“Hey Braden – is the juice worth the squeeze?”
I chuckled out loud when our client, a serial entrepreneur, asked me this the other day. It’s a funny turn of phrase that also happens to be the absolute right question to ask when it comes to most business decisions.
The cost/benefit of innovation is something every growing company struggles with. You need innovation to grow your revenue and attract new customers/consumers, but since resources are limited, the effects of a wrong bet can cut deep.
There are two ways to view new product decisions using this phrase:
Benefit (The Juice)
- Revenue and profit potential
- Time to realize the benefits
- Deeper brand loyalty or attracting new customers/consumers
Cost (The Squeeze)
- The overall investment in time and money
- Change/pain the innovation will introduce to the company
- What about the cost of not doing it?
This last point can also be a benefit but it’s often unclear at the time and in today’s world of rapid innovation, your competitors will be moving as well. You can’t afford not to innovate or introduce new products and services.
But before you even get to the decision factors, you’ll also need to think about how to create new product ideas in the first place. How should a company think about this?
I use three factors in coming up with new product or service ideas.
Consumer Behaviour Trends.
Every business eventually follows consumer behaviour. How are people eating today? What are they interested in or concerned about? What is the future household going to be comprised of? How are people learning, working, engaging with others and their environment? The answers to these questions are found through customer research, databases, papers etc.
SME organizations don’t usually have the ability to be game changers in an industry or able to take major financial gambles with big capital purchases. So you have to be resourceful. What equipment or talent or abilities do we already have that can be further leveraged? What’s possible to tweak, change or add that can open us up to new segments or markets. How could we sell more to the same customers or consumers that we serve?
Distribution / Retail Trends.
Most companies overlook the changes that are occurring in the value chain but it’s critical. Sales and distribution is where the majority of short-term gains are made and knowing what products or services will delight this group could be a great source of inspiration. One client we work with is seeing retailers in downtown locations occupying smaller spaces to compensate for higher rent prices. These retailers have a need to use shelf space more efficiently. Reducing the size and shape of our product packaging is helping that retailer save space and helping our client gain valuable on-shelf exposure.
There is obviously a lot more that goes into new product decisions, but the point is to constantly be on the lookout for good ideas that can add more juice without too much squeeze.