2

Innovating

step

Innovation distinguishes between

a leader and a follower.
Steve Jobs

Are you looking for tiebreakers

that give your customers a good
reason to choose your product over
a competitors product? As more
and more services and products
degenerate into commodities, your
challenge will seldom be to come
up with new ideas, but to select the
few precious thoughts that will make
a real difference for your customers
- and your business. In this chapter
we will show you how to develop
new ideas, how to manage those
ideas and, most importantly, how to
test them quickly and inexpensively.

iStockphoto.com/ David Luscombe

How can you come up with new

product and service ideas for your
business?

How can you turn your ideas into products?

Step 2 / 1

What kind of
ideas are you looking for?
>>
What do you want to do? Pick one:

iStockphoto.com/gocosmonaut

Build: What can you add that significantly raises the standards?
>>Netflix created low tech, low cost
logistics systems that ensure DVD
delivery across the country.

iStockphoto.com/Andrea Gingerich

Remove: Which things can you

eliminate completely from your
industry?
>> Netflix removed late fees completely, which was the main profit
driver for their competitors.

Develop a new business model?

Find and conquer a new niche or new market?
Improve an existing product or service?
Improve your internal processes by innovating along your value
delivery chain (e.g. make improvements around your purchasing
manufacturing, distribution, delivery, or customer service process)?
Create a better customer experience along the customer
purchase circle (e.g. help your customer during comparison /
selection /purchase / delivery / use / maintenance / disposal
activities of your products)?

tion

on
a ti

velopment >>> Te
e
D
stin
> >>
g

Expand: Which factors can you

expand in your industry?
>> Netflix raised customer satisfaction through a recommendation
engine that analyzed renters satisfaction with rentals and correlates
them to the preferences of the whole
user base.

Im

enta
m
e
pl

Resear
ch

Before you get your creative juices flowing its a good idea to stop for
a moment and think about which area of your business needs the most
improvement. In other words any time or money spent on innovation activities (research, ideation, development, testing, and implementation) should
be applied to the area where you will have the biggest return of investment.
For example, a tiny change in the way you purchase your materials could
have a much larger impact on your bottom line compared to a complete and
expensive redesign of an existing product. Listed in the following are a few
typical areas that lend themselves to be improved.

Decrease: Which factors can you

reduce significantly in your industry
standard?
>> Netflix replaced brick and mortar
stores with the mailbox of its customers.

>

de

Here is an idea to help you develop

a new break-out business model
for your trade. Step back and think
about the way things are done
currently in your industry. Write
down the core aspects on a sheet
of paper and then explore how you
can change your industries boundaries for your own benefit.
>> We use Netflix(R) as an example
and compare it with brick and mortar video rental stores

>>>
I

Questions to challenge your

industry

Choose your innovation playing field.

Step 2 / 2

Where do
ideas come from?

Use Web 2.0 ...

...technology to collect...

...new ideas.

Often, the success of small and medium sized businesses depends on coming up with product improvements and new service ideas to stay fresh and
relevant. Sporadically, new ideas can come from engineering, marketing, or
the executive team. Many times they can come from the fringes of a company, where your employees interact with customers, partners, or the marketplace. No matter where they come from, it is important that you collect them
systematically. Listed below we show you where and how you can harvest
ideas easily.
Internal departments: Deploy Wiki software to collect new product ideas on
your intranet website; schedule regular meetings with your sales teams and
customer support functions; offer rewards for new product ideas that pass a
peer review process in your company; encourage your employees to create
and register new patents on your companies behalf.

How to build your own idea bank!

1. Collect all ideas in a special
folder or box and include competitors new products too

Customers: Set up a blog for your customers; create an open or closed

online community for your customers and moderate it yourself. Set up a
quarterly customer advisory council meeting or listen to incoming customer
support calls on your hotline for a week to get started.

2. Classify and Sort these ideas

into the categories that make sense
for your industry

Distribution partners: Schedule regular meetings with your channel and

distribution partners to exchange ideas that will better serve your mutual
customers.
External development partners: If you co-develop your products and services with external partners, schedule special innovation days to exchange
and share customer insights.
iStockphoto.com/Pali Rao

4. Implement the most promising

ideas rapidly

iStockphoto.com/Ian Hamilton

3. Review the ideas frequently (as

described on the next page)

Collect and harvest ideas from as many sources as possible!

