Product Innovation & Taxonomy

A few days back I wrote about the need for Vision to achieve alignment, provide context, and engage workforce and customers through a collaborative and ubiquitous narrative.

This evening I wanted to share three lightweight methods of guiding strategic decisions as you funnel down to implementation tactics, these are:

1. The Innovation Ambition Matrix
2. The Lean Product Lifecycle
3. The Amazon Press Release

Innovation Ambition Matrix

The Innovation Ambition Matrix helps an organization understand the landscape and approaches available for ongoing product innovation and future revenue creation. Where the lean product lifecycle gives the process and state, the ambition matrix steers towards value.

Most significantly it provides an opportunity for achieving shared strategic context beyond technology, aligning with sales and marketing, and using the insights and intelligence they can provide to come to a common understanding of “where to play” and “how to win” with products, services, and capabilities.

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Core Innovations

As the name suggests core innovations are optimizations and features for existing products in established markets. The focus for established core products should be one of prudence, waste reduction, and market protection. There will be high tacit knowledge for the teams that operate in this domain so engineering efforts will probably be low on research and lower on complexity than the other domains.

All products will likely become end-of-life one day, it's sensible to mitigate against the risk that these revenue lines may dry up over time or become disrupted, innovation in this space should help to preserve the lifetime of the product sustaining capability whilst new revenues are sought and maximizing existing lines from a large customer base.

Your Core customer base is a goldmine of opportunity for adjacent innovations.

Adjacent Innovations

These move your company into new business by leveraging existent capabilities, the risk of entering new markets is somewhat mitigated through the tacit knowledge, assets, and patterns that the organization has developed and can redeploy to analogous problems.

Adjacent innovations will need to progress iteratively through the design phases of the LPC to ensure qualitative and quantitative decision making and reducing the cost of failure.

The key to finding high-quality adjacent opportunities is to develop high-quality relationships and understand your customer, their problems, and the opportunities these present.

In a highly federated value chain, additional revenues may be but one API downstream.

Disruptive Innovations

Disruptive innovations move your company into new business models, entirely new theatres, new customers, and solve new problems or needs.

Without the benefit of being able to leverage existing assets or knowledge, disruptive innovations are by far the most research and design intensive. The smaller and faster the action to get information the better, if the idea is a non-starter we want to know before too much effort is exhausted and before any irreversible decisions are made.

The Lean Product Lifecycle

The lean product lifecycle is a sense-making taxonomy and lightweight process definition, it can be used to map an existing product set and inform strategy. It’s complementary to design-thinking, agile execution, and DevOps.

the Lean Product Lifecycle

If you’ve skipped over the picture above, take a moment to digest it properly and consider how the funnel of uncertainty narrows from a left-right linear progression, where research, design, and engineering activities would align, and how and where iterative learning should take place. Each stage is defined in more detail below:

1. Idea: Use customer and market insights from a wide range of inputs to generate strategically aligned ideas. Select which ones to work with to help you potentially deliver new innovations or products, and or grow into new markets.
2. Explore: Explore the problem and opportunity in the customer domain. Learn how much potential the ideas have to serve real customer needs, the size of the opportunity, and jobs that need to be done.
3. Validate: Use insights to start with a minimum lovable product, and iteratively develop a product that delivers value to customers. Test business model including pricing, costs, channels, and state to prove product/market fit.
4. Grow: Once you have a validated business model, the focus shifts to growing customer numbers, revenues, and profits.
5. Sustain: As products reach maturity and markets get saturated, focus shifts to optimizing operations to reduce costs. This helps sustain profits to reinvest in ideas and innovation.
6. Retire: Identify which products are now less viable than other opportunities, and work to recycle insights and extract residual value which could support other innovations.

Amazon Press Release

The final approach to talk about is the Amazon press release, the clever folks at Amazon work collaboratively at the start of an initiative to frame and present the outcomes of their efforts in the format of a future press release. By taking this approach they benefit from the creativity of diverge — converge and pulling everyone's brain into future successes and outcomes, collecting and refining diverse views on what that future should look like. Its collaborative vision setting and provides a canvas that can be tested around the organization and with customers.

As a lightweight bureaucracy, these approaches play well into each other; identifying where the opportunity is likely to be, understanding the end-to-end process for realizing it, and taking the first step in refining the detail of the outcomes we are seeking. Most importantly they take concrete steps in providing a framework around the uncertainty that surrounds product development and give a process that can be trusted.

The journey of a thousand miles begins with one step — Lao Tzu

Further Reading:

The Lean Product Lifecycle

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