Technique 3 minutes, 11 second read Annie Stewart, Innovation Practice Lead, WONGDOODY
It’s hard to find a CEO today who isn’t convinced of the importance of having a good user experience (UX). It saves money, improves customer loyalty, and increases sales.
Many businesses though, despite investment in UX, are still struggling to keep up with disruptors in their industry. Probably because UX investment largely only helps you defend market share. Launching new products and services, on the other hand? This creates new revenue and makes your business more resilient to disruption.
Moreover, here’s a thought to be seriously considered: market disruption is not a bubble, it’s accelerating.
So while moonshot successes like Airbnb and Uber are well-trod ground, the fact is 72 percent of new unicorn businesses have joined the $1 billion valuation club since 2018. And 186 unicorns joined in just the first half of 2021, 37 percent more than in the entire year of 2020.
Why/how? Possibly because industry disruptors are moving faster, solving user problems better, and unlocking new types of value in the form of blended offerings and new types of rewards for user investment.
Staying competitive in this environment isn’t a one-trick effort. Investment in good UX, digital transformation and R&D on your offerings is imperative, but not enough. Businesses need to be launching new value propositions — products, services, and business models — to remain resilient. These add new sources of revenue, draw in new markets, and balance your portfolio so you’re less vulnerable to a new upstart in your market.
The most effective innovations
There are lots of ways for businesses to innovate. In a recent dive into the world’s most innovative businesses, BCG found that investing in new customer value propositions — along with the right technology innovations — is the most effective innovation investment for a growing number of industries.
And it’s paying off. Nearly 60 percent of committed innovators report generating a rising proportion of sales from new products and services launched in the last three years. BCG found that the top innovators are investing an average of 1.4 times more into business model innovation than the laggards, and they’re seeing four times more returns.
Even though young start-ups get a lot of attention, it doesn’t have to be a youth game. Overall, there’s no difference in the success rate of innovation in small and large businesses — it just comes down to commitment.
Given the ability of large businesses to fund investments from their own cash flows, corporates may even have an innovation edge.
However, the uncomfortable truth is that 95 percent of new products fail. Life is too short to build products nobody wants, or to run endless pilots without a clear jumping-off point. Moreover, while it’s important to embrace some failure, there are clear levers that will help you succeed.
Keeping up with the disruptors
So how do brands innovate and keep up with disruptors in their industry?
- Find your right balance of investment in CX, new markets, and new value propositions with an outside innovation assessment
- Decide on a limited number of new domains where your strengths can help you win, and be clear about the extent of your ambition in each
- Set the right performance metrics and innovation accounting system to track your ROI, and adjust spending in the right areas
- Assemble and empower a multidisciplinary team to accelerate innovation, who understand company strategy but also bring in an outside view
- Make space for experimentation with employees, clients, and partners within and even outside of your industry
Once the foundations are in place, it’s important to develop a proven toolset for designing new products, services and business models. Focus on getting the solution-market fit right early in the process, then leverage capabilities in human experience design and agile engineering to get to market in one end-to-end funnel.