Archive for the ‘New Product Development’ Category
Innovators Stand Firm:A Modern Day David Vs Goliath
Looking around the internet yesterday, as researchers, things were a little different. Wikipedia was blacked out, Google had its logo blacked out and Twitter was alive with SOPA (Stop Online Piracy Act) talk. SOPA was created to promote prosperity, creativity, entrepreneurship and innovation by combating the theft of US property. However, opponents to SOPA argue that it will do exactly the opposite in that it violates freedom of speech, internet censorship and will therefore cripple the internet as we know it.
SOPA is a prime example of how big companies (especially within the music and film industry) are trying to do everything they can to stop innovation (so say the technology companies). Is this a modern day example of David Vs Goliath where the larger ‘Goliath’ companies are unwilling to accept change whilst the innovative companies and start-ups are encompassing change?
Larger companies typically innovate around business processes to take cost out of the system. However, innovation aligned with technological change that could involve turning the way a company carries out its business on its head is often rebuffed by large companies due to upheaval and uneasiness (with shareholder apprehension another reason)
Conversely think of the most successful modern day companies and most of these are technology companies eg Microsoft, Apple, Facebook & Google. These companies have rewritten industry rules in which they play, doing things differently to deliver value to the end customer. It is therefore no surprise that technology companies oppose SOPA as their roots are in start-ups where innovation is the main driving force behind their business success.
Innovation comes from experimentation and needs creativity and destruction in equal measure – in order to create you need to destroy what has gone before. So what if the Internet was censored – would this limit innovation? I think the answer is a resounding Yes! Technology has created a third state that allows us as individuals to work alone as well as together. The company of the future will be narrow (focused on one particular specialism), hollow (use partners instead of reliant on in-house skills), flatter (not as many levels of management), creative driven and international (borders don’t get in the way of business any more). Therefore, if the internet and social media are suppressed then so is the power of smaller businesses.
Thinking about what impact this might have on our economy, if we take the UK as an example and think back to The Big Society,which was the flagship policy idea of the 2010 Conservative Party’s general election manifesto, SMEs were identified as playing a fundamental role in getting the UK economy back on track. If SME growth is hampered in any way, this will impact greatly on the growth engine of the UK and result in slow progress in climbing out of the current downturn. Also, taking the land of the free (USA) as another example, innovation is at the heart of how they came to dominate the world. However, times are a-changing and China, with all their cost advantages, will quickly supersede them as the global superpower (if they haven’t already done so). Therefore, you could argue that the only advantage the US has over China is innovation and if legislation starts to hamper SMEs then growth will slowly grind to a halt.
Taking all this into account, what does it mean for the future? In one sentence, if we stop innovation and continue to do what we have always done then we will always get what we have always got….if we are lucky!
For information on innovation and new product development visit our website.
In this week’s Business Surgery, Simi Dhawan takes a look at the role of ‘copying’ within product and service development.
Being intrinsically nosy, it is no surprise that I have found myself in research. Of particular interest, is anything related to new product development – where the words ‘innovation’ and ‘creativity’ are frequently bandied about as USPs. Given this interest, I was intrigued to read Lucy Kellaway’s article in the FT which discussed academic arguments towards social behaviour claiming that ‘almost all our decisions are based on copying’. The theory suggests that as time goes on and we are faced with more decisions and busier diaries, we tend to learn from others and do more copying.
From a business perspective, whilst copying might bear negative connotations as the “cheat’s” way, by contrast, it is a practice that most successful businesses have actually mastered! A perfect example is the smartphone. Whilst many versions exist, making it hard to distinguish a clear product definition, broadly speaking, this is a mobile phone built on a mobile computing platform (the operating system that controls it – like Windows), enabling it to perform more advanced functions than a standard phone. Whilst IBM introduced the first smartphone in 1992 – the ‘IBM Simon’ (as seen below), more advanced smartphone products now make up the base of every leading phone manufacturer’s product portfolio. A clear case in point that ‘copying’ and advancing others’ ideas is not only commonplace, but canny business practice in getting ahead of competitors and capitalising on existing markets created by their products and hard work!
There are many such historical examples in business, although you would meet with some resistance in getting people to proudly declare that the basis of their creative innovation is imitation. Whilst (not surprisingly) there is stigma attached in linking the two together, I agree with Lucy Kellaway’s notion that it is less a “necessary evil” but a skill to be embraced and perfected. This is a topic that has been the subject of much scholarly debate for many years. An article by Theodore Levitt in the Harvard Business Review in 1966 made the point that our business world increasingly bows to innovation – seeing it as the pre-requisite to business survival and growth – a view that still stands true 25 years on. However, the article also goes on to explain that whilst we see a continual flow of seemingly new products and services enter our market, strictly speaking, these are actually not innovations at all but imitations of previous products where he argues that imitation is “not only more abundant than innovation, but actually a much more prevalent road to business growth and profits”.
Tied in with this, as an avid viewer of the TV series ‘Dragon’s Den’ (clearly the pinnacle showcase of all revolutionary product development), amidst the public annihilation of prospective entrepreneurs for our shameless entertainment, the ‘Dragons’ appear to cap the risk of their investments by researching a couple of basic principles, namely:
• Is there an existing market for this product?
