4 Product Innovation Strategy Development Missteps to Avoid

May 24, 2011

In order to design an effective outcome-driven product innovation strategy, companies need to understand how their customers are using their products to achieve their outcome goals and how they measure success in fulfilling these outcome goals. Being able to successfully identify a comprehensive list of customer outcome goals and value measurements and prioritize customer outcomes ensures that a company focuses on product innovations that will satisfy customer needs and wants, which will increase the probability of product innovation strategy success.

Companies often make the following 4 errors when identifying the customer outcome requirements and metrics used for evaluating each goal:

  • Companies often fail to identify the end user as their target customer and, rather, identify the channel partner to whom they sell as their target customer. Product planning and management teams often assume that channel partners understand how each end-customer uses the product to achieve outcome goals and identify the value metrics used to gauge success with each outcome goal. However, the channel partners rarely know this information. This often leads to a misunderstanding of how innovation can enhance the product to make it better meet the needs of its customers. Ultimately, this results in the company establishing poorly defined innovation targets, which results in unsatisfied customers and an increase in the total cost of producing its products and a decrease in the company’s competitiveness.
  • Companies fail to solicit the correct information from their customers. Oft times companies send their sales people to listen to the customer needs or do voice of the customer research, but do not explicitly ask how the company’s product is used to achieve the customer’s product outcome goals nor do they ask the customer which metrics are used to evaluate success in each outcome goal. This generally results in the company developing a delusional understanding of the customer’s product outcome goals and value measures for these goals, which leads to poorly defined innovation targets.
  • Companies often fail to consider all relevant customers when identifying customer outcome requirements. Consequently, the companies develop an incomplete perspective of the customer outcome requirements, which leads to poorly defined product innovation targets.
  • Companies often speak to non-decision-making customer representatives. This increases the probability of misidentifying the customer’s product outcome goals and the metrics that are used to evaluate these customer goals. This ultimately leads to a poorly defined product innovation strategy.

By avoiding these 4 product innovation strategy development pitfalls, your company will increase the effectiveness and success of its product innovation strategy and improve its long-term product positioning in the market place.
If you are interested in learning more about the product management process and organization management, you should read my previous blog posts on assessing new product opportunities and product prioritization pitfalls to avoid.

Similarly, if you are interested in learning more about product innovation strategy and customer analytics, I highly recommend reading What Customers Want: Using Outcome-Driven Innovation to Create Breakthrough Products and Services by Anthony W. Ulwick.

Marketing Manager, Pricing Strategy

<strong>Brandon Hickie</strong> is Marketing Manager, Pricing Strategy at <a href="https://www.linkedin.com/">LinkedIn</a>. He previously worked at OpenView as Marketing Insights Manager. Prior to OpenView Brandon was an Associate in the competition practice at Charles River Associates where he focused on merger strategy, merger regulatory review, and antitrust litigation.