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MODUS ASSOCIATES : EXECUTIVE BRIEFING SERIES 
The best way to predict the future is to create it. 
– Peter Drucker
The Digital Innovation Playbook 
A Resource For Infinite Business Creativity 
The Digital Innovation Playbook: A resource ...
The Digital Innovation Playbook: A resource for infinite business creativity 
© Modus Associates, LLC www.modusassociates....
1. 
Discover 
Discover your 
opportunities 
3. 
Validate 
Test your ideas 
with real 
customers 
+ Customer needs 
analysi...
The Digital Innovation Playbook: A resource for infinite business creativity 
© Modus Associates, LLC www.modusassociates....
Phased Execution 
The Digital Innovation Playbook: A resource for infinite business creativity 
© Modus Associates, LLC ww...
The Digital Innovation Playbook: A resource for infinite business creativity 
© Modus Associates, LLC www.modusassociates....
About Modus Associates 
Modus Associates is a digital innovation and design consultancy founded to help global brand 
lead...
The Digital Innovation Playbook: A Resource for Infinite Business Creativity
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The Digital Innovation Playbook: A Resource for Infinite Business Creativity

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Innovating your business can be risky and difficult at the best of times. And in the fast-moving digital age, it can be downright terrifying. How do you best focus your resources in a world where everything is changing and anything seems possible?

It's easier than you might think. The secret is to stay focused on your customers, rather than technology. This white paper will show you how to reliably and consistently increase profits and better serve your customers online by putting people at the center of your digital business strategy.

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Transcript of "The Digital Innovation Playbook: A Resource for Infinite Business Creativity"