Step 2 / 3

Managing
new ideas

Select the...

...most compelling ideas...

...for your business.

After you have collected a large number of ideas the big question is how
you can separate the good ideas from the bad ones? Our following simple
tools, the New Product Innovation Scorecard and the Product Innovation
Map will help you greatly in sorting, managing and evaluating your ideas.
First, list all your ideas in a spreadsheet and apply a score from 1-10 to
each of the following categories:

How to create a
Product Innovation Map

Strategic fit for our company (Does it fit with what we do?)
Future leverage (What is the potential to propel our business to a new level?)
Likelihood of commercial success (Can we sell it?)
Technical feasibility (Can we build it?)
Development cost (Can we pay for it?)

Take the top 10 projects from your

scorecard and map them out on
a bubble diagram. Plot the sum of
technical and commercial feasibility
on the y-axis and the profit expectations on the x-axis. Let the diameter
of the bubbles depict the development cost.

Next, add up the scores and re-sort the table in descending order to see
ideas with a big potential. These will be the ones that sorted to the top. You
can use this table to create a Product Innovation Map (see sidebar) that
visualizes your results in a different way.

Product Innovation Scorecards and Product

Innovation Maps 2008 by Cendesic.com

iStockphoto.com/Elena Elisseeva

iStockphoto.com/Georg Winkens

Voil
: Projects in the top right quadrant are the most attractive ones to
pursue.

Create an innovation portfolio!

Step 2 / 4

Testing
new ideas

Get feedback...

...about your ideas...

...within 24 hours.

Once you have reduced all your ideas to a manageable number, it is time to
test what they are really worth.
Obviously there are many ways to test a new idea before bringing it to the
market. You can organize live focus groups in different cities or countries and
witness your customers reactions from behind one-way mirrors. Virtually
you can do the same in online focus groups with carefully recruited members
who will provide feedback about your concepts within days. You can also
test market your new ideas locally, do a peer review among colleagues,
friends and family, or get feedback from industry experts or friendly press
people.
If you dont want to wait and seek a cheaper way to test the demand for
your idea (before you make any big investments) use our simple 3-Step rapid
testing method:

How to interpret your test results

Hopefully, you were in luck and
had a good response. However, if
nobody clicked on your ads, there
is a good chance that:

In this case try out different wordings and optimize your message
until you find the level of customer
response you aspire to.

Step 2: Open an advertiser account with one of the top 3 search engines
(e.g. Google Adwords) and create a number of inexpensive pay-per-click
ads. Your ads should be triggered by keywords which your future customers
are most likely to enter if they would search for your product online. Set your
budget at around $100.

iStockphoto.com/Kameleon007

Your market is not ready for

your product
You are marketing to the
wrong people, or
You are marketing with the
wrong message.

iStockphoto.com/Elemental Imaging

Step 1: Create a 1-page micro web site for your product idea. Offer a
downloadable free white paper about your innovation, the possibility to sign
up for additional information or to pre-order your product.

Step 3: Wait 24-hours. Then use the tools from your search engine provider
to compare the number of times your ad was displayed with the number of
times it was clicked on or how often something was downloaded from your
website.

Test a new idea for under $100!

Step 2 / 5

Translating needs
into features and
benefits

Include only...

...features that...

...provide clear benefits.

Once you have tested your ideas and found a positive initial response to your customers needs, you can start translating them
into a product or a service that fulfills those needs.
Needs are satisfied through certain features that your product has and are perceived by the customer as the benefits or
value of your product. If you discovered more than one need,
start with the most important one. Think about how each need
can be addressed through a feature of your product. Then
describe the function of your feature and clearly write out how
your customers derive a benefit or get a value out of it.
Create a table to crystallize your product idea in your mind
and prioritize features, functions and benefits.
Here is an example from the Hewlett-Packard Labs:

iStockphoto.com/000003312030

iStockphoto.com/Jeff Chiasson

Smart HP Color LaserJet

Customer Need

Feature

Function

Benefit

HP Color LaserJet
customer does not
want to run out of
toner during peak
printing times

Smart toner level

monitor

Analyzes
consumption pattern
and reorders toner
supplies from the
web before toner
runs out

Worry
free
printing

Turn features into benefits!

Step 2 / 6