A technology vs product innovation strategy is central when investing in solution or product development. Companies can engage in projects that focus on new product capabilities leveraging existing technologies, invest in new technologies without major product feature changes, or merge both paths to create innovative solutions.
Each path in a technology vs product innovation strategy involves its own set of risks. Developing a new product introduces multiple uncertainties, including market response and competition (see Market PORTER). Similarly, advancing new technology involves numerous unknown components. Merging the two paths amplifies the risks.
The discussion on technology vs product innovation strategy is crucial. Some companies deem it necessary to develop products that integrate multiple innovations, aiming to leapfrog the competition. Others find it more efficient to introduce products regularly with minimal innovations but consistently.
Which approach is the one you consider and why?
Depending on your market, the use of the word “Solution” may be more appropriate. We use “Product” in this context, but it is interchangeable with the word “Solution” for this chapter.
The Technology vs Product Innovation Prioritization Tool helps teams balance investments between product and technology initiatives. It provides clarity along two axes:
The horizontal axis represents the change in product features and capabilities. Opportunities lie in developing a product that is more competitive, probably faster to deliver to the market because technology is mastered, and with a focus on the market and customer, reducing the risks related to introducing a new product.Each project can be represented by a position along these two axes. In addition, the project can be represented by a bubble where size is a function of the investment.
The projects can be represented on a graph that has 4 quadrants:
Quadrant 1: Low product and low technology changes
Quadrant 2: High product and low technology changes
Quadrant 3: Low product and high technology changes
Quadrant 4: High product and high technology changes
Balancing these quadrants is central to a technology vs product innovation strategy.
What is the best distribution of those investments? Should they be concentrated in one single quadrant or spread across multiple segments? Where should the investment budget be allocated? How can it be distributed effectively?
There are several answers to these questions. Investments should be distributed efficiently across the different quadrants. Not investing in new technology is a potential concern. However, investing in the fourth quadrant carries possibly higher risks. Some investments in quadrant one are likely necessary to address certain product capabilities, while investment in quadrant two will generate future products essential for the company’s competitiveness.
Assess your current distribution of investment in products and technology. Ensure you address the following key questions:
By tracking the answers to those questions, along with others you find useful for your company, you will enhance the effectiveness of this prioritization process.
Ensuring team visibility across company investments is key. The objective is not the graph, it is the journey itself. Ensure to use a facilitator so participants feel at ease with the discussion. Use a parking lot to keep topics left aside visible, and ensure all are aligned on the same agenda.
Generate the graph:
With a team, determine the full list of projects and evaluate them according to the components for the two axes. Compare projects based on their volume of product or technological innovation. Report on the graph using the bubble size to represent the volume of investment.
Discuss and prioritize projects:
Team must now discuss which projects should be prioritized, which should be cancelled or redesigned, and which postponed.
Are product and technology evolution deemed to be implemented in the same investment period? Are there paths that reduce risk by creating intermediary steps?
What is preferred: slow and gradual evolution which reduces risk and continuously introduces new features and capabilities for customers (e.g., Japanese camera industry), or major incremental development with both technology and product innovations which involves more risk and promises huge pay-offs when successful (e.g. rocket industry in the USA)?
This decision also links to Decision Project Prioritization and Portfolio Graph.
The Technology vs Product Innovation Strategy graph is essential for discussing and prioritizing investment projects. The true value of this tool lies in the discussions that teams engage in.
The pool of investment projects initially proposed will almost certainly exceed the current capacity for investment, possibly multifold. However, with the clarity provided by this approach, teams can better and more quickly align, ensuring that projects are in line with company priorities and needs. This can become a key element for acceptance across diverse teams.
The journey is more important than the tool itself. The destination is crucial for the company’s success.
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The Technology vs Product Innovation tool helps clarify and compare investments in technology innovation versus product feature innovation. To maximize its effectiveness, use brainstorming techniques—such as post-it sessions, as discussed in the Marketing Scope Frame In/Out section—to generate a wide range of ideas. Be sure to frame a clear question to guide the team’s brainstorming and encourage relevant suggestions.
As multiple solutions will likely emerge and be documented using the tool, allocate sufficient time to discuss the different paths these solutions represent. Some approaches may be mutually exclusive, while others can be developed in parallel.
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The Technology versus Product prioritization tool is very powerful to allow clarity along these two axes for development sharing projects investment as a function of the content of each axis.
The horizontal axis represents the change in product features and capabilities. Opportunities lie in developing a product that is more competitive, probably faster when technology is mastered, and with a focus and attention to the market and customer, reducing the risks related to introducing a new product.
The vertical axis represents the change in technology. Assuming an investment focusing on technology, products may at a point in time benefit from this technology, resulting in lower manufacturing costs or better maintenance for the products, or other benefits for the company or the customers.
Each project can be represented by a position along these two axes. In addition, the project can be represented by a bubble where size is a function of the investment.
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