Planning for future business success: Innovation by Cynthia Bassett Hartwig, CPA
Today’s business environment is changing at an ever-increasing pace. What worked yesterday may not work today. What once was a revolutionary product quickly becomes obsolete. If management does not plan to continually innovate, the company will also quickly become obsolete.
The objective of today’s post is to portray how to measure the company’s performance and ability to plan for a continually changing business environment.
There are several performance indicators that should be watched to analyze the company’s ability to adapt:
Method effectiveness to identify consumer trends
Product Innovation and Development
Number of new products
New product time to market
New product performance
Identification of innovative employees in R&D
Company’s ability to pivot
Methods to identify consumer trends include:
1. Analyze trends of sales of current products
a. What sales are growing? Is there a general theme of which ones are growing in sales?
b. What sales are declining? Is there a general theme of which ones are declining in sales?
c. Any previous products that could be resurrected with minimal investment? Sometimes old products that previously faded come back into fashion or use.
2. Follow social media
a. What social media platforms are most active for your industry?
b. What and how are consumers using the products?
c. What are their frustrations?
d. What are the areas showing most interest and growth in interest?
3. Attend trade shows
a. What is the feedback you are getting on your display?
b. Is the feedback indicative of the overall consumer response, or just the loudest and most vocal consumers?
c. What is your competition doing and what are consumers showing the most interest in?
4. Observe competitors: identify brand uniqueness and weaknesses
a. What do they have that you don’t and vice versa?
b. What is creating the most hype on the internet?
c. In what direction are your competitors moving?
5. Surveys of current customers
a. When they place their first order, what “sold” them?
b. What hesitations did they have before placing the order?
c. What are their disappointments after ordering the product?
6. Ask potential leads planned questions
a. They may or may not order: what is most important to them?
b. What might cause them not to order?
c. Why did they contact your company, how did they find you?
7. Post questions on social media
a. What is their favorite product?
b. What do they use the product for the most?
c. Share images of new products
d. Rewards for involved and active consumers on social media, such as free products
8. Request feedback from website visitors
a. How did you hear about us?
b. What are you looking for?
c. Anything missing on this page?
9. Follow industry blogs
10. Use Google Trends (trends.google.com) to see what people are searching for
Regular meetings should be held between management and the R&D team to analyze the results of the above methods to research consumer trends.
With the trends that you are seeing from that feedback, what is the market size and rate of growth? Is the market large enough to be able to show a good return for the investment in the innovation? Is there a new potential market? Do the potential new products have a large enough profit margin to justify investment? Which methods of researching consumer trends have proven to be the most reliable for your company? Which product innovations are congruent with your company’s mission and reputation?
After a few new product lines have been decided upon, how long will it take to develop, what will be the monetary investment, and how long will it take to bring it to market? When analyzing various possible directions for innovation, identifying these key hurdles can help to determine which option will have the highest likelihood of success.
At the Research and Development meetings, past products should also be discussed. A product development dashboard should be displayed and explained, including graphs of these key indicators of the new products:
1. Revenue from various new products
2. New project status – where are they in the process
3. Profit margin of new products
4. Growth rate
5. Return on Investment
6. Percentage of overall sales
7. Percentage of market share
The new products that aren’t performing well can be analyzed for improvement or dropped. The new products that are performing well or are showing potential can be discussed for increased investment or other feedback.
Identification of innovative employees in R&D:
To identify innovative employees in R&D, work backwards.
In other words, analyze the most successful new products, and determine, who had the insight to see it would be successful long before it was? Who contributed the most to its development?
By keeping good minutes during the meetings, historical meetings can be researched. There are many auto -generated meeting minutes, such as Otter.
Once key employees and/or teams have been identified, they can be rewarded with both recognition and financial bonuses.
All of these will help with adapting to an ever-changing business environment and set your company in the direction of current and future success!