As the CFO of an ambitious company, I see product innovation from several perspectives. First, I see it as a mission-critical output – for example, a world-class software that consistently exceeds the expectations of customers and prospective customers.
Product innovation is also a dynamic process that draws together the energies and insights from across an organization as well as from customers and leading industry analysts. For that reason, the process has to be rigorously monitored and constantly honed to ensure that soft- and hard-dollar costs yield an acceptable return on investment.
At the same time, product innovation is the foundation for the new ‘of course’. Put another way, today’s innovative products are those things that will be taken for granted as the norm tomorrow. Consider product innovations that have emerged during the last 10 years. Smartphones, Facebook, GPS, hybrid cars, automation software, and drones have all been widely adopted and continue to shape industries, businesses, and people’s lives around the globe.
This reveals critical traits of product innovation that are particularly relevant for business leaders and Finance leaders grappling with the challenge of balancing the costs, benefits, and risks that accompany all product innovation:
- Product innovation is fast. It first appears on the periphery of your business and/or home life – being relevant in a few industries or business areas. Then, with little warning, it is everywhere. As a result, you have to build a systematic way of keeping on top of product innovation that is external to, but has an impact on, your organization. That means monitoring evolving technologies, competitors’ offerings, and industry thought leaders.
- The innovative products you build must solve the unique and evolving needs of your customers. That recognition is fundamental to ensuring that meaningful product innovation takes place because it allows organizations to enthusiastically accept and solicit feedback from customers and would-be customers.
- Investment in product innovation is on-going and forever fluctuating. That means it requires capital expenditures and operational expenditures. As a result, you should establish measurable criteria to quickly identify which innovations are worth the time and related costs. In product innovation, there is real competitive advantage in adopting a ‘fail fast’ and ‘course correct’ mentality.
Finally, I see product innovation as an aspirational goal. It is the perpetual striving for things that improve people’s work and the world in which everyone lives. At Prophix, that means creating a product that helps Finance leaders make sense of the tsunami of business data from across an organization in order to make decisions with a higher degree of certainty and thereby minimize corporate risk.