Image_20150929_six_ways_to_improve_your_product_pipeline_98353426

Six ways to refresh your product pipeline

By Matt Peterson, Erik Rutten, and Jim Williams

Try these approaches to stretch your thinking and tap into new sources of inspiration for your products.

A healthy product pipeline is an organization’s strongest defense against changing markets, technologies and consumer preferences. It’s also the best way to capture new opportunities as they emerge, and to create novel opportunities before your competitors do. But if your company relies on the same old methods to top up your product pipeline, there is a good chance it is missing out on potentially valuable ideas. Here are six proven approaches that leading companies have used to broaden, deepen, and reinforce their own sources of new product ideas and insights.

1. Ask your products

For the first time in history, it has become possible to ask products themselves for improvement ideas. Many products can now collect data on the way they are used. An increasing number of them have network connections that allow them to “call home” and let their manufacturers know which features customers are or are not using. Today the Internet of Things includes a broad range of products, from computers, printers and thermostats, to elevators, aircraft and manufacturing machinery. Its number and diversity is growing by the day, with analysts predicting that more than 26 billion such devices will be in operation by 20201 .

Many industries are now using such data to optimize their products. Cars, mining trucks, and elevators can relay information to the manufacturer about vibration and loading levels in the field. Printer manufacturers can understand feature and usage patterns across geographies. Data storage equipment can provide its makers with complete real-time usage data, from room temperature, to data transmission requirements. All of this information allows OEMs to understand how customers are actually using the products they purchase, rather than how manufacturers think they are using them.

2. Listen to the buzz

Another consequence of internet technologies is the increasingly public—and enduring—nature of consumer discussion of their product experience. From on-line review sites, to discussion forums and social media feeds, companies have dozens of new opportunities to learn about customer priorities, problems, and experiences.

This social media analysis can take place at different scales and levels of complexity. At the simplest level, a company will ask an employee (ideally a product manager) to spend time looking through product review websites capturing what customers like and dislike about their products and those of their competitors. As Big Data analysis techniques have become more sophisticated, a number of market research companies have also developed approaches that allow them to conduct such analyses at scale.

One car manufacturer used social media to identify improvement areas for a model targeting young drivers, for example. Analysis of discussion of its vehicles showed that while customers strongly appreciated the exterior design, they were less satisfied by the quality of interiors. In response, the company changed the way it thought about interior quality and adopted a stronger focus on usability from the earliest stages of the development of the next model of the vehicle. This delivered a double benefit: subsequent models were not only more popular with customers, they were also cheaper to manufacture.

3. Explore adjacencies

Looking across industry borders can identify potentially lucrative new markets for established technologies or capabilities. Some companies use adjacency analysis to identify “overlapping” industry sectors. Sorting these by profitability and growth potential can identify the areas with the most promise and even reveal possible joint venture partners or acquisition candidates to facilitate entry into the segment. A move into adjacent sectors has been a catalyst for growth at some of today’s largest and most successful companies, from electronics companies moving into the payments markets, to search engine providers crossing into retail.

A look over the border can also inspire new ideas at home by revealing the alternative approaches other sectors have adopted in response to similar problems. UK-based Dyson’s iconic vacuum cleaner was inspired by observation of the cyclonic air-cleaning systems used in industrial environments, for example.

4. Activate your customers

Internet technologies have empowered consumers to participate far more actively in the product development process. Toy-maker Lego, for example, developed a computer-aided design package allowing customers to create “virtual models” using its library of molded plastic bricks. Users can then publish finished models to an online gallery. After running a series of online competitions to select a few popular products for manufacture and sale, Lego awards winning designers with a percentage of revenues. Chinese mobile phone manufacturer Xiaomi makes extensive use of social media for a combination of marketing and customer insight generation. It regularly asks customer to suggest new features, and has run competitions in which customers are asked to describe the characteristics of their “dream” phone. Another example is Quirky.com, which has built entire businesses based on suggestions from users: customers and others vote on popular ideas, and the organization provides support to develop them into full products.

