To innovate, or to iterate? An innovator’s dilemma.
Innovation is risky. Whether you’re iterating on a great product or investing in a new one, the right path isn’t always an easy choice.
Product innovation is a graveyard of ideas that were ahead of their time, concepts with execution problems, and products that ran out of time before finding their profitable market. For consumers, the product innovation death watch is a spectator sport. For companies, the graveyard is a harrowing warning of a wasted investment.
Read on as we explore some common innovation strategies that help unpack the tricky choice between iteration, and innovation.
Q. My current product is doing pretty well, should we keep iterating on it?
TL:DR: Keep iterating. Start innovating when your competitive landscape looks the same.
A. Yes, you should continue to iterate for a while. You put a lot of effort into launching that product, and your iterations will help it meet its full potential.
You should start innovating when your A/B test doesn’t show much of a difference, or a competitive landscape review shows that everyone else is offering the same thing. Iteration won’t keep you competitive — you need to start exploring.
Q. My competitor’s current product is basically the same as mine, but the market is growing and we’re both doing well. Can I afford to distract the team in our competitive marketplace?
TL:DR: You can, and you should. Playing it safe with current products can leave you exposed to competitive product innovation.
A. If your primary product is doing well, this is a great time to start exploring other potential spaces and directions. It’s difficult for companies to take the long view and invest in innovation while current products are generating healthy revenue. It can feel safer to just iterate on what is already doing well, and make sure that the hero product is being fully supported.
As an organization you need to find the balance between investing in improving your current product and investing in the next innovation. Exploring now can help you reduce future risk.
Q. When should I invest in finding and developing new product innovation?
TL;DR: Once a product begins to perform well consistently, dynamically move resources into innovating new and existing products.
A. In machine learning, there is an approach called the multi-armed bandit. In a multi-armed bandit scenario you are faced with a number of different opportunities, similar to a slot machine. Some have a steady payout, some have an infrequent but big payout, and some have a poor payout. However, there’s no way to know which opportunity is which at the start, and the degree of payout changes over time and without warning.
You’ll start with a few hunches, you’ll know the opportunity size around your current product, and what iteration can do to support that. But, you won’t know much about the size of the disruptive idea. You don’t even know what the disruptive idea is, and that’s fine. You need to focus a large part of your attention on the current winner and start testing out other options to see what the payout rate is.
At this point you’re in partial exploitation mode with your current products, and partially in exploration mode while looking for your next ideas. It’s a good time to notice any shared dependencies between opportunities when you’re exploring — things that your organization could start doing to support both long and short term innovation paths.
As time passes, you will notice that the benefits of focusing attention on your existing winners will diminish, and that your opportunity spaces are becoming more defined. This is the time to refocus your attention and investments on your organization’s long term opportunities.
Q. Great! So now we’ve got the go ahead and can run with the best innovation idea. Should we let the others wilt on the vine?
TL;DR: Never let good ideas go to waste. Revisit these opportunities regularly to see if the market has opened for them.
A. No! The market is always changing, so less desirable opportunities will become more feasible because of technology advances or shifts in user sentiment. Even when, in the ‘exploitation’ phase, you’re getting the most value out of the selected opportunity, the organization should continue to give focus to ideas which were initially deemed too risky. This allows the company to be nimble and responsive, dynamically allocating effort and attention across multiple initiatives. Your team should revisit opportunities at least every quarter to make sure you know when the situation on the ground changed, and you should too.
Have other innovation questions you’d like us to explore? Leave them in the comments and we’ll explore them in a future post!
