Building an
innovative product
Online course • Chad Sanderson
Putting it all together
Chad Sanderson
The journey of this course
Lesson 1
Amazon’s Success
Why do some companies fail to innovate while others succeed?
Lesson 2
Building an Innovative Product Pt. 1
So you’re ready to innovate. How do you know which idea is the
‘right’ idea?
Lesson 3
Building an Innovative Product Pt. 2
Let’s go build something!
Lesson 4
Incentivizing Innovation
Innovation comes from your employees, but how can you channel their creativity into meaningful change?
Lesson 5
Putting it all together
Walk through
end-to-end innovation case study
Lesson Objectives
1. Define the four types of ‘Innovation’
2. Categorize real-world examples of innovation 3. Understand the risks of failing to innovate 4. Assign your business an innovation ranking
Imaginary Company: VirtualBase - Virtual Reality News Platform
VirtualBase is a platform for news in Augmented and Virtual Reality. It’s existed for roughly 1.5 years as a startup. Investors and stakeholders are currently focused on growth and distribution, which has slowed considerably.
Product Team Size: 5 3 Software Engineers 1 Product Managers 1 Designers
1 Marketers
The Website
Features
- Paid newsletter that dives deep into AR/VR trends
- Frequent content updates from professional journalists staying on top of AR/VR trends and articles
- Video tutorials from professional designers for beginners in the AR/VR space - A free membership section
Monetization
150,000 viewers per month
5,000 paid email subscribers @ $5 per month Monetization methodology
- Paid advertisements on the website: $5,000 per month - Affiliate marketing through newsletter: $10,000 per month - Paid email promotion: $5,000 per month
- Paid newsletters: $25,000 per month - Featured Content: $2,000 per month
What metrics does the company care about?
Take 2 minutes to right down your answer
Identifying the Customer
VirtualBase has several types of customers
- Members: Users who have signed up on the website for access to exclusive content - Contributors: Members who actively write articles for the website, some paid
- Newsletter Sign Ups: Members who have opted in to a weekly newsletter on AR/VR trends - Paid Newsletter Sign Ups: Members who pay $10 per month for a once weekly AR/VR
market research newsletter
- Advertisers: Customers who pay for advertising space on the VirtualBase website.
Typically these are products targeted towards AR/VR developers
- Affiliates: Partners that pay a percentage of affiliate sales back to VirtualBase. Typically these are VR hardware produces
Which customer would you talk to first? What questions would you ask?
Take 2 minutes to right down your answer
Questions
Members
- Why did you sign up for the website?
- What did you expect?
- Where else do you consume AR/VR news?
- What other AR/VR sites do you visit?
- Why?
- What communities are you a part of?
- What’s valuable about those communities?
- What is VirtualBase missing?
Questions
Contributors
- Why are you writing for VirtualBase?
- How well is your content being received?
- How do you share your content?
- What other content writing platforms do you use?
- How are you editing your work?
- How much time do you spend writing articles?
- How are you monetizing your content?
- What are you looking to gain out of producing content?
Questions
Newsletter Sign Ups
- What are you enjoying most about our newsletters?
- What are you enjoying least?
- What is your favorite type of content to see in the newsletter?
- What other newsletters have you subscribed to?
- Are you paying for any of them?
- Why?
- What’s different between us and your favorite newsletter?
Current Promotion Path
What does the company care about?
The company is already profitable, so neither revenue nor profit is the biggest concern. The stakeholders and board are primarily focused on growth.
The company could be interested in growth along a variety of axes:
- Web visitor growth
- Free Newsletter sign up growth - Growth of paid newsletter sign ups - Growth of article and tutorials
The Flywheel
Serve content through a variety of distribution channels
Grow VR/AR
communities online
Generate high quality VR/AR digital content
The Flywheel
Serve content through a variety of distribution channels
Grow VR/AR
communities online
-Facebook - Twitter - Instagram
Generate high quality VR/AR digital content
- Journalism / PRs - Blog content (SEO) - Tutorials
- Newsletter - Paid Ads
What else might you want to know?
Take 2 minutes to right down your answer
Problems
A large portion of our newsletter subscribers are growing annoyed at the affiliate content we’ve been including in our articles. Some are considering canceling.
A subset of professional customers enjoys only the trends content from VirtualBase. These customers rarely visit (when trends are posted) but have said they would be willing to spend money on features that gave them access to business-centric AR/VR trends in a variety of industries like marketing or retail.
Some of our higher valuable customers (C suite executives) want better community options.
Our daily press release coverage doesn’t get much interaction, it’s primarily SEO.
What would you do next?
Take 2 minutes to right down your answer
Root Cause Analysis
Q: Why are customers getting annoyed at our affiliate marketing?
A: Because the sales strategy is too jarring and takes up too much space at the top of the email.
Q: Why does is it too jarring?
A: Because there is a big difference between our affiliate marketing language and newsletter language. One is very sales driven, one is much more light and fun.
Q: Why does it take up too much space?
A: Email header images we use were designed for web not mobile, and they can stretch, pushing down more interesting content.
Q: Why is our sales language jarring?
A: Because it is often written by a different person than the newsletter writer.
Root Cause Analysis
Q: Why do some customers only consume our trends data?
A: Because they are companies or investors looking to make smarter business decisions. Trends is relevant to their business and it can be used to guide their investment in AR/VR.
Q: Why don’t we have any other content appealing to investment/business?
A: Most of our writers focus on breaking news.
Q: Why don’t we have more writers focusing on non-breaking news areas like business?
A: Because it is a specialty area which requires lots of research and takes a significant amount of time.
Q: Why does it take a significant amount of time?
A: Because someone needs to manually aggregate the data from many different sources they are often unfamiliar with.
