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disruptive innovation

Visualizing NPD Solutions

Successful new product development (NPD) links many perspectives from the end-user or customer, designers, manufacturers, and marketers.  No single entity can develop a new product solution that meets customer needs and profit objectives by itself.  Yet, incorporating and balancing these various viewpoints is often a challenge for innovators.

Design Thinking

A set of tools that have become popular in the last few years are those in design thinking.  Design thinking is a creative problem-solving approach that systematically expands the potential ideas to address a given customer need.  The following figure illustrates the design thinking model.

In discovery, an NPD team uses tools like observation and ethnographic research to study potential problems.  Customers are an integral part of the design thinking model because they show the NDP team how they approach problems today and which solutions, or workarounds, they employ to address those issues.  The discovery phase of innovation is tremendously important since it sets the stage for all subsequent phases of work. 

In the define phase, the NPD team uses design thinking tools to clarify the problem.  While there might have been several challenges and customer needs noted in the discovery phase, carefully defining the problem is crucial to solving it.  We recommend the ITEM Method of Problem-Solving in which the problem statement is initiated, tuned, evaluated and measured.  The ITEM Method can be used as a standalone problem-solving tool or as a subset of tools within the design thinking framework.

Once the NPD team feels they have a concise customer need defined, the team will move to solution generation phases of work.  This includes creating lots of potential solutions and testing them quickly.  Rapid prototype testing is an important tool for innovation so that poor concepts can be eliminated.  Moreover, customers are involved in the solution generation process in successful innovation ventures.  You can include end-users and consumers in brainstorming sessions and certainly they should be included in evaluating prototypes. 

Visualizing Solutions

In his book, “Product Design and Innovation,” Carlos Rodriguez identifies three types of analytical thinking within the framework of design.  These strategic viewpoints can help an innovation team expand their solution sets to successfully identify options to address customer needs.

Deductive Reasoning

In the first category of problem-solving tools, deductive logic is used to test product solutions.  In deductive testing, we already know the expected outcome or result, and we are measuring whether the new product will deliver that value.  This type of problem-solving uses the argument of “if-then” and accepts conclusions justified by the hypothesis.

For example, deductive logic is applied to an automotive innovation.  The hypothesis is that “consumers want faster cars.”  Design thinking tools and the ITEM Method of problem-solving identify ways to increase acceleration through engine and transmission improvements.  Deductive testing then proposes that “if the engine has more horsepower, then the car will accelerate faster.”  Note that deductive testing is easily measured and describes “what” the design features do.

Inductive Reasoning

Inductive logic will extrapolate beyond the measurable deductive testing.  Instead of designing around the “what” of the innovation, NPD teams use inductive testing to evaluate “how” to accomplish a product solution.  This necessitates a broader viewpoint of the customer problem and back tracks from the solve stages of the design thinking framework to the identify stages.

For instance, instead of jumping to designing a faster car, inductive new product development will as the question of “how can people travel faster”.  In this case, the solution space is expanded from faster cars to high-speed rail, airplanes, and maybe even a hyperloop.  Inductive reasoning will generate more potential solutions using brainstorming and promotes solutions strategies beyond a given product feature.

Abductive Reasoning

Finally, abductive reasoning drives disruptive innovation by exploring both the “what” and “how” of a solution space.  In this context, we are focused on delivering the most customer value by utilizing skills and competencies of a cross-functional NPD team that includes the customer.  Abductive problem-solving in NPD includes design activities like observation, creating customer journey logs, and customer empathy maps. 

Continuing our example of faster travel, abductive design will go back to the discover stage of the design thinking model to identify the true customer problem.  We ask:  “Why does she want to travel faster?” and “What does he accomplish with faster travel?”  The answers may lead to NPD solutions that are disruptive or radical.

In our example, wd find that people want faster business travel so they can minimize time spent away from home and family.  This leads to a product solution that has nothing to do with the person leaving home – instead, we implement a telecommuting option and hold a virtual meeting via webinar.

Visualizing NPD Solutions

Design thinking tools offer a broad approach to new product development that helps identify the best solution for customer problems.  Using deductive testing in design and development, we can improve product features and characteristics.  This helps maintain and sustain a product or brand through the maturity stages in the product life cycle.

