Role of Innovation in a Software Product Lifecycle
Over the weekend the CBS 60 minutes program covered the approach of Design Thinking (http://www.cbsnews.com/video/watch/?id=50138327n) where company like IDEO incorporates human behavior into product design, an innovative approach that is now being taught at Stanford university these days to get the younger generation to think differently.
This made me wonder why innovation is not a topic that is strictly enforced by all product development companies. When it comes to the product life-cycle, innovation is a word that is loosely thrown around. Management tells their employees that they promote innovation but there is no goals or requirements that is tracked around innovation specifically.
Importance of Innovation
It’s a well know fact that ‘creativity’ is about coming up with ideas while ‘innovation’ is about bringing ideas to life. If product companies have to innovate they need to take risk with their ideas which requires time, investment and resources. Let’s take the example of Proctor & Gamble (P&G), an american multinational market leader in consumer goods. This isn’t accidental. It’s the result of a strategic effort by P&G over the past decade to systematize innovation and growth. Their product portfolio at any point of time is a result of dedicated focus on innovation. They will lose their #1 place in the consumer goods market if they do not innovate. Apple is another well know example who had dominance with its product portfolio because of its innovative culture that Steve Jobs always championed for. If Apple does not maintain its track record with innovation, the company will very soon lose its market share against other competitive vendors.
Role of Innovation in Software companies
80-90% of the big software companies these days take small and safe bets to innovate with their products. They mostly listen to their customers and their feedback and meet their needs by adding features and functionality to the existing products. They then tag that as their strategy for innovation. On the other hand, all the big innovations of new ideas are brought to life in software startups. Startups are backed by venture capitalist who fund them to convert the bigger and smarter ideas to transform them into profitable, commercial revenue generating product and services.
Overtime big software companies lose their product edge over competitors and to stay current in the market they acquire these software startup companies and integrate them into the existing product portfolio. Over the process of integration the products produced by larger companies lose their real value, the product becomes bulky and complex. Hence this strategy is not always effective. This need to change!.
Innovation as a Strategy
There are various well-known innovation frameworks and best practices that is already available, which enforces the importance of adopting the concepts of innovation at every step of the product life cycle. This should be the new way of thinking irrespective of whether the software products are developed in large or small companies.
In order to promote the cycle of innovation as the heart of a software product life-cycle, companies should enforce a strategy and promote a culture with specific goals that can be tracked and monitored around the product.
Here are some of the steps that can turn innovation into success for any product.
- Encourage free flow of ideas and reward them.
- Allow to share knowledge around the ideas across the company.
- Allow to interact with inside as well as outside the company resources who have the knowledge around these ideas.
- Educate and allow to seek knowledge around market and the technology trends.
2. Market research:
- Is there a need or desire for the product?
Is the size of the potential market adequate?
Will the customer buy the product?
- Will the product satisfy the market needs?
3. Competitive and Risk analysis:
- Will the product have a competitive advantage?
- Is the advantage profitable ?
- Do we have all the internal resources to build and sustain and make the difference?
- Can we get a buy-in from the top management and support it?
4. Revenue and growth:
- Are forecasted returns greater than costs?
- Are the risks acceptable?
- Does the product fit your overall growth strategy?
- Can it help us tap into additional markets?
- Can it help us to be market leaders and establish to strengthen the brand?