Root Cause Analysis
Q: Why do some customers want more exclusive communities?
A: Because have questions that are more sensitive or business oriented and public Facebook groups may not be the best place for them.
Q: Why are they interested in asking sensitive questions?
A: Because they are trying to improve AR/VR at their company and don’t have many other resources.
Q: Why don’t they have many other resources?
A: Because finding a group of like-minded executives all into a niche sub-genre of technology is hard to do.
Q: Why is it hard to do?
A: Networking takes time especially at large scale.
Root Cause Analysis
Q: Why don’t our daily press release coverage get much engagement?
A: Most of our audience are developers, they don’t care much about technological breakthrough’s in areas that don’t concern them.
Q: Why doesn’t it concern them?
A: Because they are trying to improve themselves and their skillsets moreso than plan for the longterm future.
Q: Why don’t they plan for the longterm future based on our articles?
A: Because our articles don’t tie back to their development careers and abstracting meaning is hard Q: Why is it hard to do?
A: Press releases are often meant as a sales device
What innovative
opportunities do you see?
Take 2 minutes to right down your answer
Problem
Customers are willing to pay for more business oriented AR/VR data.
VirtualBase currently does not have the writers capable of producing more business content, due to the data being difficult to find and aggregate.
Solution
There is tremendous value for businesses in having access to exclusive data on AR/VR. It could be worth an investment to become a data distribution platform, which could either be sold raw or alongside a set of professional analyses. The analyses could be stored in a repository and accessible through a web platform.
The customers who are interested in this type of data probably have larger budgets to spend, so we can upcharge these customers significantly.
Creating a data pipeline of AR/VR data could be useful in many other ways, such as an idea generator for future products Venture Capital consultation.
The Flywheel
Serve content through a variety of distribution channels
Grow VR/AR
communities online
-Facebook - Twitter - Instagram
Generate high quality VR/AR digital content
- Journalism / PRs - Blog content (SEO) - Tutorials
- + Market Analyses
- Newsletter - Paid Ads
- + Paid Account
Gap Analysis - Competitors
OpenPR/aggregators: A website that contains research on many types of technical industries and produces industry reports. These reports are not specialized, and for VR/AR are extremely rare.
Market research Firms: Can produce specialized reports for any industry on demand. However, they are extremely expensive, and have less industry knowledge. Reports also take longer to produce instead of being on demand.
Costing
There are 3 primary costs we need to focus on:
1. Content Production 2. Distribution
3. Hosting
- Content: This content will need to be detailed enough that it adds value even for industry professionals. That mean it will likely take 1 week+ of work. We’d likely want to release a report once a week, bi-weekly, or once monthly. 2 writers is ideal.
- Distribution: The report should go out via email, however because this is a paid newsletter our target market is likely affluent and tech savvy. They are likely consumers of other paid news brands. We should advertise on the channels.
- Hosting: We will want this content to be accessible even after its been posted. We’ll need to add a new section to the website to browse historical newsletter data that requires a subscription to access.
Risks
If the newsletter is too expensive then it will likely become a ‘considered purchase’ instead of a drop in the customer’s bucket of existing subscriptions.
How much content in this area can we actually produce? While AR/VR is a growing field with many potential industries, there might be a point where our content becomes rehashed and impacts the customer experience.
If our writers leave the company it will be challenging to hire new ones. The worse case
scenario is to not have an article ready to go out after a customer has already paid an annual subscription fee.
Metrics
NorthStar
Number of annual subscriptions purchased per month
Why: Hard to game - as long as this number is increasing it’s a good thing for the business. We are OK with a small number of subscriptions to start with as we need roughly 100
subscriptions to generate profit. Our goal should be to scale subscriptions as quickly as possible.
Objectives
We have a few important objectives: The first is to get strong customer buy-in from the loyalists who requested this data. The second is to then produce high quality content on a predictable schedule. The third is that we want our customers to approve of our content and be willing to be pay for it. And finally, we want to begin making money on this product.
Metrics
NorthStar
Number of annual subscriptions purchased per month
Why: Hard to game - as long as this number is increasing it’s a good thing for the business. We are OK with a small number of subscriptions to start with as we need roughly 100
subscriptions to generate profit. Our goal should be to scale subscriptions as quickly as possible.
Objectives
We have a few important objectives: The first is to get strong customer buy-in from the loyalists who requested this data. The second is to then produce high quality content on a predictable schedule. The third is that we want our customers to approve of our content and be willing to be pay for it. And finally, we want to begin making money on this product.
OKRs
KR Current Q2 Expected
Value
Q2 Actual Value
Score
20 power users (businesses) to produce LOI’s to purchase plan
0 20 -
Collect minimum 10 most valuable market research topics
0 10 -
OKR# 1: Get buy-in from existing companies/individuals
OKRs
KR Current Q2 Expected
Value
Q2 Actual Value
Score
Hire 2 newsletter writers with market research background
0 2 -
Produce a minimum of 1 piece of market research per month
0 1 -
Beta content should have an average NPS of 85
0 85
OKR# 2: Produce high quality content
OKRs
KR Current Q2 Expected
Value
Q2 Actual Value
Score
Collect ad-hoc payment from 10 customers
0 10 -
Stand-up web portal with login F T -
All 10 users registered on web portal 0 10
OKR# 3: Generate initial income
What other metrics would you come up with?
Are we measuring correctly? What’s missing?
Assignment
Use the data in this presentation to create your own project proposal (You are free to use your imagination on what customers say or do). Be sure to consider the following:
1. What are the problems VirtualBase’s customers have?
2. Which problems are highest ROI?
3. How could you most effectively spin the flywheel?
4. What are the risks and costs involved with your solution?
5. What are the metrics?
