Continual improvement and innovation are extremely important in ensuring you stay relevant with your customers and ahead of your competition. But where do you start?
Let me guess, you start by looking at your direct competitors, those who offer similar products and services to yourself?
You directly compare your solution to those of your competitors, what do they have that we don’t? How are they providing their service? What’s working well for them?
These are all valid questions, and things you should be asking, but this comes with a risk of falling into a feature matching trap.
In this scenario, you might benefit from a second-mover advantage, avoiding mistakes your competitor has made, but equally your innovation efforts may become dictated by competitor solutions and result in your solution just mimicking others.
Competitor analysis is of course something you should be doing, but not in isolation. Too often those responsible for product/service management, or those in the C-suite become blinkered, blindly following others in their space.
As digital innovation experts, we’ve experienced this a lot, pressure from C-suite to feature match, skipping the crucial step of identifying customer needs and opportunities for the business within them.
In competitor mimicking/feature matching we often make huge assumptions that the things we are copying are working for our competitors and that they’ll also work for us — this may not be the case.
Avoiding the trap
Be customer centric
When thinking about innovation or transformation, it is best to take a step back, fall in love with the problem your solutions solves, instead of the solution itself. To do this you must understand the jobs, needs, pains and gains your customers have.
As businesses and solutions become more established within a market place, those responsible for managing them move further and further away from the problems they were created to solve and more into a space where they become fixated on the solution.
When this happens, insights become confined and rooted to our existing solutions, rather than what customers actually need and we lose perspective.
A crude example of this is while Blockbuster were asking customers how their service was, and if people wanted more Doritos or Pringles by the tills, Netflix were asking fundamental questions about why and how people consumed media to understand customer need free from the constraints of a solution.
Jobs to be Done (JTBD) is a fantastic approach to identify customer need, separate from solutions. Using JTBD often leads to valuable new insights about the competitive environment, risks, and opportunities, as well as opening up greater opportunities for innovation by asking ‘what are your customers trying to achieve?’.
Identifying times where feature matching is valid
Let’s be clear, there are times when matching the features of competitor solutions are valid, to understand when this may be the case there are some tools that can be used.
Kano is a model for identifying which features to invest in based on user expectation. Using KANO you will be able to identify which features your customers consider to be ‘basic’, e.g. your customers expect them, they are must haves. Through to features that are ‘exciters’, e.g. customers wouldn’t notice if they weren’t there, however they represent a disproportionate increase in customer delight, these features are likely brand new to market and will deliver a competitive advantage.
Expand your competitor set
Your customers don’t live in a bubble of your sector/market, every day they experience services and solutions that bear absolutely no relationship to your own.
Experiences I have with Amazon are setting expectations I now want from my GP. If Amazon can take my order and have it with me that same day, why does it take up to 30 mins for my GP practice to answer the phone and then tell me they have no appointments.
People are comparing the experience you provide with the likes of Amazon, not just your direct competitors.
In looking at how those outside of the market provide services and solutions you can bring brand new ways of thinking, new features and models into your solutions, creating a competitive edge.
Look to the Horizon
McKinsey famously created the three horizons of innovation, however this model has been built on over time, with my personal favourite being created by Christian Terwiesch, Karl Ulrich in their book Innovation Tournaments.
For me, rather than being a model for managing innovation, Terwiesch and Ulrich’s adaption is a great way to frame types of innovation to ensure we are not only making small and iterative steps forward.
In this version the time element which was included in the original version is dropped, and the horizons are framed as;
Horizon 1 — Known/Core
Incremental innovation, improvements, extensions, variants, cost reduction. Focused on existing markets, using mature technologies and models.
H1 innovations are where we find the mimicking activity.
Horizon 2 — New to us
Next generation products, services and business models. Focused on emerging markets, using emerging technologies and models.
H2 innovations are where we usually find solutions or features that have come from outside of the direct competitor set, where we are borrowing and adapting solutions from indirect competitors.
Horizon 3 — New to the world
New products, services and business models. Focused on new markets, using new technologies and models.
H3 innovations are best identified by a focus on the problems we want to solve, rather than the solutions we already have.
By using these definitions to label your product or service development efforts, you are forced to consider what you do next through a lens that shifts the focus away from your direct competitors and mimicking their solution features.
You know what assumptions make…
In copying other solutions we are making lots of assumptions;
- It worked for them so it will work for us
- Our customers want it
- It will deliver value to our business
- We can deliver it
Working on assumptions can lead to costly failure. To avoid this, start by mapping your assumptions. Assumption mapping will help you to identify which assumptions represent the greatest risk to success and provide you with an actionable list of assumptions to tackle and in what order.
Once you’ve identified which assumptions you should be focusing on resolving, you need to move into validation. When validating solutions you are really asking some simple questions;
- Desirability — do customers want it?
- Viability — will it deliver the value we need?
- Feasibility — can we deliver it?
At Freestyle we work with businesses across the world to identify, validate and deliver solutions across each horizon, resulting in quick wins and long term results. Get in touch to talk about ways we can help you deliver value while moving at pace. Drop us a line: firstname.lastname@example.org
Author: Ritchie Brett, Strategy Director, Freestyle