NPD teams can use inductive design to broaden the scope of the problem.  Rather than assuming an improvement of an existing product, inductive testing challenges the NPD team to design alternative approaches to solve the customers’ problems.  Inductive testing involves design thinking tools like rapid prototyping and concept testing to ensure that customer needs are met.

Finally, radical and disruptive innovation can be achieved when the innovation team steps back to observe customers’ problems with the broadest perspective.  Instead of improving existing product solutions or creating tangential new products, abductive reasoning allows the NPD team to craft delightful and unique products and services that truly address end-user challenges.

Learn More

Feel free to contact me for more information design thinking.  I can be reached at info@simple-pdh.com or 281-280-8717.  I love helping individuals, teams, and organizations achieve their highest innovation goals!

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A Division of Global NP Solutions, LLC  

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Using Design Thinking to Manage Your Time

A recent article in Harvard Business Review details that CEOs work, on average, 9.7 hours per day, conduct business on about 80% of weekend days, and work for almost 3 hours per day on 70% of their vacation days (1).  Yet, numerous other publications describe burnout as a major factor in declining performance of all workers.  Burnout results in decreased motivation, lower productivity, and poor-quality work.  Burnout manifests itself in lost time due to illness, poor health, and destabilized personal relationships.  All of us, not just CEOs, need to better manage our time so that we can sustain deep engagement with our work and live happy, joy-filled lives.

How Do You Spend Your Time?

As product, project, and engineering managers, we know that we cannot find a solution to a problem until we fully understand the problem.  Closing a budget or schedule gap first involves gathering data on the costs to-date and evaluating the work accomplished thus far.  Once we have historical data in hand, we can interpret the size of the gap as well as begin to formulate changes and corrective actions to keep the project on plan.

Managing time in our professional and personal lives is much the same.  First, we need to gather data on how we currently spend our time and then analyze that data to diagnose the need for change.  There are two elements to tracking how you spend your time.

Task Time-Tracking

First, it’s important to know how much time you spend on various tasks throughout the day.  In the HBR study discussed previously, the researchers used the CEOs’ executive assistants to track the CEOs time in 15-minute blocks.  If you have staff support that can help you with time tracking of your various work tasks, by all means, take advantage of this service.

Since I don’t have full-time, in-office administrative support, I use a cloud-based time-tracking app.  You can find dozens of free apps to help you track how much time you spend on which activities throughout the day.  Many corporations also have available the Microsoft “My Analytics” time-tracking tool to analyze your Outlook calendar for time spent in meetings, etc.

Regardless of the tool you choose, make sure the application is easy to use (no more than one or two clicks) and can later expand if you want to track higher degrees of granularity of how you spend your time.  However, make sure that you start with very simple task analysis.  We don’t want time-tracking to become an extra job in itself!  For example, I track teaching time, writing, specific client projects, and volunteer activities.  I can also match each category to related income streams as part of evaluation and gap analysis.

Design Thinking Time Tracking

In our Life Design Master Mind Group, we follow the advice of Bill Burnett and Dave Evans in Designing Your Life.  Here, we track our “flow” in different activities.  Whereas tracking the minutes or hours spent on various tasks allows us to evaluate cost-benefit, tracking “flow” gives us a sense of what work we enjoy and what activities motivate us to do more.

“Flow” is a concept in which are working on tasks or activities that are so motivation and engaging that we don’t even notice the passage of time.  These are often the activities we daydream about or find ourselves planning for free or quiet time.  Flow is “being in the zone,” sort of like Steph Curry hitting dozens of consecutive three-pointers from the half-court-line.  You feel connected to and inspired by the work.  You are so embedded in your work, you might forget to stop and eat a meal.  And while it is hard to describe “flow,” we’ve all been there and recognize the positive and rewarding feelings that come from “being in the zone”.

Therefore, in Life Design Master Mind, we want to identify the time we spend in flow.  A separate time-tracking exercise using design thinking will follow the tasks on which you work, the energy you apply to the activity, and your feelings of engagement with the task.

For example, when I look at my journal from about a year ago, I recorded “doing email” with energy of 10% and engagement of 10%.  Not surprising, as the CEO study by HBR described previously also noted that these senior executives preferred face-to-face contact with direct reports and customers.