• Is there a patent in place to protect this product?
Fundamentally, all of what we need to know can be primarily captured in sales potential and product demand (to ensure growth), paralleled with measures taken to reduce competitor imitation (allowing us to enjoy product differentiation for as long as possible). In fact, the very existence of patent protection is evidence alone that imitation and copying forms a large part of everyday business practice!
Equally, more than most, product development teams recognise that the spurring on of “new” ideas does not happen in isolation of existing ideas. In fact, very much like the atoms that make up every human being which are in a constant state of change, product development is also a continuum and never at a standstill. A stream of thoughts piled on top of thoughts, advancing and changing all the time. Indeed, in B2B research, we’re often directing insights to our client’s “product development team” rather than a “new product team” per se. More than this, since most patents are only secured for a fixed period of time (rather than being infinite), this demonstrates wide recognition that businesses reserve the right to eventually access others’ ideas and build upon these, where this is an essential part of product development and innovation. Just imagine if we were all still reliant on using the ‘IBM Simon’!
As a junior researcher, I entered my role condoning the mantra that “the best products solve a problem”. Now, several years on, experience and common sense suggests that “the best products often solve problems with existing products”. Whilst I always relish an opportunity to test a new product or concept, this is often an adaptation or “add-on” feature to an existing product, rather than something that is completely revolutionary. In B2B markets, whilst the words ‘copying’ and ‘imitation’ might offend our clients and perhaps demean all of their hard work in bringing something new to the fore, the intelligence that they gather from working with us when it comes to testing their concept or benchmarking this against competitor products, suggests that they fully understand these principles as forming an integral part of business behaviour. If they are not learning from what competitors are doing, then they are learning (and developing) their products from the feedback and ideas obtained from their customers or end-users. It is this mass overlay of available information that allows them to progress their ideas and concepts, so as to implement them more effectively.
In short, I am not arguing that adaptations to existing products or services are not examples of innovation in business terms. Rather, these are the best examples when they can drive sales and growth. Therefore, businesses need to both recognise and act upon such principles by focusing their attention on competitive intelligence as a catalyst for their own ideas or new market opportunities. If the words ‘copying’ or ‘imitation’ sound misguided or offensive, then call this “product development”, “rejuvenation” or “replenishment”. In fact, call it what you like, but know that successful imitation will see you grow. Learning from others will not only save you time, but see your business replicate the countless successes of others that have done the same – a lesson certainly worth copying.
Mark Hedley this week considers the subject of how to approach product development research
I read a recent interview with Nielsen’s American chief of product development Vicki Gardner, in which she talks about Nielsen’s approach to product development research. The interview reveals that Nielsen has recently announced its new strategy for product development research, which breaks down the factors that influence a product’s success into twelve points. These twelve points cover issues such as how distinct the proposition is, how persuasively the message is conveyed, how well the product performs and the cost-benefit trade-off for the buyer.
Nielsen believes that, with its new approach, it can dramatically reduce the likelihood of a flop, with a success rate of about three in four. That’s compared to less than one in four for all new products, and just under half for products tested using the old approach. Explaining the reasons for this new approach to product development research in July’s issue of research-live.com, Vicki Gardner said:
Although Nielsen’s approach has largely been developed for consumer product development, its basic principles are also applicable to many business-to-business markets, where obtaining accurate and usable data for new product development initiatives presents a challenge. Although buyers in b2b markets often possess technical knowledge that allows them to visualize new product concepts, it is also necessary to present potential buyers with distinct new product concepts to test the attractiveness of a new product. It is then possible to assess reactions to the product concept in terms of its perceived benefits, cost-benefit trade-off, the ability of the product to meet a need, its benefits over alternative products, and so on. The more nuanced the dissection of these factors, the more likely that a company will succeed in developing or adapting new products to meet the real needs and unmet needs of the market place.
However, it worth noting that product development research in b2b markets should not just focus on the product itself, which is often just a small aspect of the requirements of buyers. For example, in manufacturing industries, the availability and speedy delivery of a key ingredients can often be as, if not more, important than minor product innovations that may not significantly alter the product’s performance (especially where a large number of substitute products exist). As such, the best product development research will not be carried out in isolation, but will also take account of other issues surrounding the product, such as packaging, services (i.e. technical support), delivery and marketing. The benefits accrued through the significant investment that may be required for new R&D activity can then be appropriately measured against investments in alternative areas of the business.
In Chrissie Douglas’ latest Insight, she reflects on the entrepreneurial focus of the latest Budget and the key role market research has to play.
Budgets…I have to admit…I have never really taken much notice of them. It just seems that each time the budget comes around, my husband reminds himself that he must give up smoking – I remember him saying he would give up when they reached five pounds a packet…and that was ten years ago! It was only after talking to a friend who recently lost her job that we got into a discussion about the recent budget. She has been a trainer for over 15 years but because of the range of new start-up incentives offered in the March budget (such as the extension of the rate relief scheme, business rate holidays, corporation tax reductions, entrepreneurs tax relief, R&D tax credits and the introduction of enterprise zones), she is now considering setting up her own consultancy firm. I know it’s only one example, but the government’s strategy which promises to “tear down the barriers to enterprise” may have actually got people thinking. We may be about to witness a new start-up boom.
