Many companies, HP and Apple included, were launched in someone’s garage after the founders got an idea for a product and then tried to make and sell it. HP’s first product was an audio oscillator that two Stanford University students developed. While there was some debate, Apple’s Macintosh microcomputer appeared to be a low-cost knockoff of the Xerox Star, a software-equipped workstation. Apple’s cofounder, Steve Jobs, saw the product demonstrated at a Xerox research center. 1
Employees often come up with new product ideas, too. At Motorola, engineers are working on a mobile phone that can be recharged by rubbing it on smooth surface. A Motorola engineer came up with the idea while rollerblading. He wondered if a small generator could be created to capture and store the energy generated by rollerblade wheels. This idea, in turn, led to the development of a small roller ball (like you would find on an old-style computer mouse) built into the mobile phone. To power up the phone, you just give it a roll.
Ideas can come from anywhere, including your customers. In fact, in business-to-business (B2B) markets, customers are probably the biggest source of new product ideas. Customers know what customers need and want, which provides organizations an indication of market needs. Customers who are good at generating new product ideas or applications of products are called lead users. These people are often courted by manufacturers for this purpose. Lead users exist in consumer markets, too. JCPenney, for example, utilizes a panel of women who help develop the company’s Ambrielle line of lingerie products.
Customers are particularly important cocreators of offerings when they are consuming products with service components. For example, if you provide your hairdresser with feedback while your hair is being cut, your input will alter the final style you receive. Similarly, a businessperson who provides her certified public accountant (CPA) with information and feedback about her firm will help the CPA develop better financial and tax plans for her business.
Suppliers provide another source of ideas for new products. A supplier might develop a new product or technology that can be used to make yet another product, and then go to the makers of those products and suggest new versions of them. For example, McClancy Seasoning Co. makes spices that restaurants and food processing companies use in their food products. McClancy’s research and development department works with companies such as Campbell’s to help them develop new and better offerings (for more information, visit http://www.mcclancy.com/research_and_development.asp).
Of course, companies also watch their competitors to see what they’re doing. Some offerings are protected by patents or copyrights and can’t be legally duplicated. The software that runs Apple’s iPhone is an example. There are, however, different ways to achieve the same results as Apple has with its iPhone. The Omnia, manufactured by Samsung, and the G1, a T-Mobile product, are devices similar to the iPhone that operate with software serving the same purpose.
Figure 7.4 New Offering Ideas shows some product ideas that came from each of the sources we have discussed—employees, customers, suppliers, and one’s competitors. Innovations like the iPhone are rare. However, many new ideas (and consequently new products) aren’t actually new but rather are versions of products and services already available. A line extension occurs when a company comes out with another model (related product) based on the same platform and brand as one of its other products. When Apple added the Nano and the Shuffle to its iPod line, these were line extensions.
Keep in mind that idea generation is typically the least expensive step in the process of developing a new offering, whether you involve customers or not. As you move through the product development process, each step is usually more expensive than the last. Ideas for new products are relatively cheap and easy to generate; what is difficult and expensive is making them a reality.
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