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Value chain of product and service development

Module 6: Knowledge framework for growth

In the research stage of introducing a new product or service, leaders ask questions, and success is defined as a “breakthrough solution”. During development, leaders remove barriers to execution and success is defined as a product or service delivered on time and on budget. Think of all this as a value chain, where you should be adding value to an idea at each link or stage of the process for the most successful outcome.

The links of the value chain are:

Opportunity recognition

How do you come up with an idea in the first place? Regardless of whether you are a budding entrepreneur or a product developer in a large corporation, you need to be tracking trends (e.g. technology, socio-economic, demographic) and looking at the intersection of those trends. This will help you identify what's known as the “white spaces of opportunity” where no one else has yet ventured. If you currently have customers, you can also ask them about their emerging needs and wants – and what they would value.

Identify what's known as the “white spaces of opportunity”

Capacity assessment

Capacity assessment looks at the logistics of your ability to undertake a new opportunity. Ask yourself:

  • Do you have the capacity to take advantage of that opportunity?
  • Do you have the people with the knowledge to be able to capitalise on the opportunity?
  • How does that new product or service fit with your other products and services?
  • Can you use your current sales and distribution channels to sell it? Do you have to develop new ones, or partner with another company?
  • Do you have the funds required to design, develop and produce this new product/service, then launch, market and sell it?

If you are in start-up mode, and this is your first product, you'll be most concerned about whether or not you have the knowledge to capitalise on the opportunity and will be able to sell it to your first customers. If you are an established company, you will need to consider all of these questions equally.

Finding the right opportunity

You may cycle through a number of ideas before you find the one that looks like it will provide the biggest opportunity for your company. This process is often referred to as “the fuzzy front end” of innovation because it can be messy, unstructured, and certainly does not have clean edges.

Be disciplined. Don't chase after every shiny bright new idea that comes your way

You will say “no” to a lot of ideas that look like great opportunities, but if you don't have the people, time, funds or capacity to develop the idea, or the market is not big enough, or the return does not warrant the investment, then you need to walk away.

Be disciplined. Don't chase after every shiny bright new idea that comes your way. Stay focused on the products or services that will provide the best opportunity for your company, and invest in the small number that look like they will provide the best return.

Starting strategy

Once you have chosen the product or service you think is worth “betting the company” on, you need to focus on the production function – the “speedy back end.” Here, the questions you ask are quite different from the ones you asked with regard to “capacity assessment”. These questions are focused on execution:

  • What materials do we need in order to produce the product or service?
  • Where do we source them and what problems will we have getting them?
  • What's the budget and schedule for delivering the first product or service?
  • Have we aligned the whole organisation around delivering this new product on time and on budget?
  • What’s the most efficient and effective system for delivering the product or service?
  • How do we design the most appropriate customer service?

Remember to stay focused on meeting the needs of your customers, and testing ideas with them at every link in the value chain. There’s no question that reducing the number of failed, late, or over-budget products or services is one more way to accelerate growth.

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