During the same month, I recorded my energy level at 75% and engagement at 85% while developing new course materials for one of the university classes I teach.  And I recorded working out at the gym with 100% energy and 75% engagement.  (As a side note, my husband thinks I can get a bit too fanatical about my fitness regime sometimes…)

You’ll want to keep a Flow Journal for a few weeks so that you can capture the broadest set of activities in which you engage as well as to average out any anomalies.  During a week when I had a head cold, my energy level was low for all tasks.  But, again, that’s understandable when I move to interpreting how I spent my time and what I enjoy.

Next Steps to Manage Your Time

Once you’ve collected data on how you spend your time, you need to evaluate where the gaps exist between the current stat and desired future state.  In Life Design Master Mind, we delve into understanding the core of flow for each individual and use more design thinking tools to frame the context for prototyping and testing new paths in our careers and lives.

You also can use the detailed task time-tracking to eliminate or minimize the least value-added tasks.  For instance, we all have to “do email,” yet there is little profit gained in this task.  Based on Cal Newport’s advice in “Deep Work,” I typically check email only two or three times per day, and at times of the day when my motivational energy is already low (like after lunch).  In this way, I can preserve times of the day when my inspiration is high for “flow” activities (e.g. I do a lot of writing first thing in the morning).

How Do You Manage Your Time?

A lot of how we spend our day is rooted in habit.  Some of these are good habits and some are not-so-good.  We can only expect to change our lives and strive for the next highest level in our careers if we understand where we’re at right now.  Start today with a task time-tracking app.  Then, later add a Flow Journal to learn which of these tasks give you energy, engagement, and an acceptable cost-benefit ratio.  (You can download a template for your Flow Journal as part of the Life Design Master Mind Group.)

 

(1)      Porter, Michael E. and Nitin Nohria, “How CEOs Manager Their Time,” Harvard Business Review July/Aug 2018, pg. 42-51.

 

To Learn More

Join us in an introductory Life Design Master Mind group in Houston where we start with how you spend your time today.  Over the next 6 months, we will use design thinking tools to take a deep dive into professional and personal motivation to frame and test what next steps you can take to live a joy-filled life.  Check out our on-line tutorial on Design Thinking, too.  Feel free to contact me at info@simple-pdh.com or 281-280-8717.  At Simple-PDH.com where we want to help you gain and maintain your professional certifications.  You can study, learn, and earn – it’s simple!

 

Reading Recommendation

We discuss different project team structures in NPDP Certification Prep:  A 24-Hour Study Guide, and you can find additional references at https://globalnpsolutions.com/services/npd-resources/.   Some other books you might enjoy:

 

Speaking on Design Thinking

  • 15 August 2018 at Houston Organizational Development Network Meeting
  • 7 September 2018 at Texas Association of Change Management Professionals Conference

 

Study. Learn. Earn. Simple.

© Simple-PDH.com

A division of Global NP Solutions, LLC  

What We Can Learn from Failure

Any project, product, or engineering manager knows that we can learn from failure. Sometimes it is painful, but the learning often outweighs the misery of a lost opportunity. Learning new approaches or alternative ways of doing things is how we advance over professions, personal growth, and even technology.

In “Designing Your Life,” by Bill Burnett and Dave Evans, three types of failures are described. The authors argue – and I agree – that we should approach “learning from failure” differently depending on the category of the missed opportunity.

Screw-Ups

The first type of failure is a simple screw-up. This is also known as a mistake or error. We know what to do to be successful in the situation, but something just happened to prevent the right thing from happening.

We don’t really learn from screw-ups because we know the right thing to do already. Just this one time, something prevented us from acting in the normal way we would. Maybe you missed your spouse’s birthday because you were swamped at work and travelling across the globe. While the excuse might not pacify your spouse, you have never missed a birthday in over 20 years of marriage. It’s just a screw-up and won’t happen again. You can put a reminder on your calendar or design checklists to prevent future screw-ups.