Customer co-creation works in services too. Spanish commercial bank Bankinter runs its own “Bankinter Labs” program that invites customers to supply ideas for new products and services. After screening them, the bank works with owners of the most promising ideas to develop them into concepts, and customers are then invited to vote for their preferred ideas online. US investment brokerage Charles Schwab created an online community of customers and potential customers who were invited to participate in online surveys and discussions about their financial habits and needs, ultimately leading to the development of new product offerings.

5. Unleash your organization

Large organizations are full of great ideas. The challenge for leaders can be to ensure their people have the space and the opportunity to share those ideas. The best companies are becoming increasingly systematic in the methods they use to help employees refine and communicate innovative ideas.

Doing that starts with the culture of the organization. As far back as 1948, 3M has encouraged its employees to spend 15 percent of their time working on personal projects; a new generation of innovative companies like HP and Google have adopted similar practices. Other businesses take active steps to encourage employees to keep experimenting with new ideas without fear of failure. Facebook, for example, places great emphasis on speed of delivery in its introductory training for all new development staff. The company reinforces its culture by displaying slogans at all its offices: “The foolish wait,” “Move fast and break things,” and “Done is better than perfect,” are among them.

To show their employees that they are serious about innovation and risk, the best companies invest in infrastructure to support their efforts. Some develop specific incubators outside the normal structures of the company to promote the development of innovative ideas. These can be real spaces, like sports Broadcaster ESPN’s Innovation lab at the sports complex of the Walt Disney World resort, or virtual ones, like electronics company Samsung’s Advanced Institute of Technology (SAIT), which comprises a network or research laboratories, industrial collaborations and academic partnerships. No matter how they are structured, the key to successful incubators seems to be a careful balance of independence from the parent company combined with sufficient resources, and, critically, senior management interest to support high potential projects through to market launch.

Some companies use annual “product fairs” as a forum for employees to share their ideas and to compete for an opportunity to turn them into next generation products. India-based conglomerate Tata runs an annual “Innovista” competition, for example, which attracts several thousand entries from group companies worldwide. The competition includes categories for service and process innovations as well as products. To encourage and reward risk-taking, the competitor also has a “dare to try” category to celebrate ideas that did not achieve their intended results2 .

6. Build, test, tweak

Agile development, which is based on rapid build-and-test iterations, has become the norm in the world of software development (think Facebook’s famous “fail fast” motto). Thanks to the advent of rapid prototyping techniques, it is now much more common in the world of physical products, too. It has become standard practice in innovation workshops at some companies to generate ideas one day and test prototypes with customers the next, thanks to 3D printing technologies.

Getting even a simple mockup into the hands of users can offer surprising and significant insights. The designers of an assistive reading product for visually impaired people based their original prototypes on the form of a point and shoot camera, for example. Early testing with 3D printed models revealed that this design placed undue strain on users’ wrists, however. The company relocated the camera to the bottom edge of the product, which dramatically improved usability and comfort.

Rapid prototyping methods don’t have to rely on 3D printers. Many designers use Lego blocks to explore initial concepts, for example. To gather rapid consumer insights on large products, from refrigerators to medical scanning equipment, one product design agency makes fullsize physical mockups very quickly from foam core board. Designers then project surface features from their CAD models directly onto the mockup during discussions with users. The approach allows features like the size of handles or the position of controls to be adjusted instantly at the click of a mouse.

* * *

Ultimately, ideas and insights for new products and services come from only one source: the human imagination. The challenge for companies is to ensure they are using the best possible range of approaches and technologies to collect, sort, and test those potential innovations. The proven methods above can help your product pipeline, too. Is your R&D function renewing its methods as rigorously as it could?

About the author(s)

Matt Peterson is head of client service for Lunar in McKinsey’s San Francisco office, Erik Rutten is an associate principal in the Amsterdam office, and Jim Williams is a senior practice manager in the Seattle office.

Related Articles