Innovation: Debunking the Myths (Part II)
Over the past 20 years, Ipsos Vantis has evaluated over 12,000 new product ideas across a wide variety of sectors...specifically: durable goods, financial services, consumer electronics, technology and communications, health, alcoholic beverages, and automotive. Innovation is critical to success, but misconceptions can get in the way. Our myth busting series continues.
Throughout our years of testing thousands of ideas and concepts, there has been an opportunity to observe and analyze the level of in-market success. In working through this process, Ipsos Vantis has identified many misconceptions regarding innovation processes and methods of predicting success. In Part I, we debunked the myths that innovation is a distinct business practice and that speed to market is critical to success.
Here are two more myths that need to be diffused.
Myth 3: `Inferior' Products Cannot Win
The job of research has historically been to measure appeal, and perhaps strategic fit, of new innovations. That is not enough to explain and predict success. In fact, it is common for "inferior" product ideas to do very well in market and "superior" products to fail.
The process of identifying potentially successful ideas is not simply a meritocracy based on consumer, company and product metrics. Too much focus is on consumer appeal, and the result is wasted resources, especially in early opportunity assessment.
One solution is to employ an innovation scorecard (Figure 2). The idea of a scorecard needs to be tailored to the organization, with particular attention paid to each of the constituent elements. This idea of scorecarding, especially when the elements are informed by research or fact, greatly increases the chance of identifying winners and vetting losers when traditional research by itself does not.
An interesting case study is that of the Nintendo Wii. By traditional industry standards it is an inferior product, but it is a booming commercial success. What did Nintendo do? They defined a big market, aging gamers, where the existing solutions are "too good"; they focused on a value denial, i.e., quality, but easy gaming (which saves time to realize the benefit of the product); and they had high clarity in this message. Importantly, the logistics were also good. The fact that their games are less sophisticated drives out cost for their content suppliers.
Thus, using an idea like the Scorecard in Figure 2, we can clearly explain a success story for a technically inferior idea. This is one hypothetical example, but we have found that the framework is broadly effective in interjecting commercial considerations in the process and identifying both winners and losers.
Myth 4: Assessment Research for Innovation is About Measuring the Appeal of Ideas
No, it is about mitigating risk! The major differences between determining market appeal and mitigating risk is in thinking about the possibility of things going wrong (e.g., user experience, competitive response, etc.), examining history, reviewing the momentum of underlying trends and quantifying the impact of each through research.
There are a variety of scenario analysis tools that can be used here, but there is also a very simple approach in the form of the "realistic concept." An example can be illustrated through the use of a hypothetical printer concept. Figure 3 is an example of how we traditionally think of concepts. It contains the specifications and some of the features and benefits associated with this product. Figure 4 on the other hand, incorporates some of the ideas discussed above and also includes additional information that a potential consumer is likely to encounter at some point during the purchase process or during use.
Using a more "realistic" concept forces the organization to think about risk and not simply the appeal. It also serves as a proxy for the actual usage experience - particularly important in cases where product usage research is difficult to execute. This is, very arguably, a truer read of long term performance as consumers act on (more) perfect information and are driven by more rational decision making.
And the Myths Keep Coming...
Two more myths debunked, and more to come. Watch for future instalments as we dispel the misconceptions about the innovation process and offer guidance on how research can improve commercial success.
More to come in subsequent issues...
