Product innovation is rarely a no-brainer. No company can afford to try every new idea or technology that comes along. Customer needs are always changing, hard data is often lacking, and timing is critical. Yet growth requires risk — and action before opportunities slip away.
The question is, which risk(s) are most worth taking and how do you justify the investment?
Many companies have found answers through product and technology roadmapping. When done correctly, roadmapping helps product developers make better decisions and forge more effective development strategies.
According to Dr. Jay Paap, one of the world’s foremost innovation experts, it all starts with information. His Customer Focused Technology Planning® (CFTP) framework, used successfully by many top companies, is based on the collection and distillation of information. Organizations need to find out what customers value, what competitors are doing, and what technologies are out there – now and in the future. Too often companies aren’t sure what to ask and which information is truly relevant.
So we asked Jay for a quick ‘how-to’ on gathering the right information to build a solid roadmap. Here are his answers:
1. What specific information should you gather?
Jay: The four main information-gathering questions to ask are:
- What is really driving customer behavior? Use traditional approaches like market research and VOC, but also others like forecasting, problem research, lead user, leverage or Kano analysis, or ethnography.
- What are the technology options – current and future? Have a scouting mindset to find others with similar problems, inventory other industries, monitor what’s going on in government and university labs and the entrepreneurial community.
- What is the competitive environment? What others are doing or hope to do. How you can time your activities strategically. Who potential partners or competitors might be. What resources you need and where/whom to acquire them from.
- What is your company’s strategy? Gather internal information about goals, constraints, resources, values, and risk tolerance.
2. Who owns this information and how do you use it to make the right decisions?
Jay: The information can be anywhere. We typically go to Marketing for customer information, R&D for technology information, Strategy for trends and competitors, etc. While these groups may be in the best position to manage these flows, what really drives innovation is the involvement of all major functions in the processing of the information into usable inputs into planning. To make informed decisions, everyone needs to have the same vocabulary. Assessment becomes cross-functional. When people share raw information, it keeps them honest and purposeful. When information is abstracted or summarized; the richness is gone and innovative insights often get short-circuited. The process involves piecing together customer information, competitive intelligence, technology information, and assessing opportunities in terms of your strategy. Innovation planning typically involves 15-20 people taking two days to share information, create landscape maps summarizing the key factors affecting innovation, and then jointly developing ideas for innovative products and services. The activity can be eye-opening. Marketing and engineering frequently gain a completely new appreciation and understanding.
3. How do you know which customer needs are the right ones to focus on? Customers rarely identify or articulate the ones that ultimately change the game.
Jay: There are six different techniques I use for identifying customer needs, and only one involves asking the customer what they want! Dick Davis at Whirlpool, for example, anticipated the customer demand for wash-and-wear cycles not through VOC type techniques, but by looking at environmental factors affecting what customers would want, specifically, the emergence of new fabrics requiring new ways of washing. The idea is to gather information on the customer as well as from the customer. Also gather competitive intelligence on external trends and new technologies. Innovation happens when you can anticipate customer needs even before customers know them.
For a brief overview of the CFTP framework and how it works, click here.
For further insight:
Jay Paap’s acclaimed two-day course Product & Technology Roadmapping for Future Growth will be offered November 14-16, 2018 at MIT in Cambridge, MA. Participants receive templates, examples, and individualized action steps as well as access to Jay for implementation questions after the class has ended.
“How do we justify truly innovative projects when hard numbers are lacking?”
By definition, truly innovative projects will have few, if any, ‘hard numbers.’ You might hit it big – or not. But like the lottery, you have to play to win. The challenge is securing resources and having a realistic plan to hang in there until it makes sense not to.
According to technology and innovation expert Jay Paap, president of Paap Associates, a common mistake companies make is to minimize risk by waiting until unknowns are resolved. Unfortunately, the consequence is missing the window of opportunity while competitors step in.
There is a better way!
Manage exposure versus risk
Paap advises product developers to manage exposure to risk rather than worry about risk itself. Exposure, Paap explains, refers to loss of investment (time, money), loss of reputation, and loss of opportunity. Exposure can be managed, even if uncertainty can not.
Exposure to lost investment can be managed by partnering, spinoffs, and willingness to kill projects when needed. Exposure to lost reputation can be managed by shifting the definition of success. Exposure to missed opportunities can be managed by moving quickly without knowing all the answers.
