A business need not roll-out new product every time to resolve people’s problem, they can work on the pre-existing ones and make them better. For example – Intel has been innovating its pre-existing CPU for a decade and resolving the customer’s problem. So, by incorporating product innovation in your business channelization, you will have the option what is product innovation to give yourself a favorable position over your rivals or competitors in the market. It states that innovation and improvement are never finished, that a product will never be perfect and that all you’re aiming to do is getting it to the next level. Pricing will also determine the overall acceptable level of production costs for your product.

Product Innovation meaning

That’s why innovators also keep their eyes open for gaps in specific sectors of the market; gaps are opportunities, small voids in an existing or seemingly filled market. Gaps are often specific “services” that established businesses do not offer yet. You can therefore emulate the existing business model and add the new service. You can think of them as the costs of designing, testing and re-adjusting the product into its final form. This can be in the form of raw materials for prototypes, but a large proportion generally comes from paying the product development team to do their work. This congruency will encourage a proper exchange of information, brainstorming, enhanced peer communication.

What is product innovation?

Take the iPhone as an example – to a person who just wishes to make calls, texts and browse the internet, the iPhone 5 is still perfectly usable despite being released a decade ago. You’ve probably seen updates to mobile or PC applications, new models and versions of types of smartphone – these are all examples of improving an existing product. Tesla’s innovation strategy resulted in impressive in-car hardware and software integration.

  • No matter how brilliant your innovation, if they aren’t impressed by the tests you’ll need to go back to the drawing board.
  • He explained in detail the pricing process and how involving pricing early on in the innovation process and product development can put you ahead of the competition.
  • Of course, this can’t count as the most radical innovation out there, but it shows how products can be improved by answering customers’ pains.
  • McKinsey identified in their analysis four major factors that contribute to the success of product development.
  • For instance, in many cases products are easier to scale than services.
  • The duration matters a lot hence try to be quick with your development process.

Example of process innovation achieved by McDonald’s is a call-centre in a town close to Los Angeles, which takes over the drive-through orders from multiple restaurants across the USA. This call-centre https://globalcloudteam.com/ pick up the orders remotely and transmits them back to the same fast-food. The development of new products which are based on new technologies or which solve new needs of a consumer.

Don’t wait & be the first with Product Innovation in your Niche

Or the product needs to solve a completely new problem that has arisen. The main difference between product innovation and process innovation is the fact that product innovation is truly noticeable to the consumers. For example, in the case of McDonald’s, we can say that the consumers receive the same burger, even though it has been prepared in one way or the other. The lessons these failures teach smaller companies and startups is that continued attention to product innovation is crucial – even if it doesn’t turn out quite as planned. Some product ideas will fail, and some will be your next big winners, but if you’re not placing a focus on innovating and testing, you’ll never know which is which.

In turn, this increases the efficiency and effectiveness of business processes and makes radical structural and operational reforms possible. Secondly, the development costs which you can’t recover if you’re not able to get a high enough profit margin, or wide enough adoption for the product. A way to get around these development issues is to be agile, learn from failures and have a fast pace of innovation. This step is often underestimated by many companies as they want to fast forward to the development or testing phases.

You have developed the product to solve your customer’s problem so you should be able to explain your product’s efficiency comprehensively. It should address the problem of a large section of your customer base. By relevancy, we also mean that the product should be relevant to your competitor.

Businesses should focus on solving people’s problems more than just launching a new product every year to get recognition in the market. The duration matters a lot hence try to be quick with your development process. It depends entirely on the customer’s feedback; hence market research is the key. Now, it’s not like no business does proper market research before working on their new product; they do. The modern-day market works on a single concept – survival of the fittest.

This process supports the principles and practice of continuous improvement and Kaizen. Kaizen is actually the philosophy stemming from Japanese car manufacturers and is focused on making small changes every day to contribute to major improvements over time. If you’re a regular reader, you are already familiar with continuous improvement as we’ve discussed this topic at length in other articles.

New Products

Divide your customers up using their common characteristics such as behaviors and demographics.Segmentationallows you to build a marketing persona and informs yourproduct innovationprocess. However, radical and disruptive innovations are harder to get right, have a lower success rate, and present more risks. For these reasons, they are not common because the challenging part is not coming up with a new idea, but driving market adoption. Success requires a systematic, proven way of taking ideas from conception to marketable products. This includes a culture of innovation, incremental improvements as second nature as well as a varied and balanced product portfolio. Sony launched on the market innovations that placed them ahead of their competitors.

