Smart innovation: how do you do that?
Virtually every market segment in today's economy is subject to it: innovation. It is getting easier to launch start-ups and modern technology is advancing all the time. Products and services literally every industry in the world are therefore susceptible to innovation.
There are roughly two ways to respond to the innovative world around you as an entrepreneur: either try to join in and start innovating yourself, or close your eyes and stick to your existing product and vision. Surprisingly many companies do the latter. "We just have to make sure we're the best at what we do." Wanting to be the best is of course not a bad intention, but history has shown time and again that it is precisely the innovators who ultimately have the longest breath. But innovation costs money, without you knowing in advance whether you will get anything in return. And how do you actually know in which direction you should innovate? Smart innovation, how do you that?
Innovation is not a luxury, but a necessity
We'll start at the beginning: every entrepreneur should realize that your innovation department (or team) is not a luxurious prestige project that you can always close again when times get worse. Innovation is necessary in almost every industry to remain relevant to your customers in the long term.
McKinsey states that a healthy company reserves about ten percent of its resources for innovation. You obviously spend the majority of your budgets and FTEs on your core business, but innovation is not something you do every now and then; it is an essential part of your business model.
Lean and agile
The magic words are lean and agile. That ten percent of resources may still be a huge mountain of money and personnel for the largest companies, but for most companies it means that you have to be creative and not waste. Ideally, you would like to find out whether a certain innovation makes sense before developing it has even cost money. But is that possible?
Lean development means that you focus on the core of what you want to innovate and do not waste money, time or other resources on peripheral matters or unnecessary embellishments that are completely redundant for the time being. It is related to the concept of agile (translated: smoothly). Agile development means that you implement developments step by step and do not build on forever until a product (or test version) is completely finished. In the context of the development of innovations, lean and agile development lead to a so-called MVP: Minimal Viable Product.
Innovate with an MVP
Strictly speaking, the term 'minimal viable product' is not correct at all. An MVP does not have to be viable at all to be valuable as an MVP for your innovation research. What an MVP must meet, then, depends on the type of product you want to design or the type of feedback you want to receive.
In terms of product innovation an MVP is really nothing less than a concept (existing or not) that you want to be able to test with your audience. This testing can be done in many different ways, but the following applies to every MVP: it is anything but a finished product. An MVP is far from finished. As a rule of thumb, remember: if you eventually develop your MVP into a full-fledged product, you'll end up ashamed of that MVP. (And there's nothing wrong with that.)
Nowadays, four types of MVP are often distinguished. We go through all four of them.
Yes, you read that right. Just pretending to offer a new product or service is one manifestation of the MVP. Keep in mind: we are talking about innovation here. At this stage of the research, we just want to know whether there is a future in a test balloon that we release. Most of your innovation team's ideas will die in beauty, but it's about that one idea that well results in a beautiful, innovative product.
By pretending that you have developed (or are about to develop) a new service, you can already offer this service to your customers. Based on their response, you can determine whether to proceed with the development and, if so, how. Do customers want to use your product? Does it seem useful to them? Maybe they even want to pay for your product?
Groupon is a famous example in this segment: the first test version of Groupon didn't work at all. It was a website that offered discount coupons, but it wasn't until you sent an email with an order that they got to work. Coupons were created – manually – and sent to you as a PDF. The entire underlying system – an automatic coupon system through which you can take advantage of great (group) discounts – did not exist at all yet. It all had to be developed. However, Groupon pretended it already existed.
2: Digital elevator pitch
It is now a somewhat outdated principle, but in the past – when the director still worked on the top floor of the office building and only stood in the elevator between the rest of the crowd at lunchtime – it was considered crucial for business people to have a good elevator pitch to have ready. Being able to impress the director within twenty seconds, if he once stood next to you in that elevator.
Nowadays, the inspirational vlog the new elevator pitch and put it on YouTube instead of practicing it every morning in front of the mirror. And it's a form of MVP: make a video explaining a new innovation. Instead of a video you can of course also use a landing page or other digital content: as long as there is a place on the web where people can experience your innovation and get the opportunity to interact. Explain your idea and ask for feedback. What is your audience saying? Is the video or page often shared? Is there a lot of interaction? A healthy dose of likes?
Dropbox once started with a YouTube video as an MVP: just explain and show what you want to offer, and then see what happens. The video became a huge hit and proof that the service really needed to be brought to the market.
