In the previous post, I outlined the classic innovation challenge. I briefly laid out the key aspects product leaders think of when prioritizing between new initiatives. In light of these constraints, how can innovation leaders choose the areas to focus on? Additionally, what aspects should innovators articulate when pitching their ideas? All of this with the objective of increasing the likelihood of their ideas reaching the market.
Following is a simple three point framework that will help navigate towards the end goal of creating ‘effective innovation’
1) Know Your User
Knowing your USER helps articulate the value proposition offered by the innovative idea in discussion.
Amidst all that is written about the world of startups and agile, a popular concept is to “First build the Right Product”. That entails understanding the user’s expectations. What do the users want to achieve? What kind of pains do they encounter when working towards their objectives? Are we solving problems that really matter to them?
Falling in love with the users’ problem is paramount to building useful innovations. There are various simple frameworks available to do this step. “Jobs To Be Done” by Clayton Christensen is a great starting point. Ash Maurya’s ‘Running Lean‘ points to some interesting means to enable problem-discovery. Strategyzer’s (a.k.a Alexander Osterwalder’s) Value Proposition Canvas uses some of these to uncover high-value-jobs and interesting outcomes (positive and negative) when achieving those jobs. User Research is this deeply rooted into these frameworks. Pick the right kind of user research (qualitative vs. quantitative), depending on the stage of idea generation and validation.
An important detour to avoid here is the tendency to push technology. Often individuals and teams are over-invested in a certain solution and unreasonably biased, because they own the technology stack, the patent or the core idea. ‘Falling in love with your first idea’ is easy. Yet, in order to build the right product – technology leaders should be ready to throw that apart and start afresh.
A good understanding of users, helps formulate the key value proposition of the innovation initiative. Simply defined, a key value proposition is about articulating how the idea will solve the pains encountered by the users in fulfilling the objectives they considers important. Embed user research actively within the innovation process. Drill down and ask “why?”, “For who?” and more questions before building the product. Don’t push technology! Knowing your user will help focus energies better for innovation and enable creating an appropriate pitch for the initiative.
2) Know Your Customer
When brainstorming ideas, it is essential to know who your customer is.
An easily forgotten fact is that users may not be necessarily the same as customers.
This is dependent on the business model. Let’s look at a few businesses. In case of Spotify for example, their paid subscribers are both – user and customers. LinkedIn, with a multi-sided business model, serves individual paid user members, brands that advertise and companies that use their talent solutions – three distinct revenue streams for the platform. 
Businesses with intermediaries are also commonly misunderstood. Here, companies forget that the intermediary is a key stakeholder in selling the products. Imagine the case of TV makers. Brands that sell TVs through larger retailers ideally sell their TVs to the channels (i.e. the retailer). Individuals and families buy these devices from retailers and thus become end-users for the TV maker. Draw the lines of distinction between the customer and the user.
Why is this relevant? Knowing the different customer segments, opens up avenues for innovation. It presents more areas to hunt for interesting problems to solve. It opens up more opportunities for businesses to create new ideas for. Understand their individual needs, thus expanding the scope of the audience to target with new ideas.
When prioritizing between different innovation initiatives, Product Leaders pick and choose ideas addressed to the stakeholder that creates maximum value (for the business and customer). Being aware at the start on which stakeholder is important, is thus a crucial consideration.
3) Know Your Business
Before allocating innovation resources to mega-projects, it is important to know the state of the business and be aware about the business metrics. Is the business a market-leader or a laggard struggling to gain ground in competitive standing? Is the business making profits or losses? These aspects guide the prioritization of the ideas. 
Leadership teams that have crucial and urgent business challenges are less inclined in moonshot innovation initiatives. They’d perhaps benefit from having a feature or initiative that paying users are willing to pay a premium for. They might also as in case of Lego, like process optimizations driving down cost structures.. Alternatively, addressing needs of an alternate customer segment (in a multi-sided business model) might be more beneficial. Using the business metrics as a reference, innovation leaders will be able to balance their resources between long term and short term goals.
Bringing it all together – Know Your Context
Knowing the challenges outlined before, how do you innovate effectively? How can technology leaders, reduce the barriers for technology adoption? How can they increase the likelihood of ideas going to the market? Product Leaders think of three key things when prioritising between multiple new initiatives
- Limited resources
- Balancing between value creation and capture
- Thinking beyond just products
As innovators, in order to increase the likelihood of ideas reaching the market – it is thus important to Know Your User, Customer and Business. Knowing these three, is equivalent to knowing your context. Every company has a unique context due to its own business model, internal competency, competitive standing and problems being solved. Individuals and teams can use this simple framework to
- Solve problems that matter to the audience that’s important for the business
- Open up the scope of areas to innovate in – giving more opportunities to leverage their skills
- Focus on areas that align with organizational objectives – creating meaningful impact to the business
As a product practitioner, I personally believe that this context should be driven across the organization by Product Managers/Leaders. In case that does not happen, innovation leaders and team members are right in their place to seek this information from the leadership teams. This will eventually increase likelihood of product going to the market – and only then testing the opportunity of failing or succeeding.