Product Innovation – Gaps, Challenges and the Competitive Advantage

The moniker product innovation is regularly used in the business realm but a lot of people don’t know what it means. It is quite often confused with innovation, well, it is broader than that.

In a nutshell, product innovation refers to the development or improvement of products in a way that tries to solve problems for consumers, customers, companies or society at large.

This means that it is not about just developing a new product, a business can improve the quality of pre-existing products and call it product innovation.

In the second episode of All Things Tech, All Things Business, Echo Kenya indulges you on the technicalities of product innovation, what it means, the competitive advantage, and how it can be used to solve customer problems.

The episode is especially ideal for entrepreneurs and companies looking to scale and appeal to more customers. Its timeliness is unmatched considering the millions and millions of products rolled out to the market every year.

Why is product innovation important for companies? 

Time and again, innovation has proved to be the main economic driver for industries. In regards to product innovation, a survey by McKinsey suggests that 25 percent of the total revenue profits of a company come from the launch of new products.

Having a portfolio of good products is what drives growth and brings more profit. What’s interesting is that products are easy to scale, with a little research, companies can differentiate their products to match the contemporary needs of the modern consumer.

There are many resources out there that be put together to form a product, particularly in the tech industry. 

According to Comark Onani, Co-Founder, CTO-Scale Kenya, product innovation is an ever-changing process – one that involves testing one tool and determining if it fits the consumer. 

“If it doesn’t, you try a better tool. In between this combination, you will strike one that will basically be your product,” says Comark.

Comark’s idea is simply what product innovation is – a process to finding a solution to a problem. A successful product innovation entails carrying out market research (gathering information about people’s needs and wants), then developing a concept.

The next step is developing the product based on the concept and testing it. Determine the flaws before launching it. This will provide you with the ground reality of the product while opening up room to a more competitive idea.

The final two stages involve assessing the market gain and refining the product for launch. This is where you do final research of the market to fathom whether the requirements are still the same or have changed. This is where you pick your target customers and find the most profitable way to launch.

The Competitive Advantage

The gap in product innovation mainly arises from the knowledge. Successful companies have always exploited the lacking knowledge to gain a competitive advantage. Any business looking to get ahead of its peers must:

• Develop a new product that answers the needs and wants of their consumers or creates new demand for them.
• Consistently improve on their core products and make incremental innovation.
• Redefine the competition by taking existing products to new channels or markets.

These three key goals can bring a long-term revenue stream for a company, but if done correctly. The trick is to find an equilibrium to the approach: new products, improvements, and targeting new markets. Focusing only on one of them is a mistake we see even in big companies.

A good case example is Apple. This giant smartphone maker has maintained its competitive advantage since 2007. Since its inception, apple iterated on its innovation and it gained a huge market share by displacing others that were slow to innovate.

But others caught up very fast. Samsung claimed a piece of the share, and in response, Apple added other innovative products and services such as iCloud, Apple Music, and different earbuds and headphones – and they are quite successful at that.

Why Some Product Innovations Fail

There is no product scarcity today. That means this process is quite risky at that. Every company is trying to claim a market share, to appeal to more consumers by improving on their products or their supply chains.

However, they face a fair share of challenges. These challenges are why some product innovations fail. 

For one, some companies fail to create relevant projects that solves consumer problems. Others are too costly to produce but the profit margin is low. It’s best to focus on what really creates value and what adds to the costs in the long run.

Also, pricing contributes a lot to how successful it will be. You might have an awesome product but if no one wants to buy it you’ll find yourself in a tight spot.

Some companies innovate for the sake of innovation, not for a purpose. This is primed for failure. Simply put, identifying and understanding customers’ pain points can lead to major opportunities for improvement. Once you have understood the extent of these pain points it’s important to address them as opportunities for innovation, not as ways of mitigating damage.

“There are lots of challenges in product innovation. If you don’t unpack, do proper market research, you can lose the true potential of your idea and get trapped in a notion that it will eventually be successful. This is one of the reasons why some fail,” says Loren Bosch, COO Echo International.

That said, how do you make product innovation successful? How do you do it right? Can you collaborate with others? 

Join Juliana Rotich, Comark Onani, and Loren Bosch as they take you through the advantages, the necessity, and the knowledge gaps that deter product innovation in the tech industry.