Global partners have expanded their engineering capabilities. It is possible now more than ever to outsource design. With today’s IT it is now possible to innovate with a number of partners. This promised innovation is now practiced and is reaping benefits for companies that have invested in the processes and tools for global product development.
The GDP growth of emerging markets has slowed dramatically. Companies have done all they can to expand geographically. If companies want to grow revenues, they have to develop new products in new categories. Without innovative new products it is impossible to command higher margins. Greater product differentiation drives higher margins leading to bottom line growth.
Crowdsourcing is here. Spigot and Big Idea Group are two emerging platforms. Companies are leveraging social technologies to find and filter great ideas. They develop policies that embrace open innovation and learn the tools to excel at identifying and managing partners.
The service, software, or financing options are as important to the product as the fungible object. FedEx won market share from UPS by offering tracking of packages, enhancing the customer’s experience. Another example is combined product/software offerings like the iPod and iTunes. Adding non-fungible elements to extend a product is a trend seen today especially in the app market.
Today’s product may include a concrete object, a software component, a service component, and a social networking component, where each of these is an essential constituent of the total product.
In consumer electronics and technology products, this trend dovetails with a move toward business models that are based on subscriptions or rentals and new pricing models such as “freemiums.” A coherent product planning and strategy capability is essential to ideate, schedule, and execute this web of interrelated components around a core product.
Notice how quickly Nokia was outflanked in the mobile market. Or how quickly Samsung has become a threat to Apple’s supremacy in the smart head set market. Putting cameras in smart phones has devastated the point and shoot camera markets. The development of mobile technology promises further disruptive changes in these segments in the near term.
These disruptive innovations often come from new entrants or unexpected technology crossovers. Established companies need robust product planning and strategy capabilities to respond to these small, agile competitors.