The importance of innovation
Turning an idea into a new product or service is a lot harder than just coming up with new ideas. In addition to having the right product idea in the first place, there are three essential ingredients for successful new product development:
- The relevant skills, production process, quality control, packaging, costing and pricing and successful customer trials
- Sufficient resources that doesn’t distract existing business
- Your personal commitment to drive the project.
Coming up with innovative ideas isn’t always intuitive and you may need to develop a number of ideas before any one comes to fruition. To help develop a tranche of ideas try:
- regular brainstorming sessions with staff
- a continuous improvement scheme for your products and services
- assigning staff a designated number of hours each week to explore innovative ideas
- encouraging fact-finding travel or visits to similar businesses
- upskilling staff through training programs
- joint ventures with complementary businesses
- working on new ways to improve your business systems
- exploring greater use of online, technology enablement and business models.
Reducing the risks
Try to identify the major risks early on so you can decide if the overall expense and time is worth the potential reward. Minimize the risk by:
- Establishing the likely volume of sales, and the marketing and sales cost of achieving each sale
- Determining if your target market growing or shrinking
- Identifying any foreseeable changes in your market that could affect the success of your product, such as new legislation
- Identifying any competing products already in the market.
Work out how to reduce each risk to an acceptable level. For example, can your new design be patented or protected in some other way?
Ask potential customers, suppliers and members of the development team for feedback on the idea or a prototype. Good feedback at this stage can save time and money.
Signs of non-starters
While a good product idea is no guarantee of success, a bad product idea is guaranteed to fail.
Here are some fatal flaws:
- You can’t sell at the price or volume necessary to make a profit
- Your product can easily be copied. Competitors could launch similar services at lower prices, with less start-up costs
- You lack market power. For example, a new piece of software may be the best in the market but it could be doomed to fail if you lack an effective distribution strategy
Modifying your existing products or services
Traditional businesses like cafes, plumbers, builders, professionals often can’t suddenly transform themselves into something new. If you’re a baker, you’re a baker. But they may be able to alter existing product or service lines or change the way they sell. The internet, apps, the growth of online shopping and banking have changed the playing field.
Taking for granted ‘normal’ online shopping, other ways of selling now include:
- Third-party marketplaces like Amazon
- Digital payment platforms such as PayPal, Stripe and WePay
- Offering the core product for free users and monetize the traffic (or pay to upgrade)
- Drop shipping (another business holds the inventory and ships to your customer)
- Renting short-term (using a scooter for 10 minutes)
- On-demand (delivering only when ordered such as printing and books)
- Resource sharing (where Uber and Airbnb use the public to rent their asset to end users).
This list isn’t exhaustive, new ideas will come along all the time, but what is trending in your industry that you could take advantage of? Investigate if there is a new way of selling that opens up a new business channel to your customers by seeing what other businesses are doing that you could adopt.
Developing new products and services
If you do need to find new products and services, a normal process would be to develop a prototype, research if there is demand, test with customers and then launch.
To find new ideas find out what similar businesses are doing (either here or offshore), search your industry key words, read research papers or websites that report on trends affecting your type of business. Social media channels are also a useful source of information by following relevant feeds and groups.
Stay up-to-date what’s is relevant to your industry, evaluate new software or channels introduced by your industry and contact your customers to ask them what else they need, what are their issues and problems that you can help to solve. They will be the ones that have the most invested in your innovative new ideas.