About a year ago, I had a large-sized screw-up. I was stressed over the impacts of Hurricane Harvey and my father-in-law who had entered hospice care at the time. So, I accidentally copied the wrong course materials into one of the college classes I teach online. Immediately, students swamped my email asking if they had enrolled in the wrong course and why were all the assignment due dates for last semester. Some were accusatory, indicating that the Chapter 1 material had literally changed (it hadn’t). Unfortunately, some students didn’t even notice the error (but that’s a story for another day).

At first, I agonized over how to correct my mistake. I tried of a variety of technical solutions and realized there was not going to be an easy fix. More importantly, I let go of the emotion attached to making a big screw-up and acknowledged that it was a just a one-time error. In the future, I now know that I need to double-check before I double-click!

And I really can’t learn anything from this screw-up that will improve my performance as a professor or enhance my knowledge about becoming a better project, product, or engineering manager. We need to be forgiving of ourselves when we screw-up and then move on.

Blind Spots

Burnett and Evans call the second type of failure a “weakness”. These are errors and lost opportunities that we recognize occurring over and over again but are arenas in our lives in which cannot (or will not) improve. Like a screw-up, we know the right action to take but the task is not viewed as important enough to change our behavior. Continuing to make the same mistake may cause us a headache yet we (stubbornly) do so again.

Because blind spots do not cause us long-term emotional or physical distress, we don’t learn from these failures. There really isn’t any opportunity for growth through correcting these weaknesses, either. For example, I tend to put off bookkeeping until the credit card bill arrives. I know that a more effective strategy is to do bookkeeping on a weekly basis (which would also keep my desk clear of papers, invoices, and receipts), but I have a blind spot. I don’t like doing bookkeeping and because the task gets completed anyway, there is no long-term pain that will force me to change my behavior. The worst-case scenario is a small headache as I rush to input revenue and expense data when the bill arrives in the mail.

Growth Opportunities

The failures that we value as project, product, and engineering managers are growth opportunities. These are the reason why we do lessons learned reviews to identify how we can improve future activities to yield better performance. The growth opportunities are the times when we see errors, mistakes, and failures from different perspectives – and when we can calmly and clearly identify a better approach to solving a problem.

During my career, I supported marketing and maintaining customers for a chemical catalyst material. Luckily, I had the opportunity to learn from a failed communication. A client from an Asian country was sending frequent emails asking for a specific technical solution to a problem their plant was facing. There were a half dozen or more names on the cc: list of the email. I didn’t know these folks at the customer’s plant, but I assumed that since my contact had included them on the email, my response should also include these people.

So, I carefully explained the operational adjustment that was necessary and hit the “send” button. The next day, I found the same question in my email inbox with an added statement that implied I had not addressed their problem. I rephrased my response. And the next day, the question re-appeared. I could sense the customer’s growing discontent and frustration. I, too, was puzzled why the plant wouldn’t implement my solution.

After a few rounds of emails that went no place, I decided to reply only to my contact with no one else on the distribution list. This resulted in a new response. He was grateful for the solution offered and it worked perfectly! I learned from this failure.

First, in his cultural context, my contact need to retain “face” in the situation. He could achieve this by providing the solution on his own to his colleagues. With my “reply to all,’ I was robbing him of the chance to demonstrate technical competence in an emotionally-charged environment.

Next, and more importantly, I learned that communication is sensitive to each independent situation. My German customers would have been annoyed had I not used “reply to all”. Today, I like to consider each name on an email list to determine whether its of value to the individual. I also like to consider the social and cultural environment of the communication. And, instead of “assuming,” I will ask.

In short, I learned a lot from this failure that has given me opportunities for both personal and professional growth.

Learning from (Some) Failures

When we take a look back at our, we should categorize the failures and learn from the growth opportunities. There’s no use in losing sleep over a screw-up. It’s just that – a mistake. The right approach is to recognize and acknowledge the error, sincerely apologize, and move on.

Likewise, with blind spots or weaknesses, we should use scheduling tools, checklists, reminders, and other time management tools to help us be more efficient. Yet, it’s okay to acknowledge that changing our behavior in these situations is of limited value in advancing a career as a project, product, or engineering manager. Eliminating the blind spot might free us of minor headaches but won’t necessarily make us better people.

