Does your company consistently excel at innovation? With new product failure rates around 80%, chances are your innovation process lets you down more often than not. Discover how the Outcome Innovation Process will take the guesswork out of innovation.
Over the years managers have been conditioned to believe that innovation is an inherently random process; that the acceptance of failure must be baked into company culture; and that pivoting and failing fast is the way to make the innovation process more efficient.
We’ve proven that these beliefs are based on a misunderstanding of innovation as a process. The truth is the process of innovation can be executed in a way that delivers predictable, breakthrough results.
What is an Innovation Process?
The goal of an innovation process is defined as the process of devising solutions that address unmet customer needs with the goal of creating a product concept that will win in the marketplace.
Companies that have a successful innovation process are able to take the guesswork out of development and conceptualize winning products before development begins.
The process starts with a deep understanding of the job the customer is trying to get done and the metrics they use to evaluate competing product and service offerings.
By knowing how customers measure value, companies are able to align the actions of marketing, development, and R&D with these metrics and systematically create customer value.
Why do most companies struggle with innovation?
Innovation is a top priority for nearly every company and has been for years. And yet, new product success rates are still abysmal.
The reason so many companies struggle to innovate and why so many products flop is that they don’t really understand what it is their customers want. Moreover, they don’t know what inputs they need from customers to make innovation predictable.
We have found that 80% of product teams don’t even agree on what a customer need is.
The reasons why product teams struggle:
- They disagree on who their customers are
- They disagree on what a customer “need” is, (e.g., what type of input brings predictability to the innovation process, etc.)
- They fail to capture all the customer’s needs and instead consider only a small subset, thus leading to incremental improvement at best
- They fail to quantitatively determine which needs are unmet—and by how much
- They fail to discover and accommodate segments of customers with different unmet needs
- They lack the criteria needed to effectively evaluate a product concept
An effective innovation process must overcome all these obstacles. A company must know all the customer’s needs and determine which are unmet before idea generation begins and ideas are collected and evaluated.
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Take the guesswork out of innovation with Outcome-Driven Innovation
Outcome-Driven Innovation is a strategy and innovation process conceived through a Jobs-to-be-Done lens. The process employs qualitative, quantitative, and market segmentation methods that reveal hidden opportunities for growth—opportunities that often go undetected when using traditional customer research methods.
ODI has the highest success rate in the industry — a five-fold improvement over the industry average. The process works because it enables you to observe markets, customer needs, segments, and competitors through a lens that brings science and predictability to the innovation process.
ODI helps you avoid unnecessary pivoting and iteration by revealing all the customers unmet needs before product concepts are defined. This means you can establish product-market fit in the front end of the innovation process—before the development effort even begins.
5 steps of the
Outcome-Driven Innovation process
Define your market around the job-to-be-done
People buy products and services to get a job done. Defining your market around this job-to-be-done gives your company a stable focal point around which to align and orchestrate value creation.
This step includes:
Uncover desired outcomes
Customers want to get their jobs done perfectly. The 100+ metrics customers use to measure the successful execution of a job-to-be-done define what perfection means—and instruct your company how to deliver it.
This innovation process step includes:
- Understanding all of your customer’s needs. It’s possible when you define customer needs as desired outcomes.
Quantify which outcomes are unmet
Customers have underserved and overserved needs. Knowing with statistical certainty which needs should be the focus of your value creation and cost reduction ensures the efficient deployment of resources.
This step includes:
- Understanding where customers need help most. Determine if your markets are under or overserved and precisely which outcomes hold the key to your growth.
Discover hidden segments of opportunity
Customers rarely agree on which needs are unmet. Segmenting your markets into groups of people with unique sets of unmet needs allows you to pursue opportunities your competitors will fail to see.
This process step includes:
- Segmenting the market around outcomes. People struggle differently when executing the job-to-be-done.
Formulate and deploy a winning strategy
With a common understanding of the customer’s unmet needs, your company is able to better position and improve existing products, identify and fill gaps in your portfolio, make impactful R&D investment decisions, and more.
In other words, you have everything you need to develop a reliable innovation strategy.
Watch: An Introduction to Outcome-Driven Innovation® (ODI)
Turn ODI insights into action
The goal of the ideation process should not be lots of ideas and idea generation activities. Instead, the goal should be to construct the single, best solution to satisfy the unmet customer needs of the target customers and segments, enabling them to get the job done faster, more conveniently, and more effectively than ever before.
There is one belief that permeates academic literature and has influenced nearly all gated product development processes: it is the notion that the innovation process begins with an idea. This is the myth that misleads. An idea is the output of the innovation process, not the starting point. Making ideation and idea management the starting point of the innovation process, although common, turns innovation into a guessing game. It is the most inefficient approach to innovation and the root cause of low innovation success rates.
Competitive analysis, when seen through a jobs-to-be-done lens, is not about head-to-head comparisons. Instead, it’s about assessing how much better or worse a product is at helping the customer get a job done.
Traditional competitive analysis almost always involves a technical comparison of product specifications and features, yet the analysis is conducted without knowing how customers measure value or how much value competing features deliver to the customer. This is the problem, and the myth that misleads: companies are not competing against other companies or their products. They are competing for the customers, and their one goal is to create value for them. And there is only one way to do that: by offering a product or service that is better than any other at helping them get their jobs done.
Through a jobs-to-be-done lens, the goal of the concept testing process is to validate that a product concept is better than competing solutions at helping customers get a job done. To make this determination, we must know what metrics the customers use to measure the successful execution of the job-to-be-done. Our methods work because they are built around these customer metrics.
The goal of product positioning is to present a product or service to the customer in a way that effectively communicates its value. When looking at the product positioning process through a jobs-to-be-done lens, we see that the best way to communicate value to customers is to explain (1) how the product helps them execute the functional job better than competing solutions and (2) how it satisfies the emotional jobs that are associated with getting the functional job done.
The size of a market can be calculated based on the number of potential job executors, the frequency with which they execute the job, and their willingness to pay to get the job done better. An attractive market consists of a large number of underserved executors who have a high willingness to pay to get the job done better. This forms an effective market sizing calculation.
Companies often size the market they are interested in by determining the dollar volume of the products being sold. Using that calculation, they decide to invest or divest in a market based on trends in revenue growth.
But here is the problem, and the myth. A product is not a market. Every product will one day become a thing of the past. Vinyl records and cassettes gave way to CDs and MP3s, but in time those formats too will fade. But just because a technology or a product becomes obsolete doesn’t mean the market disappeared. It means that the market (the people who hired the product to get a job done) moved on to buy another product; one that helped them get the job done better.
Don’t gamble at innovation
If you’re ready to launch the next big thing, it’s time to upgrade to Outcome-Driven Innovation. Get in touch to speak with one of our innovation experts.