After spending the last ten years working with digital innovation initiatives and development of digital products I am surprised to see that there is still a huge gap between the two. Not all digital innovation initiatives are meant to result in new or improved digital products, but quite a large part of them are. Yet, in too many companies the product organisation is seen as purely a delivery unit, of little interest for the Head of Innovation. That is a mistake, and here is why
Four reasons for why the Head of Innovation needs to care about the product organisation:
They decide the ROI for your product innovations
If you have created a brilliant concept for a new product a large chunk of the cost of realizing that concept will be the product development. If you have a poorly functioning product organisation the development process is likely to take longer than necessary, and lead to worse results, which will increase the investment needed and decrease your returns.
They make sure your customer gets something they want to buy (or not)
The reality is that even a validated product concept is nowhere near finished at the concept stage. If the product organisation is doing its job, what will be released to the customers will be something quite different from your initial concept. This is not because you did a bad job with the concept. It is because the product organisation will have done customer tests, they will have created new insights, they will have come up with new great features, they will have tested some more…and end up with a product that the customer can use and will want to pay for. In fact, I would argue that if the product organisation does its job, just as much innovation will have happened after they took over the product, as before they recieved it.
They will make sure your products always feel up to date (or fail to)
Many innovation professionals are spending their days chasing the ever so elusive disruptive innovation, while the constantly ongoing incremental innovation is what will keep your company relevant to the customers. If your product organisation is doing its job, they will make sure even your oldest products are constantly improved and updated to satisfy changing customer needs and behaviours. They will manage your product portfolio well, know when to retire a product, and have a new one waiting to take its place. If your product organisation is not working well, they might fail to do all of this, and simply keep maintaining products that should have been retired long ago.
They will give you the insights that allow you to create game changers (or not)
A strong product organisation is talking to the customers every day. They see every change in customer behaviour, they know the competition like the back of their own hand, and they are aware of every sign of a change in market trends. They are a veritable gold mine of insights to turn into more disruptive innovations. How could you not treat these people as a core part of your innovation team?
To summarize: making sure the product organisation is functioning well, enabling continuous innovation work within it, and involving it in wider innovation work could create countless benefits for the company. It could enable a Head of Innovation to see better and faster results, and higher ROI on innovation projects. If you are in charge of innovation and haven’t been involved with the product organisation in your company, now is the time to start.
And yes, innovation should be a priority throughout the entire organisation. But that is still very far from reality in most organisations, and prioritizing enabling innovation work within the product organisation would be an effective step on the way, with both short and long-term benefits.