Companies everywhere are desperately scrambling in the race to remain relevant as the world changes faster than ever. Innovation has become a buzz word synonymous with revenue growth, but average new product failure rates are still widely reported to be anywhere from 50%–90%, depending on the industry.
If innovation has become the new beacon of hope for long-term survival, why are companies still so bad at it? For starters, predicting the future is extremely difficult. Beyond forecast strategy, there is certainly an element of “right time, right place” that comes into play with successful new product development (NPD). As an innovation consultant working with many of the world’s largest firms, I often see several common innovation mistakes consistently repeated. In addition, in times of panic, we seem to forget (or ignore) the fundamentals: the standard innovation process.
A typical innovation process involves four key stages: discovery and idea generation, making the business case, prototyping and design, and go-to-market strategy.
The first two stages are critical to conduct before investing in new product or service design, and are often where effort falls short. Why are they so important? The first two stages of the innovation process help answer the question: “Are we working on the right things?”
Discovery and Idea Generation
Discovery and idea generation facilitates initial opportunity identification. It is the stage in which companies step back to take a wide scan of the numerous shifts in consumer behavior and product/service growth around them. The most critical factor for success in this phase is thinking more broadly about your consumer and their evolving needs. While consumer research may lead to short-term opportunities, the best innovators derive inspiration beyond their immediate category/industry, think longer-term, and identify bigger potential white spaces.
Making the Business Case
Making the business case is the stage in which firms further refine and narrow opportunities. Here, companies define exactly what the opportunity is, gain deep knowledge on the competitive environment and quantify the “size-of-prize”. The goal of this stage is to objectively narrow multiple ideas and focus further investment in those that are sizeable, set for strong growth, and have a favourable competitive environment to ensure the greatest ROI.
Once the right opportunities for innovation have been identified, you still have to build a strategy for how to capitalise on them. The last two stages of the innovation process are imperative to ensure you have the right product at the "right time, right place."
Prototyping and Design
Prototyping and design is when the actual product or service is created. Due diligence in design and prototype testing up front is required at this stage to ensure final output matches the true in-market needs of consumers. The ultimate goal of this stage is a unique proposition that offers the right features and benefits, yet stands out from competitors.
Go-to-market strategy, sets the foundation for a successful launch. This stage focuses on building an informed and strategic plan for where and how you will sell your new product/service to yield the greatest results. Selecting the right markets, channels and distribution partners are just as important as developing the right product. As business models evolve continuously today, assuming the status quo at launch can still result in failure even if all prior stages have been executed perfectly.
While conducting a full and thorough innovation process is critical to NPD success, it is still equally important to remain nimble and execute fast. Firms that can quickly identify, refine and validate the strongest innovation opportunities, design the right product/service and strategically go to market fast will win the race to remain relevant.
Euromonitor helps companies strengthen their innovation process through the following capabilities: megatrend analysis, measuring size of prize, concept exploration, and developing go-to-market strategies. We work across 100 markets and 30 industries to help customers draw inspiration from numerous creative and data-driven perspectives. Our database of thousands of trends, products, and players can help guide your innovation process from strategic opportunity identification to product launch.
To find out more about how we can help you with your innovation strategy, please get in touch to request a free consultation.