Product innovation

Examples of product innovation done right

#1. Sony

From the way we listen to music to digital cameras and big TVs, to dog robots, Sony has been a trailblazer in innovation for the past 60 years.

Today, gaming is the most profitable industry in the entertainment sector. As HBS (Harvard Business School) reports, when Sony entered the market, the real gaming war began. The PlayStation release in 1994 turned Sony into the biggest rival of Nintendo and Sega, companies dominating the gaming industry until then.

Sony launched on the market innovations that placed them ahead of their competitors. The key differences in the PlayStation were CD-ROMs used to process the games and the introduction of 3D graphics. At that time, they were technologically superior and more attractive for developers who could create a wider variety of games.

Sony also excelled at identifying their competitors’ weaknesses and at delivering great value to their customers. They were able to price their console lower and attract more players on their side.

There are several factors that contributed to their success and whether it was the technology, the pricing, or their timing, Sony knew how to use innovation to fuel their growth.

#2. Beyond Meat

Beyond Meat is driven by their philosophy to continuously improve and their approach to innovation placed them in the top 50 most innovative companies. In an oversaturated market, what differentiates Beyond Meat? Instead of going only after vegans and vegetarians, Beyond Meat was among the first to target omnivores and people who want to reduce meat consumption. This was a good switch since targeting exclusively vegans would mean going out on a very small, niche market.

Since their launch, the competition grew fiercer and there are countless alternatives out there. However, it’s worth mentioning their role in changing the market and their dedication to innovation as their main ingredient to becoming the dominant global protein company.

Beyond Meat states their commitment to innovation through continuous improvement and the use of the latest technologies. While they were trailblazers at first, it won’t be easy to maintain this position on such a crowded market. If they want to continue growing and surpass their competitors, they definitely have to up their innovation game.

#3. Tesla

Tesla is the name we always come back to when we talk innovation. They didn’t invent electric vehicles, but their innovation lies in improving the technology that converts more and more people to electric cars. Tesla is innovating to increase battery longevity, decrease costs for consumers and increase value on the market.

Beyond technological innovations, Tesla is always the poster child of innovation because of their ambition to become better at everything they do. They have reimagined big parts of the value chain at a rapid pace and recently also achieved a 96 Net Promoter Score (NPS), by far the highest in their industry.

The challenges of product innovation

There is no product scarcity today, which makes product innovation a risky business. Every company is trying to come up with new or improved products and they are facing numerous challenges. We listed below some of the most common challenges facing product innovation and some possible workarounds that you might find useful.

#1. Proving product viability

Product viability refers to the business potential of a specific product. Unfortunately, many companies miss this as they fail to create relevant products that really answer to customer needs.

To overcome this challenge, always ask yourself if there is demand for your product, if it provides a solution to a problem and if it does, can you sell it at a competitive price which allows for ROS (Return On Sale)?

Sometimes it’s not enough to just ask yourself as your biases might hinder your judgment. Go further and look into the jobs to be done theory and make sure your product is performing a job customer’s need done. Research the market thoroughly and get as many insights as possible and remember that you can’t do it at your desk. You have to get your hands dirty and go on the field.

#2. High costs

There are two types of cost challenges that can arise in a company. First, you might have a product that costs too much to produce so your profit margin will be low, or you end up losing money. It’s best to focus on what really creates value and what ads to the costs on the long run. « Jobs To Be Done » and « Blue Ocean Strategy » are frameworks that will help you focus on providing value and decrease production costs.

Secondly, the development costs which you can’t recover if you’re not able to get a high enough profit margin or wide enough adoption for the product. A way to get around these development issues is to be agile, learn from failures and have a fast pace of innovation.

MIT Sloan has documented how eight different Japanese companies develop profitable new products. Successful Japanese companies like Toyota, Olympus, Sony, or Nissan focus on highly structured processes and manage costs early in a product’s life. In their analysis, they also emphasize the importance of disciplined proactive cost management in the product development process.

#3. Pricing

Putting the right price to innovation is always challenging and it’s especially true with consumer goods. Pricing can tip the balance in your favor and determine more people to buy your products. You might have an awesome product but if no one wants to buy it you’ll find yourself in a tight spot.

Pricing is a very powerful tool to determine the feasibility of innovation early on. We invited Kyle Westrain the Innovation Room Podcast to talk about pricing innovation and new product development. He explained in detail the pricing process and how involving pricing early on in the innovation process and product development can put you ahead of the competition.

#4. Innovation for the sake of innovation

When innovation is merely a branding strategy and is not purposeful, companies get in trouble. Innovation for the sake of innovation could occur when companies want to show results to internal stakeholders. Such initiatives can be highly visible, but they are not always aligned with a comprehensive enterprise-wide innovation strategy. This is known as the « Theatre of Innovation ».

If you realize that you’re in that bucket, take a step back and focus on incremental innovations for a little while. Large companies have the advantage of getting tons of support requests, customer complaints, and improvement suggestions from customers, employees, and pretty much every other stakeholder too.

Simply put, identifying and understanding customers’ pain points can lead to major opportunities for improvement. Once you have understood the extent of these pain points it’s important to address them as opportunities for innovation, not as ways of mitigating damage.

We can think of the Haier example from 1996 when consumers were complaining their washing machine hose was clogging. As it turns out many people in rural areas were having the same issue because they were using washing machines to wash sweet potatoes. Haier enhanced their product to meet such needs in rural areas and the first 10,000 washing machines sold out immediately.

Of course, this can’t count as the most radical innovation out there, but it shows how products can be improved by answering customers’ pains.

#5. Complexity

The focus on product improvement can also be taken too far. When this happens, improvements have the opposite effect, and innovation initiatives backfire. Feature creep illustrates this perfectly. Feature creep happens when excessive expansion or features are added to products. It mostly happens with computer software and consumer and business electronics.

Usually, incremental new features to an existing product add slightly less value than the previous one, and before long, you may be in a position where each new feature costs more than it adds in value. What’s more, every new feature adds complexity, and complexity slows you down and makes additional development harder still.

So, keep it simple. The best products are always elegantly simple, and simplicity might just be the hardest thing to achieve. To prevent counter effects, always base your decisions on data. Perform tests, validate your ideas, and don’t be afraid to go back to the drawing board.

Conclusion

To wrap things up, we want to remind you that investing in all forms of product innovation brings huge benefits for large companies. It allows you to stay in business and gain advantage in a highly competitive market and enables your growth and long-term success.

It’s also good to keep in mind that once you’ve aligned your goals and strategy, you need a fast pace of innovation to keep up with markets that have become oversaturated with products, consumer goods, and new technologies.

Consider a holistic approach to product innovation. This includes a culture of innovation, incremental improvements as second nature as well as a varied and balanced product portfolio.

We know product innovation is not a walk in the park, but with hard work and commitment, you can get better at it. There are also other types of innovation you can look into and plenty of resources we provide for those who want to make more innovation happen in their organization. For an in-depth look at the types of innovation and how to make it happen, download our ultimate guide to innovation.