team the freedom to work without interruption or meddling from internal stakeholders is vital to the development process, the importance of getting feedback from real users of a product as it's being developed cannot be overstated. This allows you to confirm assumptions about the way a product will be used, and it also allows development teams to make important course corrections mid-stream.
Find a good partner. Strategic business partnerships can help lessen the risks associated with creating new products or venturing into new markets. Today, companies are investing in product development platforms that can help accelerate innovation and manage risks. And if your pockets are deep enough, you can always take a page out of PayPal’s book and buy a good development partner.