Innovate or perish – product leadership demands a mix of innovation strategies

A few weeks ago, I published a blog on growth strategies for product companies, in which I presented a broad outline of the Value disciplines, namely product leadership, customer intimacy, and operational excellence that are critical for achieving product excellence. In continuation of this theme, in the 2^nd part of this series of blogs, I will present a brief description of various innovation strategies for product leadership excellence.

Technology-push innovation

Technology-push is an innovation strategy that uses emerging or breakthrough technologies as the foundation for new or existing product innovation. In this scenario, innovation is primarily driven by a strategy of creating a technology-led differentiation, and may not be directly related to serving a customer or market need.

Products such as handheld devices, touchscreens, digital pens are some examples of technology-push innovations in the recent past, and incidentally many of them are the result of an integrated hardware-software development. Very often these innovations are the result of either a technology breakthrough such as the ability to manufacture highly complex and miniature chips, or the ability to synthesize diverse technologies to create a unique product or service. Apple Newton PDA (1993) is a great example of technology-push innovation when it was first introduced, even though it wasn’t that successful.

Market-pull innovation

Very often businesses realize that in the process of serving a specific type of customer or a market segment, there is an unmet demand for a feature or solution that is not fulfilled by the current product or service. Market-pull innovation is the strategy of orienting product innovation to serve the unmet needs of customers or markets. Market-pull innovation is a popular strategy adopted by businesses with a high-degree of customer focus, and is often driven by:

• Customer’s business goals and objectives
• Pressure to match or better competitive offerings
• Demand to deliver improved performance
• Focus on creating a service differentiation and a sustainable competitive edge

Proliferation of photo editing software, which is the result of the increasing popularity of digital cameras is a classic example of market-pull innovation. In the context of digital disruption, technology modernization and digital product reinvention are innovation strategies dictated by market-pull.

Business model innovation

Depending upon various contextual factors, both technology-push and business-pull innovation strategies can be successful in creating significant value and a differentiated offering. But, there are also limitations to these strategies. For example, in technology-push innovation, you run the risk of being an early adapter of a new (and untested) technology with low entry-barriers, which could easily be displaced by a better technology and/or a superior business model. Similarly, there are risks associated with business-pull led innovation. In an insightful article published in HBR:4-types of innovation and the problems they solve, Greg Satell states:

 “when the basis of competition changes, because of technological shifts or other changes in the marketplace, companies can find themselves getting better and better at things people want less and less. When that happens, innovating your products won’t help — you have to innovate your business model.”

That is precisely what digital unicorns such as Amazon, Uber, Airbnb, Netflix and others have accomplished in the past decade. What these unicorns have accomplished has little to do with technology innovation, and they weren’t even the first players in their space. They were successful in creating entirely new business models with a combination of superior product offering, unparalleled ease of use, and superb customer service.

Consider the case of the stupendously successful Amazon Prime. Stephenie Landry, Head of Amazon Prime, explained the rationale behind Prime’s business model innovation as follows:

“ my business merely has to answer two questions: “Do you have what I want, and can you get it to me when I need it? The rest of the customer experience is built around answering both questions in the affirmative.”

This line of thinking and business model innovation led to revolutionary improvements in supply chain logistics and fulfillment, and made Amazon Prime a juggernaut in the e-commerce space.

Product innovation in the digital age

While the innovation strategies cited above have a sort of time-tested universal appeal, in the current digital and platform landscape,  there are also some new-age product innovation strategies that businesses must consider,  which are described below:   

Design thinking and human-centered innovation

It is widely acknowledged that design thinking is at the heart of the phenomenal success of Apple and its iconic products. Tim Brown, CEO of IDEO, a leading global innovation and product design company (creator of the modern mouse), defines design thinking as follows:

 “ Design thinking is a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.”

Customer intimacy, extreme ease of use, and a focus on simple, intuitive forms are the key attributes of design thinking, an innovation strategy for the development of technologically feasible, financially viable, and human-centered products and services.

Source: IDEO

 Platform strategy

Thanks to the impact of digital paradigms such as cloud, social, and mobility, and the proliferation of connected products and devices, there is an increasing demand to adopt a platform strategy for product innovation. Platform-centric product innovation is no longer merely about delivering functionality, as integrations, extensibility, customization, access, and availability become critical technology and business considerations. And these considerations in turn are influenced by the relative position of the product in a platform, i.e. whether it is a producer, consumer, or match maker.  It is also entirely plausible for a product to have different positions in different platforms, i.e. a product can be a producer in one platform and a consumer in another platform.

Product leadership demands mix of innovation strategies

To reiterate, there is no one, true path to innovation. Businesses must remember that there is nothing like a perfect innovation strategy, and they must be agile and flexible to experiment with multiple strategies, including new paradigms such as design thinking and business model innovation. To achieve product leadership through innovation, businesses must consider a mix of innovation strategies that can help them develop differentiated products/services with a sustainable and competitive edge.  Product companies would be well-served to remember that lack of innovation is the fastest way to obsolescence.