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At the end of last month we finally unveiled the results of the annual innovation priorities and challenges survey dubbed “The Return to Profitability – 2011 Product Innovation Priorities Report” which was conducted in partnership with the Association of International Product Marketing & Management. You can download the complete report for free on our resource page, but we also wanted to share a snapshot of the results and analysis here.
At the highest level, our survey confirms previous estimates that about 50% of all products fail. In our case we found that 50% of respondents had a less than 50% success rate, but we dive deeper into why so many products fail and what product executives are planning to do about it next year. We found four major factors in failing products.
Failing to Align Strategy & Execution
40% of respondents said less than half of their engineering resources are being spent on the most important features and 67% of respondents felt there was at least a moderate chance they were currently developing the wrong features.
Failing to Listen to Customers
The customer is always right - or so I hear. When a company has thousands of customers, who often have bad or conflicting ideas, listening becomes harder to do. Listening to customers is the most important competency in developing the right products that will be successful in the market, so this is a course correction for companies creating products that don’t sell. Online referrals are critical to most any product’s success, yet the responsibility for facilitating that doesn’t belong to marketing alone – product managers need a product worth recommending, not condemning online.
Only 26% of respondents had a significant web-based idea collection and management process. Collecting ideas from customers through business cards, casual conversations and emails doesn’t offer a viable or systematic way of creating the product customers are asking for. Additionally, getting customers involved in the creative process and enabling them to co-create products with you sparks the beginnings of excited customers, beta testers, and co-creators that will advocate in favor of the brand.
Failing to Automate Innovation Processes
72% of respondents felt a majority of their innovation management processes were handled manually. An increasing number of companies are beginning to recognize that by automating time-intensive and costly MS Excel and Word-based processes, they can increase their time to market and accelerate profitability. By applying technology-based solutions to ideation, strategy and portfolio requirements management and development processes, companies can shorten their innovation cycle times, reduce development rework and costs and bring quality products to market faster.
Failing to Manage Execution Risk
The top-ranked challenges in innovation management are linked to carrying plans through execution and dealing with tradeoffs, deadlines and resources. We often see this as a conflict in the work, communication and management style from management down to individual developers. Developers are on an Agile workflow that works in sprints, but their management system doesn’t extend up to the strategic level. This means management is using emails, PowerPoints and meetings to communicate complex ideas and priorities that go through several middle-men before being executed.
What Companies are doing about it in 2011
There’s a clear refreshed focus on innovation. The rebounding economy has brought C-level focus back to top-line revenue instead of costs, R&D is stepping up, and global innovation hubs are forcing US companies to step up their game. Survey respondents generally expect 2011 to be an even more volatile and fast-paced business and innovation is taking a front seat.
So what are the most common 2011 plans? Product portfolio management, followed by ideation and Agile execution are amongst the most popular new initiatives.