Instead, as you review your performance throughout a day, examine the failures for growth opportunities. These failures, errors, or mistakes take you by surprise. You observed an outcome you didn’t expect. Why? What could be done differently if you encounter a similar situation tomorrow? How would a trusted friend or mentor approach that same situation?

In our on-line tutorial on Design Thinking and in our Agile NPD course, we discuss failing fast and failing often to drive learning. However, we must first categorize the type of failure to benefit from lessons learned. Not all failures offer a growth opportunity, but we must be open and honest when we do encounter such circumstances. Join us for the Agile NPD course or check out our self-study and other NPDP Workshops. Feel free to contact me at info@simple-pdh.com or 281-280-8717. At Simple-PDH.com where we want to help you gain and maintain your professional certifications. You can study, learn, and earn – it’s simple!

 

Reading Recommendation

We discuss different customer insight methodologies in NPDP Certification Prep: A 24-Hour Study Guide, and you can find additional references at https://globalnpsolutions.com/services/npd-resources/.  Some other books you might enjoy:

 

Speaking on Design Thinking

  • 25 July 2018 at PMI-Houston Energy Corridor Lunch and Learn
  • 15 August 2018 at Houston Organizational Development Network Meeting
  • 7 September 2018 at Texas Association of Change Management Professionals Conference

 

Study. Learn. Earn. Simple.

© Simple-PDH.com

A division of Global NP Solutions, LLC  

 

 

Lean Innovation

Many entrepreneurs come up with great ideas. They decide to sell these new products and services into a market yet are often disappointed at the customers’ responses. Sales revenues do not generate adequate income to cover costs and so, the business shuts down.

Corporations, likewise, struggle with innovation. A grand technical breakthrough is converted to a commercial product. But, existing customers don’t really seem all that interested in the new features and few new customers are drawn to the brand through the new offering. The product may linger in inventory for months or years while R&D moves on to the next cool technical invention.

Study after study shows that new products fail to achieve sales targets or meet customer satisfaction goals. This is not an issue with strategic objectives but rather a matter of implementation. New product development (NPD) is not simply a matter of great ideas. New product success is a matter of meeting customer needs.

The Lean Startup Method

The Lean Startup has its roots in the lean manufacturing movement, pioneered by Toyota. In lean manufacturing, quality is baked into the product by operating with small batch sizes. If a quality issue arises, fewer products are wasted to scrap or rework. Changes can be implemented quickly to improve the products as a quality issue is resolved. In essence, learning and continuous improvement are the real products of lean manufacturing.

Similarly, learning and continuous improvement are the core concepts of the lean startup method of innovation. “The goal of a startup is to figure out the right thing to build” (pg. 20). Entrepreneurs have the initiating idea, but ideas are not perfect at birth. They need to be nurtured and groomed to grow into marketable products.

However, just as every parent claims their baby is the most beautiful and most intelligent of all children ever, entrepreneurs and new product development practitioners have blinders when first testing their new products. We tend to dismiss negative feedback by saying that those weren’t really our target customers (Chapter 3 of The Lean Startup). And we sue our optimism bias to continue to build the feature we like when potential customers give any sign of neutral or positive feedback on the feature selections.

Therefore, it is imperative that entrepreneurs and NPD teams capture and assess all potential and existing customer feedback. Consider if an automobile manufacturer knows that there is a quality defect on the assembly line. Will it cost them more or less to allow the defect to continue? Likewise, will it cost the entrepreneur more or less to continue to design and build a product that is ‘defective” (not meeting a customer’s needs)?

Steer

At the heart of the lean startup method is the “Build-Measure-Learn” feedback loop. Early, frequent, and small product concept and feature tests validate the vision for the new product. But, to grow a business, entrepreneurs must test a bevy of assumptions. These assumptions cover how we perceive customers will access and purchase the product, how they will use the product, and how they expect next generation products to be designed and integrated into their ecosystem.

In The Lean Startup, Ries gives a running example of his company IMVU, founded for the purpose of computer user to create movable avatars. The entrepreneurs assumed users would bring along their friends and by increasing the number of users, increase revenue. When they honestly assessed how people were using their product, the discovered that people really wanted to connect and make new friends.

These enlightening moments allow for a company to “pivot”. A pivot is a change in the strategic direction for a new product that is linked to the existing offering. Consider a pivot in basketball – the player can turn and change direction, as long as he keeps one foot stationary.