  1. 1. MODUS ASSOCIATES : EXECUTIVE BRIEFING SERIES The best way to predict the future is to create it. – Peter Drucker
  2. 2. The Digital Innovation Playbook A Resource For Infinite Business Creativity The Digital Innovation Playbook: A resource for infinite business creativity © Modus Associates, LLC www.modusassociates.com 3 Innovation is hard. Let your customers help. Innovating your business can be risky and difficult at the best of times. And in the fast-moving digital age, it can be downright terrifying. How do you best focus your resources in a world where everything is changing and anything seems possible? It’s easier than you might think. The secret is to stay focused on your customers, rather than technology. In their book Subject to Change, our colleagues at Adaptive Path in San Francisco describe the Segway scooter as an example of innovation that is detached from the needs of real people: “Crazy predictions peppered the web prior to the launch of the high-tech Segway scooter. Its patented technology was supposed to change cities and create a new world. Steve Jobs referred to it as ‘an incredibly innovative machine.’ The Segway was certainly new and certainly innovative, but the problem was that no one wanted to use it in the context for which it was intended. The Segway was targeted to fit a need that few people actually had. The experience of riding on a Segway is new and different, but the Segway technology in its current form isn’t relevant to the way people move through their lives.” This white paper will show you how to reliably and consistently increase profits and better serve your customers online by putting people at the center of your digital business strategy. But first, let’s review some common, yet unsuccessful approaches to web innovation. Not good enough: Popular strategies that don’t work 1) Parity. The parity play involves watching what your competitors do, and then either copying them or one-upping them. Parity is seductive because it’s easy and it’s safe. And it can lead to incremental improvements. But it’s just as likely that you’re imitating an expensive tactic that didn’t help your competitor. In either case, you can never lead your market by following the pack. Takeaway: Don’t chase your competitors. Chase your customers. 2) Novelty. Every business wants to be new and different, so many business leaders equate innovation with novelty. They think if they introduce something new, something that nobody else offers, they will differentiate themselves and capture attention. But what’s new isn’t necessarily valuable or better than the alternatives. In fact, few business breakthroughs are actually new: • Apple didn’t invent the graphical user interface, digital music player or smart phone. They vastly improved on existing products. In a six-year study from 2007 to 2012 by Watermark Consulting, firms that were customer experience leaders generated total returns that were three times higher on average than the S&P 500 Index.
  3. 3. The Digital Innovation Playbook: A resource for infinite business creativity © Modus Associates, LLC www.modusassociates.com 4 • Google didn’t invent the search engine. • Nintendo didn’t invent the video game. Takeaway: Newer isn’t better. Better is better. 3) Usability. Many web initiatives cite usability as a business objective. While usability is a must for long-term success, it’s just table stakes in the web game. If your websites and products aren’t useful as well as usable, then all the usability in the world won’t save them. Takeaway: Be useful first. Then usable. 4) Technology. The technology play remains the most common approach to web innovation. It involves making a list of feature ideas or technologies, and then designing your websites around them. Designing products based on feature lists leads to unsatisfactory experiences because those lists aren’t oriented to the perspective and needs of your customers. In fact, the majority of your customers don’t care about features and technology. They just want products that are useful to them. Takeaway: Design your business around people, not technologies. 5) Epiphany. Some managers are always on the lookout for that next big idea that will change everything for their business and their industry. Sadly, this is encouraged in the business press and in our cultural myths about how innovation happens. While epiphanies sometimes do happen, they’re too unreliable as a business strategy because they can’t be controlled. Takeaway: Don’t bank on epiphanies. Processes that are repeatable and controllable are the most reliable sources of innovation. There is a better way: Innovation in 4 steps The most successful business innovators today – whether they’re creating something new or improving an existing product – are those with the best understanding of their customers. On the web, this understanding requires a customer-centered design approach. In broad terms, customer-centered design is a best practice in which the needs, wants, and limitations of your customers are given close attention at each stage of the design process. The chief difference from traditional software design philosophies is that customer-centered design tries to optimize the user experience around how people can, want, or need to work, rather than forcing users to change how they work to accommodate your system. With customer-centered design, you are more likely to: • Make things that people want and use • Reach the right people with the right message • Eliminate misspent development costs by making things right the first time Our favorite example of customer-centered design is Apple’s iPhone. Progress in the mobile phone industry had been hampered for years by the need for phone manufacturers to design their products around the standards and limitations of the major cellular networks. Apple was the first manufacturer to design its phone entirely around the consumer, and then challenge the carriers to
  4. 4. 1. Discover Discover your opportunities 3. Validate Test your ideas with real customers + Customer needs analysis + Competitive analysis + Web traffic analysis + Industry research 2. Ideate Envision the future + Future-state prototypes + Customer and stakeholder validation testing 4. Execute Create the future + Innovation roadmap The Digital Innovation Playbook: A resource for infinite business creativity © Modus Associates, LLC www.modusassociates.com 5 adapt their system to the phone. The rest is history. Apple’s iPhone ignited the mobile revolution after years of false promises and incremental progress. While most business leaders like to think they know their customers, many are really just guessing. The following approach, developed over 12 years and hundreds of web initiatives for the world’s leading brands, offers a proven, flexible framework for tapping into the needs of your customers and increasing your odds of making things they want. 4 Steps To Successful Web Innovation STEP 1: DISCOVER Discover Your Opportunities Fortunately, bringing customers into your development and innovation processes is easy, and there are many ways to do it. Some require an investment of time and resources. Others leverage data that you probably already have. Here’s a run-down of commonly-used techniques: • Customer interviews and focus groups: Nothing beats direct customer contact to help you understand the lives and attitudes of your customers, where you might fit into those lives, and where you don’t. • Surveys and questionnaires: Surveys and questionnaires are an effective and cost-efficient way to gather opinions and insight from large numbers of customers. • Social media monitoring: Blogs. Twitter. Facebook. MySpace. LinkedIn. Community sites. Product review and rating sites. Monitoring the social web is a great way to learn what people are saying about you and your competitors. And the explosion of social media has brought with it an explosion of customer insight for you to mine. • Web analytics data: Your web traffic data yields precious insights about what your customers like and don’t like, where they’re struggling with your product or websites, who they are, and how they’re finding you. Chances are you already have this information. Are you using it to its fullest? • Customer service logs: This is data that most companies already have but don’t utilize. Talk to your customer service manager to find out what customers are saying. Usually, there are five issues that customer service reps hear over and over again. Find out what they are and address them online.
