Product innovation refers to changes that improve the design, materials, functionality or user experience of a product. It helps companies stay relevant over time and is essential to long-term viability. Taking Apple's iPhone as an example, its innovative touchscreen design changed the mobile phone market and led to huge profits. Product innovation creates new products that customers want to buy, while process innovation refers to how products are manufactured and sold.

1. PRODUCT INNOVATION
SET A | GROUP 2

2. Product innovation refers to changes that
improve design, materials, feel, look,
capacity, functionality, and overall user
experience. An improvement can be
tangible, such as a physical product, or
intangible, like software or services.
WHAT IS
PRODUCT
INNOVATION?
Product innovation helps companies stay
relevant in their market and continue
growing and improving over time. A company’s
ability to innovate is considered essential
for its long-term viability.

3. Companies need to venture out of their
comfort zone and get creative when designing
new products.
EXAMPLE OF
PRODUCT
INNOVATION
Take Apple, for example. The release of the
first iPhone changed the look and use of
phones forever, thanks to its sleek
touchscreen and internet capabilities. The
result? The iPhone developed a cult
following, dominated the market for years,
and sent Apple’s profits sky-high. So, why
is product innovation important? Simple. If
you want your company to (at the very least)
stay afloat, you have to create products
that people want to buy.

4. WHAT IS THE DIFFERENCE
BETWEEN PRODUCT
INNOVATION AND PROCESS
INNOVATION?
02
THE PROBLEM?
Product innovation is what you design and
create, including the quality of the
materials used.
Process innovation refers to how you
manufacture, distribute, and sell it.

5. WHAT IS THE DIFFERENCE
BETWEEN PRODUCT
INNOVATION AND PROCESS
INNOVATION?
02
FOR EXAMPLE
A real-world example: Google excels at both
forms of innovation. The company invested
millions in its Android operating system and
drove device sales by investing in its site,
creating effective ad campaigns, and even
partnering with other companies. The result?
Android is a worthy adversary to Apple.

6. • Sustaining innovation, in which a business consistently
provides the highest quality products to its best customers
THERE ARE three key
types of innovation:
03
2. Low-end disruption, in which an emerging company enters at
the bottom of the market, providing a “good-enough” product
with a low-profit model
3. New-market disruption, in which an emerging company creates
a new segment in an existing market and moves upmarket,
gradually rendering the incumbent products obsolete

7. The difference between the three types of innovation lies in their
relationships to the existing market. Low-end and new-market
disruption are both types of disruptive innovation, meaning they’re
used by companies with fewer resources to challenge well-established
businesses.
A sustaining innovation is one that targets the top of the market—that
is, the people willing to pay the most—and directly competes with the
incumbent products that own that segment. While a new entrant may have
some success breaking into the top of an existing market, the
incumbent business is likely to put up a fight.
Disruptive innovators, however, are likely to avoid a fight because
the segments they’re after offer the lowest profit margins and,
therefore, aren’t a justifiable use of incumbent companies’ time,
money, or effort.
When seeking innovation opportunities for your product, consider both
types. Sustaining innovations will allow your business to stay
relevant in its current market and continue delighting its top
customers, while disruptive innovations will allow you to break into
other markets or create a new market segment.

8. Many people think there’s no need to
innovate if you’re already running a
successful business. But this just isn’t
true.
WHY IS PRODUCT
INNOVATION
IMPORTANT?
04

9. PRODUCT INNOVATION IS GOOD FOR
THE BOTTOM LINE.
BUSINESSES THAT INTRODUCE NEW PRODUCTS EARN
HIGHER PROFITS THAN THOSE THAT DON’T. COMPANIES
IN THE TOP QUARTILE OF NEW-PRODUCT
INTRODUCTIONS GENERATE A MEDIAN RETURN ON SALES
MORE THAN THREE TIMES GREATER THAN THOSE IN THE
LOWEST QUARTILE.

10. DIVERSIFYING BRINGS IN NEW
OPPORTUNITIES.
PRODUCT INNOVATION DRIVES EXPANSION BY OPENING
UP NEW MARKET OPPORTUNITIES. IT ALSO HELPS
FIRMS DIVERSIFY THEIR BUSINESS AND TAP INTO
TOTALLY DIFFERENT CUSTOMER GROUPS.

11. ANTICIPATING THE NEEDS OF YOUR
CUSTOMERS BOOSTS RETENTION.
IF YOU’RE CONSTANTLY INNOVATING, CUSTOMERS WILL
NEVER SEE YOU AS IRRELEVANT OR OUT OF DATE.

12. INNOVATION HELPS YOU KEEP UP
WITH THE MARKET.
WHETHER YOU INNOVATE OR NOT, OTHER COMPANIES
WILL. AND THOSE COMPETITORS COULD POTENTIALLY
STEAL YOUR CUSTOMERS. INNOVATING HELPS YOU
DIFFERENTIATE YOUR BUSINESS AND RACE AHEAD.

13. INNOVATION IS GOOD BUSINESS. THE PROBLEM IS,
WHILE MOST PEOPLE CAN SPOT AN IMPROVEMENT, FEW
CAN DEVELOP IDEAS ON THEIR OWN.
This is because it’s hard to spot the
opportunity and even harder to get that idea
developed, funded, created, and marketed.
Innovation also poses a significant risk: 95%
of new products fail. When you consider the
money that goes into development and release,
it’s pretty terrifying.
The Google Glass disaster is proof that even
with the most extensive product development
team and bazillions of dollars behind you,
product innovation isn’t easy. But, don’t let
us scare you off! Here are some tips to help
you.