Product pivots should not be wholesale remodels and reinventions. The NPD team, at this point, has learned what works and what features customers value. A pivot is designed to capture new value based on what customers need for continuous improvement. And the pivot is supported by lean thinking as features that are not meeting customer needs are discarded, thus reducing waste.

Accelerate

Business growth is imperative whether you are a startup, entrepreneur, or an established firm. Clayton Christensen’s seminal book on disruptive innovation, The Innovator’s Dilemma, demonstrates that incremental (or sustaining) innovations provide profit for a limited time period. New technologies, new markets, and new business models are constantly being created that will disrupt existing markets. Lean thinking demands that growth actions do not stall with sustaining innovations.

In Chapter 9 of The Lean Startup, Ries tells a story of stuffing and addressing envelopes. It is counterintuitive to learn that doing the task one-at-a-time is more productive than filling all the envelopes in one step, addressing them in the next step, and sealing and stamping in a final step. When we consider any probability of errors, mistakes, or defects, the small batch (one-at-a-time) operation is best to reduce waste. Companies can use small batches to ensure that new products are meeting customer demands; and if not, they are in a situation to make rapid changes.

When – and not if – growth begins to stall, entrepreneurs and NPD practitioners can borrow another quality tool: the 5 Whys. Drilling down to the root cause of a problem reduces the risk of repeated errors and can eliminate waste. The 5 Whys can also be used as a brainstorming tool to create ideas for next generation product categories when coupled with customer insights.

Lessons from Lean Startup

By definition, innovators must be flexible and adaptive to new information and new situations. Too often entrepreneurs and new product development practitioners are blinded by their faith and optimism in an idea. They create a marketing and production plan but are disappointed (emotionally and financially) when things don’t work out how they had hoped.

The lean startup methodology championed by Eric Ries focuses on an agile approach to new product development using a continuous feedback loop: build-measure-learn. This framework supports innovation best practices with frequent and deep customer interactions, eliminating “waste” or features that don’t add value, and continuous improvement. Innovation is most successful when we test our assumptions and make honest, data-driven assessments. The results of each experiment inform us and lead us to the next product design which we will proactively test with existing and potential customers.

To learn more about innovation processes, please check out our self-study and other NPDP Workshops. In particular, the Agile NPD course builds on the lean startup method and reducing waste in development. Feel free to contact me at info@simple-pdh.com or 281-280-8717. At Simple-PDH.com where we want to help you gain and maintain your professional certifications. You can study, learn, and earn – it’s simple!

 

Reading Recommendation

Some important references for lean innovation include two books by Eric Ries: The Lean Startup and The Startup Way. Also, every innovator, entrepreneur, and new product developer should own and read a copy of Clayton Christensen’s The Innovator’s Dilemma and the follow-up text, The Innovator’s Solution. I also like Being Agile by Ekas and Will, a book that gives tips to truly move from waterfall to agile methodologies in product development.

We also discuss different NPD methods in NPDP Certification Prep: A 24-Hour Study Guide, and you can find additional references at https://globalnpsolutions.com/services/npd-resources/.

 

Study. Learn. Earn. Simple.

© Simple-PDH.com

A division of Global NP Solutions, LLC  

Inverting Innovation

Experienced scientists, chefs, and artists tend to look to the familiar to create new works. Knowing that corrosion is reduced using one metallurgy under acidic processing, an engineer will choose the same metal for construction of a reactor operating under similar conditions. When a touch of basil adds flavor to one dish, a chef will add the herb to another. And as a marker of greeting cards, I find many of my designs repeat themes, patterns, or color schemes that I have used in the past.

While having “go-to” solutions is useful and saves time when we need to solve a problem quickly, innovation can be hampered by not seeking novel or unique approaches to challenges that appear to be like those we’ve faced in the past. This is the core philosophy described by Clayton Christensen’s The Innovator’s Dilemma.

Traditional Innovation

In traditional innovation, we understand the importance of deep focus on our existing customers. We must learn their wants and needs if we are going to continue to serve them. We also must add features to existing products to keep competition at bay. However, as we continue to rely on more of the same, we fall into the trap of creating sustaining innovations.