  5. 5. The Digital Innovation Playbook: A resource for infinite business creativity © Modus Associates, LLC www.modusassociates.com 6 • Customer feedback forms: More and more organizations are including a prominent customer feedback form on their websites and products. If you don’t have one, add one and watch for the feedback patterns that develop. • Third-party research: Research firms like Forrester, eMarketer and MarketingSherpa produce mountains of great industry and customer insight every year. If you can’t do your own research, buying it can be just as valuable. • Usability Testing: If you’re looking to improve an existing site or product, usability testing with customers is a great way to identify areas for improvement, and areas that should be left as is. Usability testing is also a good way to gain stakeholder buy-in for a project, by asking members of the project team and senior stakeholders to observe the testing sessions. • Competitive Benchmarking: Benchmarking (also known as “best practice benchmarking”) is a process in which companies evaluate various aspects of their websites and marketing programs in relation to best practices, usually within their own industry. This then allows them to develop plans on how to adopt such best practices. Most organizations don’t have the time or resources to try all of these techniques at once. But any combination of them, incorporated over time, will amass a formidable foundation of business insight that you can use to identify both tactical quick wins and longer-term strategic opportunities for your organization. STEP 2: IDEATE Envision the future Now that you’ve identified your best opportunities, the next step is to visualize your ideas in prototype form and validate them with your colleagues and customers. There’s no better way to communicate business ideas and build consensus than literally getting everyone on the same page with a paper or clickable prototype. • Prototyping: Prototyping involves creating mockups of websites, applications and other experiences, with enough detail to demonstrate how the experience works and to allow users and stakeholders to evaluate them. Prototyping lets you inexpensively test and refine new ideas early in the R&D process, prior to investing in costly programming and development. Paper prototypes can range from a simple pen and paper creation, through to those created in graphic design packages or prototyping software. Reality Check Continuously ask yourself: “Is this decision mainly good for me, or for my target audiences as well?”
  6. 6. Phased Execution The Digital Innovation Playbook: A resource for infinite business creativity © Modus Associates, LLC www.modusassociates.com 7 STEP 3: VALIDATE Test your ideas with real customers Once you’re satisfied with your ideas in prototype form, validate them with actual customers and project stakeholders to ensure they understand the experience, how it works and its value. The most commonly used technique is the design walkthrough. • Design walkthroughs: Design walkthroughs are used to validate your design decisions and collect feedback from users, stakeholders and members of the design team. The technique is typically used early in the design process using a paper prototype. However, it can also be conducted with an electronic prototype or parts of the website that are fully developed. A design walkthrough involves taking a group of participants through the website design using real-life user scenarios or tasks. Participants are asked to specify their actions they would take on each page and to make comments about the usefulness and usability. Results are documented and recommendations for improvement are made. STEP 4: PRIORITIZE, PLAN, AND EXECUTE This step requires no explanation. With problems and solutions already identified, individual projects can be executed with extreme efficiency. Remember, it’s not about generating hundreds of ideas that will never see the light of day. It’s about creating a pipeline of good, achievable ideas that will drive the evolution of your online business presence for years to come. So you innovated, but will they buy it? How innovations gain adoption There’s nothing more disappointing – and wasteful – than investing in new ideas that are rejected by their intended audience. How can you increase the odds that your investments will be adopted by the marketplace and pay off? Scott Berkun, in his book The Myths of Innovation, identified the following conditions that lead to widespread adoption of new products and services. 1) Relative advantage: What value or advantage does the new thing have compared to the old one? This is perceived value, as seen by potential customers of the innovation, not by its makers. Perceived advantage is built on factors that include economics, prestige, convenience, fashion, and satisfaction. 2) Compatibility: How much effort is required to transition from the current thing to the innovation? If this cost is greater than the perceived advantage, most people won’t try the innovation. These costs include people’s value systems, finances, habits or personal beliefs. Technological compatibility is only part of what makes an innovation spread: the innovation has to be compatible with habits, beliefs, values and lifestyles. The business consultancy Bain & Company surveyed hundreds of companies that felt they delivered superior customer experiences. But in reality, only 8% of those companies’ customers agreed that the experience was superior. Project 1 Project 2 Project 3
  7. 7. The Digital Innovation Playbook: A resource for infinite business creativity © Modus Associates, LLC www.modusassociates.com 8 3) Simplicity: How much learning is required to apply the innovation? The shorter the learning curve, the higher the rate of acceptance. 4) Trialability: How easy is it to try the innovation? Samples, giveaways and demonstrations are centuries-old techniques for making it risk-free to try new ideas. On the web we have product tours, free trials and even free products and services. The easier it is to try your innovation, the faster it will diffuse. 5) Observability: How visible are the benefits of the innovation? The more visible the perceived advantage, the faster the rate of adoption, especially within the social groups. This is where strong communication skills are critical. Additional Reading > Outside In: The Power of Putting Customers at the Center of Your Business, by Harley Manning, Kerry Bodine and Josh Bernoff > Customers Included: How to Transform Products, Companies, and the World – With a Single Step, by Mark Hurst and Phil Terry > The Myths of Innovation, by Scott Berkun > The Lovemarks Effect: Winning in the Consumer Revolution, by Kevin Roberts > Democratizing Innovation, by Eric von Hippel > Outside Innovation: How Your Customers Will Co-Design Your Company’s Future, by Patricia Seybold > Wikinomics: How Mass Collaboration Changes Everything, by Don Tapscott and Anthony D. Williams > Subject to Change: Creating great products and services for an uncertain world, by Peter Merholz, Brandon Schauer, David Verba and Todd Wilkens
  8. 8. About Modus Associates Modus Associates is a digital innovation and design consultancy founded to help global brand leaders and visionary start-ups more fully realize the business potential of the digital age, where customers rule, connectivity is everywhere, and creating value for profit and social impact is the name of the game. Clients include ADP, Comcast, NBC Universal, NYSE Euronext, SIRIUS Satellite Radio, Sittercity.com and Wyndham Hotel Group. Contact Us Modus Associates 37 West 20th Street, Suite 304 New York, NY 10011 Tel: 212-255-6768 Fax: 212-255-6264 info@modusassociates.com www.modusassociates.com The Digital Innovation Playbook: A resource for infinite business creativity © Modus Associates, LLC www.modusassociates.com 9 Founding Corporate Member: Customer Experience Professionals Association Inc 500 | 5000 America’s Fastest Growing Private Companies

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