New product development for online applications and services is changing, and changing fast. And it is time for the established businesses to join the revolution or forever play catch up and pay over the odds for the next big thing e.g. ITV & Friends Reunited, eBay & Skype and CBS & Last.fm.
Established players generally play it safe with innovation, as:
- it’s simpler to stick to products and services that they know deliver revenue and shareholder value;
- playing safe protects against the perceived risks of stepping into the unknown e.g. damage to the brand, lost customers and revenue streams if it all goes wrong, and
- customers have expectations of them delivering in a specific area of expertise that they know is safe, tried and tested.
But can this model exist in a time when online launches are quick and growth even quicker? Or is it best for established businesses to leave innovating to the newbies, joining the party once it is safe to do so?
I believe that more companies should be following the lead of the likes of Prudential/Egg, BT, Adobe, Dell, Nokia and McAfee. All of these use continuous customer feedback and involvement to drive the development of new services and reduce the risk of duff launches.
Success in this model is about creating an environment where new products are brought to market in beta / an incomplete format. And ensuring that customer expectations are managed through clearly communicating that they are using/playing with something that is in beta.
By opening doors and inviting customers to try new products, companies can only benefit. Not least because they generally welcome the opportunity to be first to try something new. And will freely provide their opinion in the knowledge that they are inputting into products they will use – just look at the models used by Google labs, Windows live, Myaol, Netvibes, Flikr, del.icio.us, Box.net etc.
In short, this approach provides opportunities to:
- gain customer insight and real life opinions to directly impact product development on the fly;
- build a customer base and early market take-up / buzz around new products;
- take products to market faster and potentially be the first (but only if the business adopts an iterative approach to development and delivery);
- build an agile and responsive business (or at least business unit), and
- implement a lower risk methodology for identifying new opportunities (no longer do you need to go to market with the perfect product).
There is a lot that can be learnt from companies that open up beta programmes and use this as an opportunity to trial new products. Established businesses are very well placed to adopt a version of this model as they have the ear and trust of their customers who are also someone else’s customers.
Look out for my future pieces on shifting business models to accommodate this approach and a review of options of partnering.
As with all my blogs, this is my opinion and I welcome comments and debate.
Asomi
