iPad. The Flip video camera. Coleman’s FlashCell ultracapacitor-powered screwdriver (which fully charges in just 90 seconds). When so evident, it’s easy to see a high innovation quotient well before the initial inventory rapidly vanishes and customer waiting lists ensue. But more often than not, whether B2C or B2B, product development portfolio decisions are about incremental innovation rather than breakthroughs. It can be considerably more challenging to gauge the level of innovation across incremental development portfolios, such as enhancements for a new model of an existing product or new features for the next release of a software application. That’s where competitive impact metrics can be a powerful tool to help insure sufficient product differentiation for competitive advantage.
For development portfolios in established product categories, a very effective approach is to rate each new product (or service) enhancement’s potential to change your brand’s competitive standing on key drivers of brand preference — the attributes that define ideal customer experience — such as easy to use, for example. If your brand is not already best in class on a particular attribute, is it likely that the new Feature X as currently scoped will move your brand from “parity” vs. competitors to “superior” on that attribute? Or if your brand is currently inferior there, could Feature X at least move the brand to parity? Assign a value to each movement (parity to superior, inferior to parity, inferior to superior). Going one step further, weight each rating by the attribute’s relative importance to your customers. When you’ve done this for each attribute (usually the top 8 to 10), you’ll have a customer-focused scorecard for comparison of development projects on differentiation.
There’s another big payoff, however. Looking at these scores collectively across all planned projects/features provides visibility into the innovation quotient of the total portfolio. We sometimes see portfolios that are highly aligned with customer needs and yet still result in mostly “me-too” products. The alignment scores across development projects are relatively high, but the competitive impact scores are relatively low. In such cases, your loyal customers may be very happy to buy those products, but market share gains without aggressive pricing are unlikely. And your brand remains highly vulnerable to competitor innovation.
Incremental innovation is still innovation — if the offering is meaningfully differentiated. The important thing is having a way of knowing, and then allocating product development resources accordingly.