Innovation has become an integral part of our business landscape to stay relevant. Information overload has shortened the attention span of consumers to 8 seconds. Businesses are pressured to keep up with the changing customer behaviors and trends. The competitive business landscape makes it even tougher to compete, as globalization enables mass production to populate the consumer market. Thus, 84% of executives believe that innovation is crucial to their success.
An internal culture that encourages ideation is the first line of defense. Many companies struggle because they lack an entrepreneurial mindset, to begin with. Hence, they start losing their stake to born-digital players and agile market entrants. The only way is to encourage an organizational change to an entrepreneurial mindset. Easier said than done, we know. It involves changes in technology and processes at all levels, which could take years. But, it pays to have a strategy that promotes such a culture. Many industry leaders like Google, Amazon, and Coca-cola spun out innovation hubs to outcompete the market. Granted that these companies are multi-billion corporations, which brings us to the subject. How do you innovate effectively when you're not Google or Amazon?
Creating a culture of ideation is only the beginning. The challenge sometimes is not about coming up with ideas. It's determining which of these ideas have the potential to soar by finding the ones with the market fit.
Many companies practice an iterative ideation process. It focuses on providing the right solution to its customer's problems. Finding the 'perfect' product usually stems from obtaining customer feedback. But, companies repeatedly use a process that does not provide true customer intentions. A focus group is a good example of this. It is a valuable tool for obtaining insights into your target audience. However, the method can be painstakingly flawed when you use it to determine product-market fit. Opinions are not skin-in-the-game, particularly in a controlled test environment. People would tend to tell you what they think they would do, but not what they would ACTUALLY do. So you end up putting a product on the market that nobody wants to buy.
Companies need to know early in the process if an idea is worth investing in. The further you are in the development phase, the higher your investments are. So, conducting market validation tests after building a prototype generates more risks. Without any insights into the customers' interest in the product, you could end up wasting resources on a product nobody wants.
- Validate ideas fast enough
Organizations pursuing bad ideas for too long is one of the innovation barriers. You reduce resource waste when you determine product-market fit earlier in the innovation process. Small experiments allow you to be agile in your processes. Otherwise, you keep using resources on ideas that won't soar. Scrapping bad ideas earlier saves you countless resources that could be used on ideas with more commercial potential.
- Understand your customers better as you iterate product concepts
Being customer-centric is no longer an option. All businesses aspire to solve their customers' problems. When your innovation process evolves around an iterative approach centered on customer-focused experiments, you get opportunities to build better products for your customers. Providing a space where your potential customers can decide in a real-life setting to "buy" your product gives you more insights than just basing your development progress on opinions. This authentically gives you a better understanding of your customers so you can confidently direct your next course of action.
- Empower your business development and marketing strategies
Innovation requires the involvement of the whole organization. When new products don’t meet revenue targets, it’s often due to not involving marketing and pricing strategies in the early stage of the innovation process. So ideas that passed the early product-market validation tests have a long way to go. If the innovation process has been customer-centric all along, it further empowers your go-to-market strategy, as you've already obtained insights into your potential markets. This also provides opportunities to ensure that your value proposition resonates with your target audience.
We are experts at testing business ideas in the market using our method called Flashtest to learn if your idea has a market fit before you invest a lot of resources developing it. We have worked with numerous innovative companies such as Nestlé, Deutsche Telekom, Lego, etc. to test their new product concepts in the early stage of innovation.