Over the past decade, we've seen new products and services disrupt nearly every industry. Recent product innovations have fundamentally changed the way we receive goods and services, the way we care for the environment, and the way we do business.
The creation of new products and services is what allows people to start new companies. It is what and allows established businesses to gain an advantage over their competition. In short, product innovation is at the heart of a growing economy.
How do these disruptive products and services come into being? And how do they succeed? Through the processes of product innovation and product validation.
What is product innovation?
In short, product innovation is the process of changing or developing products that are different than what’s already available. This can include small changes, such as incremental improvements to a smartphone. It can also include large changes, such as making electric cars commercially viable and easy to use.
Unfortunately, the failure rate for new product launches is 95%. In many cases, there simply aren't enough customers for the product to be commercially viable. In other cases, the product might be too expensive or it might fail to solve a real pain point.
Despite the risk of failure, product innovation remains critical for long-term success. If your company were to sell the exact same products year after year, your company's growth would eventually stall as your customers start buying from more innovative competitors. Many consumer goods like cars, smartphones, and fashion trends change each year for a good reason.
How does product innovation differ between large companies and startups?
For large companies, product innovation is often an organic part of improving what they already make. Think about the iPhone: with every generation, Apple introduces improvements to the prior models. They develop changes from advances in technology, customer feedback, and good ideas from their product development team.
The process of developing a new product is different for startups. In many cases, a startup will develop a single product or a series of closely related products almost entirely from scratch. They’ll use existing technology, of course, but they often won't have anything to sell until the product development process ends. Then, they’ll launch the product and hope that it succeeds.
A brief overview of the new product development process
Whether you're introducing incremental improvements to an existing product or you're creating something from scratch, developing a new product is a big project. Luckily, there is a set of steps that can guide you. These steps are known as the Product Development Process. The steps include:
- Idea generation
A brief overview of product validation
Of all steps of the product development process, the research step is the most important. The research step is so crucial because it is where companies use product validation to make sure that they're creating something that people will buy.
If your company does product validation properly, you will greatly reduce the chances of product failure.
Of all the ways to validate a product idea, the most effective is dry testing. In a nutshell, dry testing is a form of test marketing where you use a webpage to try and get people to purchase your product before the product exists.
Dry testing is the most reliable way to perform product validation because it answers one question extremely well: "If this product actually existed, would lots of people pay for it?"
Want to get started with Dry Testing with minimal effort? Try the Product Demand app for Shopify.
Of course, there are other ways you can validate a product. These include:
- Selling a few items at a small event
- Competitive analysis
- Research product demand
- Try crowdfunding
- Meet customers and seek their feedback
As you can see, the new product development process is complex, but it follows a logical progression of steps. With that said, the best way to help ensure your product is commercially viable is with product validation.