Crowdfunding has to be one of the greatest inventions ever for any entrepreneur. Customers are already paying for your product when you haven't even developed it yet. Through crowdfunding you can show a product to the world and ask for an investment or purchase. early bird receive a discount or another advantage, but more importantly: invest money in your idea. Once you have enough investors, you know two things for sure: you have enough money to make the idea a reality, and you have a loyal customer base to start with.
Another advantage: crowdfunders are generally people who have a good eye for innovations. They know how to value innovative ideas. If you get a lot of followers through a crowdfunding campaign, you can be confident that your idea has a future.
4: One function
In order to appeal to the largest possible target group, we often build products or services that are full of options. That's nice and nice, but with your MVP you often only want an answer to the question whether there is a demand for your product at all. Then it helps to develop an MVP with only that one core functionality.
All the functions you offer will trigger reactions. If you put a website online with six functions, you will receive feedback on all six functions. It is then difficult to determine whether the website itself is a good idea.
The first version of Facebook was nothing more than a page with your photo and your profile. No timeline, no apps, no videos, nothing. The question Zuckerberg wanted answered: Do people want to be able to view other people's profiles? He only needed one function for that: to be able to create a profile. The first extra feature he added? The relationship status, because feedback on his MVP showed that many people looked up profiles of acquaintances they secretly liked. Something that would have been a lot harder for him to figure out if he hadn't put that bare-bones, single-function MVP online.
Lean development with the design sprint
So you have a clear idea of which innovation you want to test and have chosen an MVP that best suits your innovation. How are you going to shape this now? How do you quickly arrive at that MVP, so that you get feedback that you can use to move forward?
The design sprint is a method that can help with that. The design sprint forces you to arrive at a presentable MVP in a very limited time, with a limited group of people from different disciplines.
A typical design sprint lasts three to five days, so in any case no longer than a working week. You ensure that all necessary disciplines, which are relevant to the innovation you want to test, are present. Think of IT, marketing, management, development, et cetera. You should no longer need help from outside your workgroup for this sprint. In any case, also provide a product owner with ultimate responsibility, so that decisions can be made if necessary. It is also useful to work with a scrum master; someone who is not involved in the content, but who guides the process, acts as a timekeeper and checks whether everyone conforms to their role.
During a design sprint, the working group takes place in a room where you can work pleasantly for a week. Distractions in the form of mailboxes or smartphones are not accepted: the working day is spent purely on the sprint.
The idea of the design sprint is that you can already show an MVP to potential customers on the last day and actually do this. This can be any type of MVP from the list above. It is useful to prepare such a test day, and therefore to have a group of willing customers ready.
How do you get useful feedback?
The ultimate goal of almost every MVP is to gather useful feedback to get started. But how do you do that in a smart way?
If Henry Ford had listened to customer feedback, he would have bred faster horses instead of building cars. Therefore, do not blindly copy the customer's wish, but listen to the wish behind the wish. After all, you cannot make your customer responsible for coming up with the innovation.
You don't collect the most useful feedback by asking your customers what they want, or if they are satisfied, but by thorough user research (user research). Here you research how people (want to) use your product or service and what they find important. You do this early on – that's why it's part of the design sprint – so you can fully tailor your product to the way people ultimately want to use it.
A good example of successful user research that has taken place in the Netherlands is the digital television decoder from KPN and XS4All. By 2011, all digital receivers were large, imposing devices. However, user research – originally aimed at discovering new desired functions – showed that mainly women were massively annoyed by the large design. And so they eventually came up with a receiver that had no extra functions at all, but was just four times smaller. It was the best innovation imaginable at the time.
Finally, what really helps in the context of customer feedback is making a limited number of functionalities available. Every function you build will appeal to a (very limited) group of users. Removing those little-used functions at a later stage, in turn, encounters negative reactions from them. In this way, you are ultimately more concerned with sentiment management than with innovating your product.
Therefore, develop step by step, feature by feature, and research how users interact with that feature. Adjust things based on their feedback, and immediately start testing again. Do not proceed until you are sure you are on the right track. And do you keep getting negative reactions? Then there is probably something fundamentally wrong. Then don't be afraid to take your loss and start over. That may be a waste of your resources, but continue on a dead end and eventually make a service available that people are not really waiting for? That's just a sin.