A company needs to develop its structures and processes to match the innovation practices it is teaching its people.

—The Corporate Startup [1]

Definition:

Definition: Product Innovation is the ongoing process of developing new products or enhancing existing ones to meet changing customer needs while taking advantage of evolving trends and technologies.

What is product innovation?

Product innovation is the ongoing process of creating new or significantly improved products that solve customer problems in novel ways. It encompasses enhancements to existing products and developing entirely new products that keep pace with evolving user needs and technological advancements.

Some innovations, such as the ‘lighter, faster, cheaper’ improvements associated with consumer electronics, may feel predictable. Others are more breathtaking, such as AI-based systems that seem to predict our needs or mind-controlled prosthetics that feel as if they’ve been created in a science fiction laboratory.

Regardless of the degree, product innovation is—or should be—an integral part of an Agile Release Train’s natural function, supported by several SAFe practices, as shown in Figure 1.

This article will explore how vision, strategy, design, delivery, and marketing work together to overcome the challenges organizations face in consistently delivering innovative solutions.

Why is product innovation so important?

Several trends amplify the need for innovation.

• Evolving customer expectations: Digital age customers have grown up with increasingly advanced technological innovations. The majority embrace technology and have high expectations for the many ways in which technology-enabled products make their lives better. They are quick to switch to competitors if their needs aren’t met. Organizations that fail to innovate around customer experience are at high risk of losing market share​.
• Technological disruption: Artificial Intelligence/Machine Learning, Blockchain, Augmented/Virtual Reality, advanced gene editing with CRISPR-Cas9, and synthetic cells are examples of disruptive technologies reshaping entire industries by providing organizations with entirely new ways to solve existing problems or previously unsolvable problems. A culture that promotes continuous learning and experimentation enables organizations to leverage these technologies to create differentiated offerings and improve operational efficiency​.
• Increased Competition: The globalization of markets has lowered entry barriers, allowing new players to enter and disrupt industries quickly. Organizations can no longer rely on past success to maintain their market position. Continuous product innovation enables companies to stay ahead of new entrants by offering superior or entirely new solutions​.
• Shorter Product Life Cycles: The speed of change in today’s market means product life cycles are shorter than ever. Organizations that do not consistently innovate risk falling behind as their products quickly become outdated. Lean-Agile ways of working enable organizations to rapidly deliver innovations that keep pace with market trends​.

Each factor represents a challenge that can overwhelm organizations that have not embraced and implemented the elements of product innovation described in Figure 1. The following sections describe each aspect of the product innovation process and provide insights into how ARTs can put them into action.

How does product vision motivate Agile Teams?

The product innovations pursued by an Agile Release Train are guided by the product vision, which defines the intended future state of the product and aligns the ART on the outcomes that will create customer success.

In some organizations, the product vision may be the same as the company vision created by the founders. In others, the product vision is created by product managers and business owners and aligns with the portfolio and organizational visions. In both cases, a product vision must be compelling and effective.

A compelling product vision:

• is bold and long-term, clearly defining how the product provides a better world for well-defined customers and users
• ambitiously defines a future beyond the realm of current technological capabilities, anticipating future market needs based on the extrapolation of prevailing trends
• is infinitely scalable, capable of inspiring and empowering a single team, multiple ARTs, or the entire organization
• energizes the organization to overcome the challenges it will face in realizing the vision

An effective product vision:

• promotes a sustainable relationship between the organization and its customers
• helps ensure that all efforts, from small changes to major enhancements, are part of a cohesive plan
• allows for both flexibility in execution and consistency in purpose, which is critical to sustaining innovation over time
• shows how the product vision supports the organization’s future direction and desired business outcomes, such as increased sales or greater market share

In most cases, the vision will also require changes in user behavior, which create a number of positive effects for subsequent activities. Caterpillar is an example of an organization with a clearly stated product vision that describes how Caterpillar will be leveraging advanced technologies to create longer-lasting, safer, and lower-cost mining trucks. This shared vision enables their customers to prepare for the inevitable operational changes caused by Caterpillar’s evolving mining trucks.

While the product vision is intended to be stable for an extended period of time, there are legitimate circumstances in which an organization pivots from one vision to another. For example, Slack started as an internal messaging solution for the video game company Glitch. It was only when it was certain that Glitch would fail that the founders of Slack pivoted to a new product – and a new product vision.

