Watch the 30-second summary and then read on for full details.
I have recently been studying a text on Operations Management. Innovation is an element of all operations and as product development professionals, our knowledge must be wide as well as deep. I have also been reading a book on “5S,” a quality management toolkit, by my friend Luciana Paulise. Like innovation, quality management is important in every aspect of business.
As innovation leaders, our focus is on the customer. How do we make product use easier or more convenient for them? How do we make the product easier to consume – cheaper or more accessible? How do we prioritize customer needs for a next generation product?
Customers are always the focus. I’ve seen many new product development (NPD) processes start with an emphasis on customers yet gradually drift away. In WAGILE Product Development (read more here), customer feedback is mandated at each stage and verified with each gate. (Register for our next WAGILE Product Development training course in February here.)
Regardless of your NPD process choice, the product is the goal of your work. We design and develop new products to meet customer needs and business objectives. We often think of the product as serving a hierarchy of needs. (Read more in Chapter 4 of The Innovation ANSWER Book.)
Every product for sale within a given category must deliver a core benefit for all customers. Airplanes offer quick transportation over long distances. They are propelled above the ground to avoid slow travel and fly at high speeds to help us arrive at our destination faster. That is the core benefit of an airplane.
Today, all passenger airplanes have seats that recline, tray tables to hold stuff, and overhead lighting so you can read in dim light. These are all tangible benefits, meaning we can touch them in real life. Brands differentiate by changing the quality of tangible benefits in a product. Some airlines have plastic seat covers, some have fabric, and still others have leather. (Tangible benefits are sometimes called the “actual product” that we can touch or interact with.)
Often customers make product decisions using tangible features and prices. If I don’t want to spend a lot of money, I will fly the budget airline and tolerate a plastic-covered seat. If you want to arrive in good form for a business meeting, you might choose the full-service air carrier with leather seats.
However, augmented features and benefits are how companies can truly differentiate and gain customer loyalty. For an airline, these augmented features include frequent flyer miles, free snacks and drinks, and efficient boarding processes. Consumers stick with a brand because of augmented features and will pay extra to receive higher levels of quality service.
Production is defined as the creation of goods and services. As innovation leaders, the method of manufacturing is important to our decisions. If we design a product that is expensive, difficult, or complex to manufacture, it might not be profitable, and innovations are defined as successful only when they earn revenue.
Manufacturing and operations experts need to be involved in NPD efforts – from idea generation through to manufacturing and sales. We also can identify product innovation opportunities in manufacturing. For example, we can simplify steps or automate manufacturing to improve quality. Such cost-saving activities can enhance profits. Involving technology and manufacturing experts in product design may result in reduce capital investment by identifying equipment reuse or recycle. Operations management involves innovation as much as does the design of the product.
In standard terms, we measure productivity by dividing units of output by units of input (e.g. labor). In the United States, productivity growth is slowing as we switch from production of goods and to service sectors. Reliance on imports and outsourcing become critical activities for businesses to succeed.
In innovation, we often measure productivity by the vitality index. This is a metric that examines the percent of revenue generated by new product sales over the last three- to five-year period. Productivity goes up for innovation, then, when we release more products that generate higher sales.
A caution, of course, is to ensure the product quality is not harmed in a quest to deliver a large number of new products. You also do not want to dilute your brand by offering cheap products (with high profitability) to the masses. Keep in mind that product innovation must always be focused on customer satisfaction.
So, we have defined products, production, and productivity. What do you do with this information? As a product development leader, you should always focus on the customer first. What is the core benefit that the product satisfies? How can you differentiate your brand and offering through tangible benefits and augmented features?
Next, consider how production, operations, in manufacturing can be improved. If you can streamline production without sacrificing quality, you directly deliver profits to the bottom line. Excess cash is devoted to next generation innovations.
Finally, consider the metrics of success use in measuring innovation productivity. The vitality index is a common innovation success metric – but don’t forget to validate customer satisfaction and quality. Many organizations use a Net Promoter Score for this task.
To learn more about these concepts and to practice applying them in your own company, join me for the New Product Development Professional (NPDP) certification workshop starting Thursday, 14 January at 2:00 pm Central Time. Register here for the 4, two-hour sessions. If you’re interested in increasing productivity and streamlining production, join me for the CPEM (Certified Professional Engineering Management) review course. And, for personalized problem-solving or customized training, contact me at email@example.com for coaching or consulting.
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Building Innovation Leaders
I am inspired by writing, teaching, and coaching. I tackle life with an infusion of rigor, zeal, and faith. It brings me joy to help you build innovation leaders. Teresa Jurgens-Kowal is an experienced innovation professional with a passion for lifelong learning with a PhD in Chemical Engineering and an MBA in Computer and Information Decision Making. My credentials include PE (State of Louisiana), NPDP, PMP®, and CPEM, and I am a DiSC® certified facilitator. Contact me at firstname.lastname@example.org or area code 281 + phone 787-3979 for more information on coaching for entrepreneurs and innovators.