14. 5 QUICK AND EASY
STEPS TO FLAWLESS
PRODUCT INNOVATION
05

15. BRAINSTORM IDEAS
based on customer research and
competitor research. Include a mix
of data-gathering methods, including
focus groups, surveys, and customer
studies.

16. DEVELOP CONCEPTS
THAT SATISFY
CUSTOMER NEEDS
Continue conducting analysis to make
sure these products fit into the
competitive landscape. Does the
product solve a problem or simplify
a process? Is it redundant?

17. VALIDATE CONCEPTS
VIA TESTING
Keep gathering feedback as you go,
being sure to listen to what works
(and kill what doesn’t).

18. USE CUSTOMER
SEGMENTATION TO
ASSESS THE MARKET
and determine which of your concepts
will be most profitable.

19. REFINE YOUR CONCEPT
VIA PROTOTYPING.
Develop a Minimum Viable Product
(MVP) to control costs and limit
waste. And why stop there? Keep
iterating until your product is the
best it can be.

20. HOW TO
INNOVATE: BEST
PRACTICE
Here are some key things
to bear in mind.

21. FIRST AND FOREMOST — DO
YOUR RESEARCH
Understand what your customers want.
Talk to them about how your product
could be improved and which areas you
can branch into.
Doing this will help you to produce
products that people need and want — and
not something that just sounds like a
good idea. It’s essential to avoid
falling into the trap of staying in your
own bubble, rather than asking potential
customers what matters to them.

22. ASKING FOR FEEDBACK IS ALSO
IMPORTANT WHEN IT COMES TO AVOIDING
BIG MISTAKES.
Crowdfunding sites are one great way of
doing this cheaply, but they come with
many pitfalls. The people who pledge
your project aren’t always a
representative sample of your target
markets. There are countless ways to
collect feedback, from conducting
interviews and sending out surveys to
hiring a market research company. The
important thing is to put the customer
at the center of everything you do.

23. LEARN TO FAIL FAST
Product innovation involves incremental
testing and refinement to figure out
what works and what doesn’t. The goal is
to make improvements in the shortest
time period with the least amount of
money wasted. The faster you can do
this, the quicker you’ll learn.
With every “failure,” learn to adapt
quickly to make your innovation work.
Maybe, you need to change the way you
run focus groups or adjust your pricing
strategy based on what you learn from
customer feedback.

24. STAY TRUE TO YOUR CORE VALUES
Your company culture establishes the
beliefs and behaviors within your
organization. These core values should
drive everything you do as a company. So
when you innovate, don’t get too
distracted by what competitors are
doing. Focus on staying true to your
core values and doing the right things
for your company and your customers

25. DON’T NEGLECT COST
Your company’s financial health affects
everything from employee salaries to R&D
budgets. Try not to get caught up in all
of the bells and whistles of creating
The Next Big Thing if it means you’re
neglecting the overall health of your
company.

26. LEARNING TO LEAD
INNOVATION
AS A BUSINESS LEADER, IT’S YOUR
RESPONSIBILITY TO SET THE TONE AND LAY
THE FOUNDATION FOR A STRONG PRODUCT
INNOVATION STRATEGY. TO BUILD YOUR
SKILLS IN THIS AREA, CONSIDER AN
INNOVATION TRAINING COURSE, SUCH AS
DISRUPTIVE STRATEGY.

27. 5 INNOVATION TIPS
FOR BUSINESS
LEADERS

28. The jobs to be done framework also
presents a unique way to view
competitors. Not only are you competing
with other brands that make comparable
products, but also anything else that can
perform the customer’s job to be done.
Returning to the ice cream cone example,
the customer could choose to hire water
balloons, popsicles, or a day at the
beach to do the same job of making summer
memories as a family.
1. IDENTIFY YOUR CUSTOMERS’
JOBS TO BE DONE

29. • Creating opportunities for cross-team
collaboration
• Leading with a growth mindset and
embracing failures as opportunities to
learn
• Hosting brainstorming sessions and
encouraging out-of-the-box thinking
• Dedicating a team or committee to
coming up with innovative ideas
without the typical restraints or
success metrics as the core business
2. CREATE AN ENVIRONMENT
THAT FOSTERS INNOVATION

30. • Resources can include everything from the
materials used to make products to
technology, cash, and employees.
• Processes are the ways in which tasks are
executed; for example, product development
or employee onboarding plans.
• The profit formula is the criteria used to
guide prioritization decisions and can
include metrics such as gross margin
targets or return on investment
thresholds.
3. DETERMINE YOUR
ORGANIZATION’S CAPABILITIES

31. • One key point Christensen stresses in
Disruptive Strategy is that businesses
can’t disrupt themselves—that is,
disruptive innovations need to be kept
separate from sustaining ones.
• While it may seem counterintuitive, if you
have an idea for a disruptive innovation,
you should form a separate business unit
to execute it so the innovation doesn’t
get lost in the company’s existing
strategy.
4. KEEP DISRUPTIVE
INNOVATIONS SEPARATE

32. • Innovation isn’t a one-and-done project;
it’s a commitment to thinking one step
ahead for the business’s lifespan. As you
hone your resources, processes, and profit
formulas, innovation will become easier
and a more ingrained part of your
company’s culture.
5. CONSISTENTLY THINK ONE
STEP AHEAD

33. THANK YOU!