How does product strategy guide teams?

The product vision sets the direction and destination. Product strategy defines how the organization will deliver against the product vision, ensuring innovation remains focused on delivering value. An effective strategy is firm enough to provide a clear direction for Agile teams while retaining the agility needed to evolve based on feedback and market conditions.

Roadmaps and backlogs capture the product strategy

The product strategy is captured in a roadmap that forecasts and communicates how planned deliverables progress against the product vision. These deliverables are based on outcomes that define progress from the customer’s perspective and the economic impact of the sequence for the organization.

A new product may define these outcomes as a series of product/market fits. A growing product may define these outcomes based on repeat customer usage and retention. A mature offering may define outcomes based on market share and profitability. An internal product may define its strategy through a sequence of Epics, each advancing the product and sequenced according to which Epic has the most beneficial operational and economic impact.

Caterpillar’s product vision for using technology in its mining business unit started with incorporating telematics and sensors into its equipment. These data were integrated into the Cat Connect system to enable companies to monitor the performance of machines in real-time, reducing downtime through predictive maintenance. A subsequent deliverable included semi-autonomous trucks in mines. Future plans include additional products based on data analytics and e-commerce.

The dynamic nature of product strategy is shared in SAFe events, such as PI Planning, in which product leadership regularly shares the business context and the evolving roadmap. The specific innovations and deliverables for the PI are captured in the product backlog, which enables teams to incorporate feedback and adjust during PI execution.

Lean Portfolio Management funds product innovation

Lean Portfolio Management (LPM) uses the product vision and the product strategy to support product innovation. It ensures that Value Streams have the funding necessary to enhance existing products while also investing in Epics and new Horizon 3 solutions.

Value stream funding empowers teams to make smaller decisions more rapidly. Epic funding ensures that the organization has considered a range of options and is funding the most promising investments within a given solution and across the portfolio. This funding is essential to creating ‘safe to fail’ workplaces that promote experimentation, learning, and growth.

How does product design drive product innovation?

Product design drives innovation by blending a customer-centric mindset and the tools and practices of design thinking. It goes beyond focusing on the features and functions of a proposed product. Instead, it emphasizes understanding the problem to be solved, the context in which the solution will be used, and the evolution of that solution. It includes the complete customer experience, product aesthetics, usability, and core functionality.

Customer centricity: the foundation of product design

Customer centricity ensures that all design efforts are rooted in a deep understanding of user needs and behaviors. It requires Agile teams to structure their work to include ongoing engagement with customers. This includes market and customer research activities associated with continuous exploration and Gemba walks, in which the team visits customers and observes how they use the solution. As solutions are delivered, Agile teams gather feedback from actual usage to assess whether innovation efforts are addressing the most important problems.

Design thinking: the tools and practices of product design

The tools and practices of design thinking allow teams to quickly experiment with new ideas and refine innovations before they are fully developed. This reduces the risk of investing in ideas that don’t align with user needs and allows product teams to focus on innovations that offer real value.

For existing products, ARTs leverage Lean UX. This approach starts with a benefit hypothesis that defines how a proposed innovation will provide measurable value to a user. The hypothesis is tested through a Minimal Marketable Feature (MMF), the smallest amount of functionality that must be provided for a customer to recognize any value and for the teams to learn whether the benefit hypothesis is valid. In many cases, extremely lightweight experiments such as paper prototypes, low-fidelity mockups, or feature stubs can provide the data needed to prove or disprove the hypothesis. In other cases, more extensive functionality is developed and released, where application instrumentation and telemetry provide feedback data from a subset of production users, often through controlled tests.

For new products, ARTs leverage the SAFe Epic process to build and evaluate a Minimum Viable Product (MVP) to prove or disprove the hypothesis. Similar to the development of an MMF, ARTs conduct numerous low-cost experiments to gather data to prove or disprove the new product hypothesis. Because a new product is competing with other novel product ideas, the results of these experiments and the evaluation of the MVP are reviewed by Lean Portfolio Management before committing to full product development. This ensures that even when the organization is exploring several promising opportunities, the most promising options are fully funded.

While using Lean UX and the Epic process substantially reduces risk, all risks cannot be eliminated. Agile teams know that even when solutions show promise as prototypes, they may fail when delivered. In this circumstance, the teams return to focusing on the problem. If the customer’s problem is still worth solving, the team will try another way to solve it.