This took me back 15 years to my undergraduate business degree. One of the things I remember (and there isn’t very much) is the huge failure rate in new business start-ups. I rechecked the stats and the gloomy picture remains. Depending on the source, the rate of business failure in the first year varies from 30% to 50%. Even worse, of those start-ups that do survive, as many as 95% will fail in the first five years.
The reasons for failure make interesting reading. They include a variety of factors such as overexpansion, overspending, poor location, bad management, failure to change with the times, ineffective marketing, underestimating the competition…the list goes on…but a recurring theme is poor business planning and lack of research. Basically, a failure to truly understand the market (i.e. customer needs and preferences, their decision making processes, price sensitivity, and who they are up against). As such, it is clear that market research has a critical role to play in the government’s plan for growth. Market research provides the necessary ‘intelligence’ on which to make more informed business decisions and minimise start-up risk.
But hasn’t this always been the case? Haven’t we always seen peaks and troughs in business start-up activity and hasn’t market research always had a key role to play? The answer, of course, is yes on both counts but often the major barrier to market research is both cost and perceived need. On the first point, and particularly for new start-ups, finance is often tight (especially in the current climate). On the second point, when an idea is borne confidence is often high. You have an idea, you believe in that idea, so why spend money to confirm that it will work?
The arguments for market research remain the same. It makes complete sense to test an idea in the market place and tailor the concept before making a sizeable investment. In this current cycle, however, we believe that market research is better equipped to play its role than ever before. Market research can now be carried out more cost effectively than in the past as a result of advances in technology and the use of online survey techniques. Online market research eliminates the high costs involved with face-to-face, postal and telephone data collection. It also offers the benefits of speed and data reliability and eliminates the barriers often associated with global research. For a business which needs to gain a general view from a large cross-section of the population, in as short a time as possible, there is no doubt that online research offers a viable solution.
Any new business start-up or new product launch is inherently risky as it is a venture into the unknown. B2B International has shown that thorough, well planned research can accurately pinpoint the richest areas of opportunity and therefore prioritise the most promising areas for new start-ups and new product development.
To learn more about how B2B International can help you, contact our New Product Development Research Team.
In this week’s Thursday Night Insight, Peter Mullarkey tells us how going out for an impromptu meal leads to a smorgasbord of options, washed down with plenty of discussion.
On a recent trip to Liverpool to visit an old school friend. My Girlfriend and I stayed in a hotel close to the shopping and leisure development, Liverpool One.
After an afternoon walking round the dock, a trip to the Tate Modern and viewing the Liver birds, we walked up to Liverpool One and decided to go for a meal at one of the many chain restaurants on offer, but just as in business, here is where the problem occurs. 3 people stood outside 20 different restaurants all with differing tastes. How do you make the choice?
Companies face these decisions when trying to development new products. They will (hopefully) have lots of ideas, but only with the budget to move forward by prioritizing one of them.
One of the ways to test if the product has any hope of being a success is by using the Stage-gate model which was developed by Robert G. Cooper in 1986 and although it has been modified by different users it has the same process:
Our “Discovery” was the large amount of choice, all conveniently located within a 200 meter radius. But after a quick discussion we had reduced the list by some influencing factors:
• Is it a restaurant rather than a fast food outlet
Once we all had common knowledge of these, we reduced the list to 5 restaurants:
• Las Iguanas – A Latin American Restaurant.
At which point we start to walk between the eateries, perusing the menus and looking through the large glass windows at the atmosphere inside. This scoping stage also included looking at the menu of each of the restaurants and the most interesting was for Red Hot Buffet “a meet all” solution for the evening, a Chinese, Thai, Mexican, Italian and Japanese buffet, but it seems that the rest of Liverpool also had the same idea as there was a rather large queue. This put a cross against our initial choice.
We all pitched in with our thoughts, experiences and built a case for each of the remaining restaurants, trying to quickly weigh up all the pros and cons. At this point my hunger increases and I think they all look good, Rob is still unsure and Louise has made up her mind, but is being diplomatic.
But the decision was made when we focused on value and more importantly, at which venue could we use a discount voucher? After a quick search, we found a “buy one get one free” deal at the Italian restaurant Zizzi. With a few taps on a Smartphone, the choice was made for us, and we would get the chance to fight over the 4th free meal!
It was a relief to have reached a conclusion. We strolled in and asked for a table for three, then we were hit with a spanner in the works, there would be a 40 minutes wait before we could be served. Another group huddle ensued, but after all the choice and indecision so far, we said it was fine and that we would find a bar for an aperitif. This test emphasised that the correct decision had been made on the face of it, but just as in business, the proof is in the pudding…
Not all decisions can be made with a few clicks on an app for a Smartphone and just as with the Smart-Gate Model; some new products will need market research to help them to evaluate the bigger picture.
If you would like more information on how B2B International can help you with this, please click here