487: Product Innovation Management: First of Seven Knowledge Areas of Product Mastery – with Chad McAllister, PhD

Product Mastery Now for Product Managers, Leaders, and Innovators

How product managers can master product innovation management

Today we’re talking about product innovation management, one of the seven knowledge areas for product mastery. These are the knowledge areas that make us successful as product masters who know how to create new value for our customers. They also lead to more influence in our organizations. This is the second episode of a series where we’re diving into each of the seven knowledge areas.

Summary of topics discussed for product managers

Watch the full interview with PowerPoint slides on the Product Mastery now YouTube channel.

[2:06] What is product innovation?

PDMA defines product innovation as the creation and subsequent introduction of a good or service that is either a new or an improved version of previous goods or services. Product innovation involves creating value, which is judged by the customer.

[3:23] What factors influence product innovation?

There are four categories of factors that influence product innovation:

• Controllable
  • culture
  • strategy
  • capability
  • organizational structure
  • finances
• Uncontrollable
  • competitors
  • government policies and regulations
  • international environment
• Internal
  • board
  • management
  • marketing
  • production
  • finance
  • purchasing
• External
  • consultants
  • suppliers
  • regulators
  • agents
  • trade
  • customers

[5:19] Why is product work hard?

Successful product innovation is challenging because it doesn’t just happen by accident. As much as 70-90% of consumer products fail to meet their revenue expectations.

This means organizations are wasting financial and human resources at a tremendous rate. Your competency with these concepts in the Body of Knowledge helps equip you to turn this around and be more successful creating products customers love and that generate revenue for your organization.

Some famous examples of failed product launches that missed some aspect of product innovation are:

• New Coke
• Apple Newton
• Blackberry phone
• Nintendo “Virtual Boy”
• Segway
• Gerber “Adult” Food “Singles”

[7:20] What factors influence product innovation success?

I want you to be aware of success factors at three levels:

• project
• people and environment
• strategy

[7:39] Success factors at the product project level

• Develop unique, superior products, not me-too products
• Have a clear focus on a target market segment
• Do your pre-development homework
• Develop a clear, concise and stable product definition from the beginning
• Adequately plan and resource the launch
• Execute with speed—but not at the expense of quality of execution. This creates a tension that product teams live with—speed with quality

[9:01] Success factors at the people and environment level

• Organize project teams to fit the constraints and complexity of the project
• Create the proper climate and culture to support innovation and remove innovation barriers
• Enlist top management support

[9:35] Success factors at the strategy level

• Have a product innovation and technology strategy that is aligned with organization strategy
• Leverage core competencies
• Target attractive markets
• Use portfolio management
• Use the necessary resources for each project

[10:34] What does research tell us about product innovation success factors?

The PDMA Comparative Performance Assessment Study has identified factors consistent among high product innovation performers, organized into seven areas. They study is conducted every few years, and the most recent one was titled Product Development Global Best Practices Survey.

[11:26] 1. Innovation Culture

• Failure is understood
• Managers establish objectives
• Innovation is considered in recruitment
• External communication is used
• Innovation and risk-taking are valued
• Constructive conflict is encouraged
• Internal communication is effective

[12:32] 2. Product Strategy

• Well-defined new-product strategy
• First-to-market or fast-follower strategy
• Focus on sustainability
• Intellectual property considerations
• Global business model

[13:24] 3. Portfolio Management

• Select projects
• Balance across projects
  • Radical vs. incremental
  • Low vs. high risk
  • New vs. existing markets

[14:09] 4. Product Process

• Formal, cross-functional process
• Continuously re-design the process
• Specialized team structures to drive product innovation
• Adopt flexibility
• Senior manager support

[15:16] 5. Front End of Innovation

• Spending considerably more effort to understand customer needs
• Formal processes for idea assessment
• Open Innovation
• Social media to gather customer information

[16:09] 6. Development Tools

• Use market research tools to understand customers
• Use engineering design tools
• Emphasis on project planning tools

[16:32] 7. Measures & Metrics

• Formal metrics for measuring performance
• Metrics for both outputs and process:
  • Outputs—product profits
  • Process—milestones

• Metrics for continuous improvement

[19:10] What does a product manager do?

The responsibilities of product managers vary by organization, but some general responsibilities include:

1. Understand customer experience
2. Develop vision
3. Prioritize processes and activities
4. Develop product pricing and positioning
5. Negotiate with stakeholders
6. Build and follow a roadmap
7. Arrange product testing groups
8. Drive product launch
9. Participate in the promotion plan
10. Build and maintain product awareness

[20:22] What are the skills of successful product managers?

• Discovering customers and their needs
• Market knowledge
• Innovation awareness
• Strategic thinking
• Technical knowledge
• Expert communication skills
• Relationship management
• User behavior understanding and empathy
• Ability to explain business and technical requirements
• Measuring the success of a product

A product manager is responsible for market success. They develop the product strategy and engage in product work through all stages of work—idea to launch and ultimately to product retirement.

A product manager works across functions, such as development, marketing, sales, and finances, to coordinate resources, transfer to them the product vision, and build a product roadmap.

[21:53] What are some key metrics for tracking product management performance?

• Monetization
• User engagement
• User satisfaction

[22:20] What are key strategies for a Product Manager’s success?

1. Create a vision
2. Develop a plan to execute the vision
3. Guide the development of products
4. Commercialize the products

Watch the full interview with PowerPoint slides on the Product Mastery now YouTube channel.

Put the information Chad shared into action now. Click here to download the Action Guide.

Useful links:

• Check out the 2024 Product Development and Management Body of Knowledge by Allan Anderson, Chad McAllister, and Ernie Harris
• Find out how the Rapid Product Mastery Experience, the fastest path to higher-performing product managers and teams, can help your team

Thanks!

Thank you for taking the journey to product mastery and learning with me from the successes and failures of product innovators, managers, and developers. If you enjoyed the discussion, help out a fellow product manager by sharing it using the social media buttons you see below.