This manner of new product development (NPD) starts with the existing customer (who) and asks why they buy our products. We then move to what we can do to increase the attractiveness of these products and services versus the competition. Thus, we fall into the trap of increasing performance along a known trajectory, trying to glean more and more improvements to serve an increasingly elite customer base.

Inverting Innovation

Disruptive innovation, on the other hand, first identifies a market need – something that customers want and cannot easily find to solve their problems. Most often, these novel ideas and product solutions come from start-ups and entrepreneurs that are not hindered by pre-determined answers or expected profit margins. These new market participants view all customers as potential sales targets and strive to understand their fundamental problems.

What

The question of what to create and design as a new product is determined by the firm’s strategic intent. What is the business? What is the mission or purpose of the firm? What are the long-term and short-range goals?

Why

The next question an innovation team must answer is why is this product solution different? The NPD team should look at the entire business model, including how the product is delivered to the customers as well as complementary or platform products and services. A whole business model approach to solving a customer’s problems is often more attractive to consumers than when they must cobble together various pieces of the product solution.

Take, for example, travel web sites. Instead of looking just for the best hotel in your price range, a platform solution offers full vacation planning. These sites scour the internet for the best airfare, hotel, and rental car rates, and then package them together for a customer’s ease of performance.

Who

Finally, the disruptive innovation answers the question of who is the customer? You’ll recall that incumbent firms focus heavy NPD efforts on existing customers and in moving up-scale in consumer markets. They already know who the customer is.

Disruptive innovations, on the other hand will identify who the customer is by addressing what the need is. Yet they will also address vendors, suppliers, and distributors across the value chain. Again, this leads to a holistic vision of the business model and not just a single product development initiative.

Be Disruptive by Inverting Innovation

Many times, we get truck in the trap of developing new products for existing customers that must deliver a certain profit margin. Knowing what worked in the past, incumbent firms add features to existing products, often in response to competition. Innovation is approached from knowing who the customer is, why they are your existing customer already, and what you can do to improve the product performance.

Inverting innovation, instead, forces an NPD team to think like an entrepreneur. What does the market need? Why is my business model different? Who, in the value chain, helps us meet customer needs?

To learn more about disruptive innovation, see our special class on Disruptive Innovation and you earn 1 PDU credit! Also, check out self-study and other NPDP Workshops. Feel free to contact me at info@simple-pdh.com or 281-280-8717. At Simple-PDH.com where we want to help you gain and maintain your professional certifications. You can study, learn, and earn – it’s simple!

 

Reading Recommendation

One of my favorite new books on innovation is The Power of Little Ideas by David C. Robertson and Kent Lineback. Clayton Christensen’s The Innovator’s Dilemma and The Innovator’s Solution are classics for this field (affiliate links). Another good book focusing on customer perspectives is Strategy from the Outside In by George Day and Christine Moorman. We also discuss application of strategy via disruptive innovation in NPDP Certification Prep: A 24-Hour Study Guide, and you can find additional references at https://globalnpsolutions.com/services/npd-resources/.

 

Study. Learn. Earn. Simple.

© Simple-PDH.com

A division of Global NP Solutions, LLC  

Disruptive Innovation: Customer vs. Market Orientation

Ever since Clayton Christensen first published “The Innovator’s Dilemma” over 20 years ago, companies have struggled to identify and develop products that are “disruptive”.  Likewise, academics have argued about the definition of “disruption” along with the constraints and application of the theory.  Because of the sheer volume of papers and the animation of those debating the topic, we can assuredly know that disruptive innovation is important!

In short, Christensen noted that large, incumbent firms tend to develop new products that serve existing customers with higher and higher levels of performance.  These are called sustaining innovations.  At the opposite end of the spectrum, entrepreneurial firms with no profit margin or expectations tend to design new products that meet the needs of niche customers.  As the product performance characteristics of these new designs improve, mainstream market adoption occurs which “disrupts” the incumbent’s position.

Certainly, not all innovations or new products should be disruptive, yet if a company ignores new technologies and business models, it stands to lose to the up and coming competitors.  One element of disruptive innovation that is often overlooked is the strategic orientation of the firm which informs the innovation culture.  Understanding this linkage – and any deficiencies – can help a company better balance a new product portfolio between sustaining and disruptive innovations.