Integrating product, user experience, and user interface designers into the ART

Organizations emphasizing product innovation will add product, user experience (UX), and user interface (UI) designers to their ARTs, often distributing these individuals directly into Agile teams. This approach eliminates silos that frequently exist between design and delivery, improving the flow of value and processing of feedback.

Product design informs product strategy by providing valuable feedback on a product’s desirability, feasibility, viability, and sustainability. It helps ensure the strategy remains flexible as the product adapts to changing needs.

How does product delivery accelerate product innovation?

Product delivery accelerates innovation by ensuring that ideas flow from concept to market as efficiently as possible through a continuous delivery pipeline (see Figure 2). The continuous delivery pipeline (CDP) represents the workflows, activities, and automation needed to guide new functionality from ideation to an on-demand release of value.

ARTs measure the efficiency of their CPD through flow metrics and the impact of their innovations through outcome metrics. Optimizing flow creates competitive advantage: The faster a product or enhancement reaches the market, the sooner value is realized, and the sooner customers can provide feedback, allowing teams to iterate, pivot, or persevere and innovate further.

Organizations reduce bottlenecks and improve the flow of value through a combination of structures, tools, and processes. These include, but are not limited to:

• Structuring cross-functional Agile Release Trains (ARTs) with the people that are needed to design, build, validate, release, and, where applicable, operate solutions
• Instrumenting products so that feedback is gathered automatically through actual product use
• Employing SAFe processes that integrate customers into the development cycle

The most critical capability of the CDP is release on demand, or the ability to release new functionality immediately or incrementally based on business and customer needs. Release on demand powers product innovation and consists of the four practices shown in Figure 3.

1. Release – the practices needed to deliver the solution to end users, all at once or incrementally. It includes delivering specific functionality to a subset of users to support ‘safe to fail’ experiments.
2. Stabilize and Operate – ensures the solution is working well from a functional and Nonfunctional requirements (NFR) perspective
3. Measure – how to quantify if the newly-released functionality provides the intended value
4. Learn – collecting feedback that enables the ART to adjust innovation activities based on actual use

How does product marketing amplify product innovation?

Even the most innovative products can fail if they are not effectively communicated to the target market. Product marketing amplifies innovation by ensuring the right audience understands, adopts, and advocates for the product. While this includes storytelling, the most effective product marketing highlights how the product solves real customer pain points.

The continuous exploration practices described earlier are also part of product marketing. When customers feel involved in the innovation process, they can shape the value proposition and are more likely to become promoters of the product.

Product marketing is most effective when involved early in the innovation process. This often includes integrating product marketing into the ART and ART processes. Product marketing can develop and test messages, campaigns, and key stories in parallel with development teams.

Product marketing bridges the gap between the development team’s technical achievements and the customer’s perception of value. By amplifying the innovation through clear messaging, customer education, and effective positioning, marketing ensures that the product reaches its full potential in the market.

How does culture underpin all the elements of product innovation?

The rapid, relentless pace of product innovation may feel overwhelming. It can seem nearly impossible for an organization to survive amidst its many choices and challenges. Yet, many organizations not only survive; they thrive because they have created a continuous learning and innovation culture.

Each aspect of product innovation is grounded in learning. This learning starts even before the product vision is formalized, as business leaders learn of unmet customer needs and imagine bold new ways to solve them. Learning accelerates as ARTs develop and execute experiments that prove or disprove their hypotheses. Learning continues throughout the product lifecycle as the ART adjusts the product based on customer feedback.

Learning extends beyond the product. While organizations serve customers, they also learn how to work more effectively, improving the flow of value. For example, organizations can invest in learning how advanced DevSecOps practices can improve quality while increasing flow.

While an organization may create a few product innovations in any culture, sustained product innovation only thrives in an innovation culture. An innovation culture exists when leaders create an environment that supports each aspect of the product innovation process. As outlined above, this includes funding for innovation efforts, support for experimentation, accepting a degree of risk that is commensurate with the potential return of an investment, and the willingness to shift direction when the facts indicate that a pivot is required.

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References

[1] Viki PhD MBA, Dr Tendayi, Toma MBA, Dan, Gons, Esther. The Corporate Startup: How Established Companies Can Develop Successful Innovation Ecosystems. Vakmedianet Management bv, 2017.