The main idea is to refocus on exposure – this enables organizations to invest in projects with great potential benefit even when there are significant unknowns.
Project reviews and rational decision-making
Once this new context has been established, the next stage is reframing project reviews. Innovative project reviews should focus on the opportunity versus ‘the plan.’ Track what you learn about the market, technology, and options (versus ‘targets’) and re-define success as making good decisions (continue, speed-up, slow down, redirect, kill, spin-off) rather than meeting on-time or budget goals.
As for choosing which opportunities to pursue, Paap offers the following keys to rational decision-making in the absence of hard numbers:
- Ask the right questions.
- Seek the best data possible, which may or may not be quantifiable.
- Involve a broad cross section of organization – for quality and commitment.
- Use formal frameworks to guide collection, storage, analysis, and sharing – be systematic in collection.
- Use ‘informed judgment’ to make the decision – be intuitive.
4 questions to ask – identifying opportunities with landscape maps
He describes how to use landscape maps to identify opportunities. These maps help link together market and technology factors for current and future products and services by asking:
- What product or service characteristics affect purchase/usage decisions – what do your customers value and why?
- How can technology be used to provide or improve these characteristics – what is the role of technology?
- How mature are the needs and technologies – is there leverage?
- Profile the competitors’ capabilities – can you gain an advantage?
NOMMAR – a 6-step rational and risk-sensitive approach to choosing opportunities
The overall approach Paap recommends to evaluating projects – without the numbers — is a six-step approach he calls “NOMMAR”:N: is there a customer need? (someone will want it) O: are their technology options? (someone can meet the need) M: is there a potential market? (someone will pay) M: is there a business model? (someone could do it) A: do we have a realistic approach? (we could do it) R: is it relevant? (we should do it)
For each of these steps, he outlines the inputs and data sources to use:
N: Customer Need. Look at needs versus wants/requests – customer vs. product — as well as current and future customers and needs. Data sources and tools: Customer insight: (VOC, MOC, visits, planning, etc), unobtrusive methods (internet, trade shows, ethnography, etc), problem research / context analysis, ‘Lead user,’ technology forecasting.
O: Technology Options. Take stock of existing technologies – your firm or industry, and other industries. Also explore emerging technologies designed as replacements and organizations with similar problems. The key is to focus on problem/need not expected solution. Think broadly. Data sources and tools: standard CTI resources (patents, literature, VCs, grants, etc); Technology Scouting; ‘Customer Focused Technology Planning.’®
M: Potential Market. Check past innovation adoptions/analogs and customer interactions. Be sure to realistically assess resistance. Data sources and tools: Potential customers, related markets and leading industries. If incremental, use quantitative tools like conjoint analysis and value/benefit assessment relative to alternatives.
M: Business Model. Models are ‘rules of game’ – independent of players. Look at past adoption trends for innovation and analogs of approaches used in other industries. Look at both numbers and logic – “I could see this being big.” Data sources and tools: Customer interactions, analogs, imagination.
A: Realistic Approach. Fit with three Rs: resources, risk, resistance. Consider all development options: traditional, corporate venturing/OI; internal ventures, partnering, acquisition, licensing, spinouts. Data sources and tools: Roadmapping of technical requirements; risk management (alliances, opportunity focused gates, spin-outs and licensing, etc.). Do a mini-business plan only, before relevance review.
R: Relevance. Fit with strategy, fit with image. The key is to look at both what an opportunity does and what it prevents you from doing. Data Sources and tools: Strategic vision, clear portfolio management and balancing guidelines.
Paap reminds us that “innovation cannot be ordered, but orderly processes can increase the level of innovation.” Often the best opportunities are the least quantifiable. While risk may seem higher without numbers, this should not be a deterrent when it comes to innovation. The key is to think of risk exposure rather than the unknowns, and to ask the right questions (NOMMAR). By applying this framework to new ideas, your decisions will be sound.
For further insight:
Jay Paap’s acclaimed two-day course Product & Technology Roadmapping for Future Growth will be held November 14-16, 2o18 in Cambridge, MA. Participants receive templates, examples, and individualized action steps as well as access to Jay for implementation questions after the class has ended. Seats are limited, reserve online or call 781-801-8080.