Two Strategies

A company can follow one of two broad strategic approaches, the choice of which will lead to a cultural tendency toward sustaining or disruptive innovations.

Customer-Led Strategic Orientation

First, many organizations maintain intimate contact with their best customers.  These consumers and end-users regularly participate in lead user forums and focus groups.  The firm relies on these customers to test new product prototypes and to provide feedback on new product concepts.  Such customers may be more innovative than the average consumer and can offer insights into product usage, features, and characteristics.

Companies that utilize a customer-led strategy often are focused on improving existing product performance and gaining market share.  As a result, these firms resort to sustaining innovations more than disruptive technology introductions.  The company’s culture is driven by quality improvements, cost reduction, and customer satisfaction.

Market-Led Orientation

On the other hand, many firms follow a market orientation in their strategic approach.  Companies with this focus will follow trends and readily adopt new technologies and platforms.  Such firms will seek to understand and empathize with customers to identify unmet needs.  They will visit and observe customers in the consumer’s own environment to identify challenges and pain points with product usage.

Companies that follow a market-led orientation support an internal culture of curiosity and creativity.  Failure is accepted – on an appropriate scale – and is valued as a learning tool.  Being first to market with a new technology for a new market is highly valued.  Performance is measured by market penetration, sales volume growth, and new customer acquisition.  Such firms will create many new products and a few of these will become disruptive innovations with a mainstream customer base.

Disruptive Innovation and Strategic Orientation

Strategic orientation, whether a company is customer-led or follows market trends, influences the degree of innovation sought and generated in new products.  Companies that seek deep understanding of existing customers tend to support sustaining innovations while firms that seek to understand new market insights tend to yield more disruptive innovations.  The firm’s strategic orientation creates internal cultures and practices that confirm customer satisfaction or design processes for learning by experimentation.

Neither culture or strategic orientation is “right” and, of course, neither is “wrong”.  Instead, what senior management must ask is if the balance between customer and market orientations will allow the firm to meet its strategic objectives.  Some companies will lean too heavily in supporting performance improvements for existing customers while others will sacrifice product support to chase the next shiny object.

To better understand your firm’s new product strategic balance, you can do a simple exercise.  Take a sheet of paper and draw a dividing line down the vertical middle.  Label the left half “Customer Orientation” and the right half “Market Orientation”.  Now, simply list your current new product development (NPD) products in one of the two columns.  Don’t elaborate too much and don’t spend too long on this exercise – no more than five minutes.  Your “gut feel” will suffice for an early strategic assessment.

When you are finished, you will see if the projects listed are evenly distributed or if there is a distinctive imbalance.  For example, a conservative, risk-averse firm may find no projects that are market-led disruptive technologies.  This signals a long-term threat if competitors introduce new technologies or business models that change how customers interact with the product.  The simple strategic analysis leads the company to take steps to create fundamental research opportunities within their accepted cultural norms (e.g. a low-risk partnership with a university to conduct R&D).

It is important in a fast-changing, globally competitive environment to understand how strategic orientation and the resulting cultural practices impact your innovation characteristics.  Is your firm customer-led or market-oriented?  Is your NPD portfolio balanced between sustaining and disruptive innovations?  Will the innovation portfolio deliver both short-term and long-term strategic objectives?

To learn more about disruptive innovation, check out our on-line class and you will earn one hour of professional development credit.  We also discuss how to implement a disruptive innovation strategy in our self-study and other NPDP Workshops.  Feel free to contact me at info@simple-pdh.com or 281-280-8717.  At Simple-PDH.com where we want to help you gain and maintain your professional certifications.  You can study, learn, and earn – it’s simple!

 

Reading Recommendation

One of my favorite new books on the debate between sustaining and disruptive innovation is The Power of Little Ideas.  Of course, anyone interested is disruptive innovation should read Clayton Christensen’s The Innovator’s Dilemma and Geoffrey Moore’s Crossing the Chasm (affiliate links).  I also have a section on disruptive innovation in NPDP Certification Prep:  A 24-Hour Study Guide and additional references at https://globalnpsolutions.com/services/npd-resources/.

 

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