Product Innovation meaning

You developed the product based on the concept; now is the time to test it. Testing not only provides you with the ground reality of the product but also opens up to a more competitive idea. It may seem cliché, but it’s the most effective measure to take before launching the product in the market. The market is getting competitive day by day, and only those survive who can meet customer’s expectations. Essentially, since the overall aim is to improve the product you must first plan how to alter it, implement that, then check whether the alterations were successful or not. Improvement for improvement’s sake doesn’t always yield results that the general public will find necessary or even useful, meaning you’ve wasted all that you’ve put into your design.


If you look around you and think back just a few years, you will see product innovation everywhere you look. We now have cell phones that can access the Internet and can even withstand being dropped in the toilet! We have touchscreen computers that we can draw with and edit pictures on. We have infra-red cooking machines that can fry foods without any oil. There are fabrics that stay wrinkle-free so you never have to iron them. There are new light bulbs that use a minimal amount of electricity and don’t need to be changed for years.

These types of innovation can go hand in hand with each other or they can be extremely different. They are indeed two of the multiple types of innovation, but they are two of the most used ones as they work with tangible resources. Even though a few burgers and some fries do not seem to require a serious process. Solve a new consumers’ problem, which occurred as a consequence of the evolution of the factors previously mentioned – social, cultural and economical. Popular theories of product innovation – what causes it and how it is achieved – include Outcome-Driven Innovation and “Jobs to be Done” . This will help you establish how you’ll approach product innovation moving forward.

Many such innovations can be tangible and involve either radically new technologies, or just incremental improvements of existing ones. But more on the types of product innovations later in this article. Product innovation refers to the creation of a new or improved product with advanced features relative to existing ones. Learn about the types of product innovation and discover examples of improved versions of products.

What are the examples of process innovation?

What’s more, every new feature adds complexity, and complexity slows you down and makes additional development harder still. Of course, this can’t count as the most radical innovation out there, but it shows how products can be improved by answering customers’ pains. Pricing is a very powerful tool to determine the feasibility of innovation early on. We invited Kyle Westra in the Innovation Room Podcast to talk about pricing innovation and new product development. He explained in detail the pricing process and how involving pricing early on in the innovation process and product development can put you ahead of the competition. This is probably the single most common failure companies may go through in the process and it takes us back to the jobs that customers need done.

Why is product innovation?

However, we think it’s important to specifically mention the important role continuous improvement plays in product innovation. When the market is oversaturated and companies don’t find their way out, they could turn to product innovation. We’ll explain how this works when we get to the processes and frameworks, but in short, it is about creating new demand. Redefining the competition is also about redefining the value of a product. For example, in the 70s, Japanese innovation almost took out of the market traditional watchmakers in Switzerland.

This was a good switch since targeting exclusively vegans would mean going out on a very small, niche market. Once you have the right people keep in mind that for innovation to happen, teams should be trained to strive for excellence. This is of course more complex, and it requires a certain environment that allows an innovation culture to flourish. Successful companies know that investing in training and developing their people will add to the outcome of the product.

Innovation for the sake of innovation could occur when companies want to show results to internal stakeholders. Such initiatives can be highly visible, but they are not always aligned with a comprehensive enterprise-wide innovation strategy. Putting the right price to innovation is always challenging and it’s especially true with consumer goods. Pricing can tip the balance in your favour and determine more people to buy your products. You might have an awesome product but if no one wants to buy it you’ll find yourself in a tight spot. Since their launch, the competition grew fiercer and there are countless alternatives out there.

A solution may be devised for the same problem priorly and could be used effectively after certain trials whenever the problem emerges. Thus, a track should be maintained for technology development parallel toproduct innovation. You can use several key performance indicators to measure innovation, including engagement, actionable ideas, costs, projected profitability, actual profitability, and cultural impact. Innovation requires talented individuals, so companies looking to innovate their products or services must seek top industry talent to ensure success.

There are two types of cost challenges that can arise in a company. Beyond technological innovations, Tesla is always the poster child of innovation because of their ambition to become better at everything they do. They have reimagined big parts of the value chain at a rapid pace and recently also achieved a 96 Net Promoter Score , by far the highest in their industry. It’s not to say that you should linger on the strategic phase for too long. If you find yourself stuck in this phase, by the time you are ready to act, it might already be too late. It’s important to get the big picture right, decide which direction is right for you and then be fast and agile in testing, learning and adapting on the way.