Harvard Business School professor and "The Innovator’s Dilemma" author Clayton Christensen once noted that of the approximately 30,000 new products launched into the market annually, there is a 95% failure rate. Every organization and industry deals with this challenge.
Christensen pointed to over-innovation as a major root cause of this failure rate, saying, “Technological progress almost always outstrips customers' ability to use it.”
Personal computers are a great example. Most personal computer's processing power far exceeds the needs of the average user, meaning a large part of the machine's capabilities go wasted. And this constant need to enhance and optimize products often drives the costs of the items beyond the reach of the typical target customer.
To dive further into this topic, we sat down with Mark Langsfeld, CEO of mTab. Langsfeld has overseen innovation across an array of industries including social listening, customer analytics, customer experience and applied artificial intelligence (AI) and has been tasked throughout his career with overcoming the innovator’s dilemma. He has served as co-founder and president of ListenLogic, vice president of analytics innovation for Anexinet, and head of product innovation for VoiceBase.
What follows are five data-driven steps organizations can take to to solidify their understanding of market shifts and customer evolution to develop innovations that align with the needs of the user.
1. Position Perspective
First and foremost, assemble a comprehensive view of the surrounding competitive market landscape and the position of your brand and solution within it. Although often overlooked, this is typically achieved through external intelligence sources and analysis, including benchmark reports, landscape reviews and industry overviews. However, customer perspectives can also provide valuable insight into your solution’s differentiation factors and competitive advantages, as well as its positioning and perception within the market. For this reason, surveying customers to understand their attitudes and behaviors related to established products is key.
Langsfeld's take: "Having a clear grasp on your competitor’s offerings and stance in the market helps to not only reveal your product’s strengths and weaknesses, but also the opportunities for innovation where market or functionality gaps exist. Having a strong understanding of your position sets the foundation for innovation and allows the organization to align resources to develop solutions that intersect with user needs."
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2. Customer Clarity
A vital part of innovation efficiency is understanding how customers perceive your brand and product. The backbone of this is internal data. And while the average company today has upwards of 400 data sources (and counting), adopting the means to overlay these quantitative and qualitative datasets provides incredible views into the behaviors (e.g. web logs, app activity, channel engagements) and preferences (e.g. product reviews, customer surveys, brand rankings) of the customer. Beyond this, these multidimensional cross-views can reveal the evolutionary path of the product.
Langsfeld's take: “While instincts and ‘gut reaction’ are often the guiding point for decisions, it’s a foolish undertaking when it comes to the future of a product or a company. Going directly to the customer is vital to developing innovations that will grow the strength and success of the organization. This is deeply rooted in data-driven understanding by unifying dispersed datasets into a single-source view of the customer. Listening to the end-user to understand their raves and rants is critical in driving effective innovation.”
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3. Strategic Synthesis
Once you've assembled the views of the external market and internal customer, synthesize them to gain a holistic understanding of the opportunities where the market and customer intersect. The result will be a roadmap for innovating your solutions and evolving your products. The roadmap serves as the basis for developing the strategy around the technology development, target market, engagement channels, product positioning and communication planning. All of these elements are critical to enhancing your product and exposing it to the market.
Langsfeld's take: “Aligning the needs and preferences of the customer with gaps in the market offerings can reveal opportunities while validating the technological and personnel investments required. This serves as a proof-point on the direction of the organization’s innovation steps to ensure that the opportunity is there on both the strategic and tactical levels.”
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4. Universal Understanding
Once this fragmented data is synthesized into innovation intelligence, it needs to be distributed across the organization — from sales and strategy to customer experience and the C-Suite. This provides the information needed to serve as the backbone for every team to make decisions, set strategy, plan engagements and design innovations. For example, engineering and product are focused on developing enhancements based on the market gaps and solution weaknesses, while marketing and sales are developing plans based on product strengths and top features. Working off the same data foundation ensures everyone is working off the same knowledge base, with the same assumptions and aligned goals.
Langsfeld's take: “While it’s important to align the needs and preferences of the customer with gaps in the market, educating your entire organization on this insight is equally critical. Too often, when companies demolish their data silos, they still fail to democratize this understanding across the organization, essentially locking up the intelligence from cross-functional teams.”
Related Article: Is Your Company Data-Driven or Data Informed?
5. Flywheel Focus
Developing and integrating a flywheel process will ensure innovation is an ongoing effort. This makes the process a fundamental component of the organization’s DNA and facilitates continuous SWAT reviews of strengths and weaknesses of the product and opportunities and threats to the organization. This approach transforms innovation into a fundamental component of the organization’s culture across each department.
Langsfeld's take: “Innovation is not a one-time event, nor should it be periodic. The most successful innovative organizations are the ones that embrace and encourage it as an everyday process. This is why establishing a methodology and supporting it with insight is the ideal way to successfully innovate. The foundation to drive this is to encourage a read-react-response to the market across every team.”
Related Article: Building Innovation Practices With Staying Power
The Bottom Line
Adopting a data-driven approach to facilitate deep understanding of your organization, customers and competitors is fundamental to overcoming ‘The Innovator’s Dilemma.’ Driving innovation to fill in the gaps across the market and align with the needs of the customer is achieved when insight drives innovation. Beyond this, making it a part of the everyday methodology and process of your organization will engrain it into the operation and result in innovation being a fundamental driver of success rather than a dilemma to avoid.