Product innovation during… | TXI – Digital Product Innovation Firm
Product innovation is most successful when organizations embrace it as an ongoing way of working. But that’s easier said than done, because, again most organizations are not set up to innovate. They’re set up to maintain the status quo.
Innovation requires investing time in things that aren’t directly tied to day-to-day business functions, which means many organizations struggle to loop innovation into their existing operations.
(Pro tip: if your organization finds itself in this situation, you might benefit from working with an innovation consultant.)
When you start innovating in the context of process improvement and optimization, however, you learn to flex the innovation muscle. You may find small wins that lead to value gains and market differentiation––and whet the appetite of leadership for more.
What’s more, the conversations you have as part of the idea generation will also reveal other problems employees and customers are experiencing. These act as catalysts to create new value: by solving a problem, you make life better for the people affected, and that creates new value.
As for how to solve those problems, product innovation provides a framework: continuous discovery. In the first part, teams diverge and then converge to identify which problem to solve; in the second, they diverge and then converge to identify the best way to solve it.
One of the beauties product innovation is that it creates its own momentum: by creating an environment where everyone’s voice matters, you not only ensure you’ll have a steady supply of innovation opportunities (i.e., problems to solve to make people’s lives better) but also that your organization is a place where employees feel valued and so want to stay.
Why (and how) to prioritize innovation during a recession
Maybe the best framework for internalizing the value of innovation during a recession is to think about pruning a tree. Left to themselves, trees will grow toward sunlight and nutrients. That doesn’t always lead to growth that maximizes fruit production.
The goal of pruning is to identify growth that isn’t productive and remove it so the tree can focus its energy on growth that does yield fruit. But you have to know what you’re doing. Cut the wrong parts of the tree––or cut too much at once––and you can seriously hamper growth (and even kill the thing!).
That’s exactly the mindset businesses need to have during a recession: how do you cut in such a way that you produce more?
Businesses, like trees, are constantly evolving entities. If you aren’t actively managing the way your business evolves, it won’t necessarily evolve in ways that optimize growth.
Product innovation helps ensure that your business evolves toward growth because it involves checking in with stakeholders (employees, customers, partnerships, etc.) on a regular basis. When you’re continually examining the various parts of your business, you’ll begin to recognize inefficient processes, underutilized services, and outdated KPIs––all of which can be cut to refocus growth.
And, again, if this approach is unfamiliar, working with an experienced innovation consultant can help ensure you make the right cuts.
Lessons from businesses that mastered innovation during a recession
One reason it’s unwise for businesses to “hunker down” during a recession is that doing so can cost them a prime opportunity to forge meaningful connections with their customers. Because customers also have changing needs and values in a recession.
For example, in a 2022 study, J. D. Power found that retail banking customers’ satisfaction with banks’ advice and guidance dipped three percent from a year before, largely because they were experiencing greater financial distress and wanted and needed more guidance.
In other words, the banks didn’t do anything different from one year to the next––and that was the problem. Customer satisfaction decreased because the banks didn’t adjust to their existing market’s changing reality.
Now let’s look at some businesses that mastered innovation during a recession to see what we can learn.
In 2007, Netflix introduced its streaming service and brought it to scale in time for the Great Recession––perfect for the many unemployed Americans who were looking to cut back on entertainment spending. By making a night in both entertaining and inexpensive, Netflix offered exactly what the Great Recession called for.
The takeaway: Offer something new to your existing customers (this is called “radical innovation”). If that thing solves a real problem they have, you will likely attract new revenue and customers as well.
Warby Parker
The glasses frames startup launched during the Great Recession and offered an innovative idea: glasses frames could be stylish and inexpensive––and buying them could be convenient. The company’s original model, which included no physical locations, let them reduce operating expenses and pass those savings on to customers.
The takeaway: Look for inefficiencies in existing markets. In this case, the existing market for glasses frames was dominated by a single player that was able to keep prices unnaturally high. Warby Parker’s founders decided to try disrupting the market by creating frames themselves and selling them with less markup. (Spoiler: it worked.)
Launched during the Great Depression, Revlon illustrated one of the truisms of recession living: brands that sell small indulgences tend to do well, as people look for small, inexpensive ways to treat themselves.
The takeaway: Emotions matter. When people have to cut back on discretionary spending, small treats can have a big impact on their state of mind. If your company can find ways to make customers feel like they’re getting a little taste of luxury, they’ll feel fondly toward you and stay loyal.
Bonus takeaway: “Luxury” can be a matter of branding: position your customer service or your above-industry-average uptime as a way you pamper your customers, and they’ll be more likely to consciously appreciate those offerings.
Another brand launched during the Great Recession, Airbnb was one of the great examples of solving problems to create new business models: canonically, Airbnb’s founders needed to make rent money, and so rented out their couch for cheaper than people could get a hotel nearby. A recession-times win-win.
The takeaway: Focus on how you can meet customer needs better during the recession, and you’ll survive difficult times and thrive after.
Innovation during a recession is key to achieving success after
Creating new business value without new investment is challenging, but it’s doable. It requires getting to know your organization, familiarizing yourself with the tenets of product innovation, and applying those tenets to your business on an ongoing basis.
When you embrace this way of working and make a habit of listening to people from many parts of your organization, you start to uncover new opportunities to improve your internal processes, optimize resource allocation, and ultimately improve your products and services.
In the process, you’ll also create a more rewarding work environment for your employees, which will help improve retention and reduce the costs of recruitment and training.
If all of that sounds great but you’re not sure where to start, get in touch. We’d love to talk through your situation and help you prioritize which change to make to start adding new value without requiring any new investment. In any economy, that’s a recipe for long-term success.