Valuable insights are provided by, for example, the daily routines that consumers follow in their everyday lives and the challenges they face. Clayton Christensen, the late Harvard professor and pioneer of modern innovation strategy, put it in a nutshell: “You should look at the workarounds that your customers are needing to do. It becomes a real source of a lot of insights.”
By combining further insights into the digital skills and assets available within a company, and through relevant technology trends and the relevant competitive environment – additional perspectives that many innovation departments also fail to capture in a structured way – it is possible to pinpoint suitable solution areas or opportunity spaces for future innovation activities.
This ensures, with comparatively little effort, that future innovations address a relevant problem, and it significantly reduces the risk of misinvestments.
Precisely defined assumptions, cost-effective pretotypes and suitable test formats are crucial for reducing investment risk
Suitable value propositions for new products, services and use cases can now be developed for the solution areas or growth areas identified in this way. The decisive question here is: What must be true in order for this value proposition to be successful in the market?
Important: This step requires concrete assumptions to be made. In order to continue to minimize risk efficiently, it is also necessary to record the respective assumptions on which a value proposition is based – and to do so as transparently and comprehensively as possible.
One example: Digital services often assume that consumers are willing to share their data with the service provider. In this step, innovation managers must first make assumptions about what data the future users will be willing to share and for what specific purposes they will give their approval. For the success of an innovation, it is essential to test this willingness before the actual development.
Accordingly, the next step should be to define efficient validation methods to check the defined assumptions. These steps can come in the form of in-depth research e.g. to validate assumptions about the market potential.
Important assumptions regarding the potential adoption of an innovation by a specific target group can, however, be validated primarily by applying agile test methods.
Validation through agile test methods and pretotypes
For agile test methods, the use of so-called pretotypes (early prototypes) is particularly recommended. The term originates from Albert Savoia (Google) and describes a kind of preliminary stage to complete prototypes – i.e. pre-prototypes, or pretotypes for short.
In contrast to prototypes (which are often already considered as fully functional precursors of an end product), pretotypes are intentionally limited to specific aspects of a planned innovation and simulate functionality only as far as necessary.
Pretotypes are representations of specific features and functionalities of products, services and use cases that are developed for the sole purpose of validating this specific aspect of an innovation (and the underlying assumptions) with minimum time and cost.
Specifically, pretotypes (or early prototypes) can range from sketches and wireframes to click dummies and data simulations, all of which pursue the same goals:
- to prove or disprove whether a value proposition would be successful in the market,
- to determine the need for adjustments,
- and to estimate the market potential.