THE BLOG

Strategic Innovation Secrets: What Technology Leaders Do Differently

08/28/2012 06:43 pm ET | Updated Oct 28, 2012

From Apple to Facebook and Google, technology titans have quickly become the darlings of the modern business world. But like scrappy young startups such as Flipboard and Pinterest, their success isn't solely rooted in online innovations and cutting-edge electronic advancements. It's also founded in basic management, marketing and strategic innovation principles that every entrepreneur can learn from.

Want to build your startup or small business in ways that mirror the lessons taught by today's top industry legends? Relax - it doesn't take a star-studded IPO to follow in their footsteps. Below are five essential strategic takeaways that any firm can glean from today's top app, software and gadget manufacturers and put to work right away with regard to enhancing operations, customer services and their underlying business model.

1. Treat Any Business Like a Service - Gone are the days of fire-and-forget products and services, especially for those operating in high-tech fields like apps and software development. The lesson here: Once your core product's on the market, whether it's a cutting-edge CRM platform, real-time inventory solution or even just a neighborhood legal or accounting practice, you can't simply operate on cruise control. In this day and age, staying on top of emerging topics/trends and potential business opportunities requires that you forge a direct and ongoing relationship with your customers in order to remain relevant.

To take advantage of the heightened insight and awareness the shift to a service-based model brings, first establish running dialogue with your key constituents - even if they're just the regulars who patronize your restaurant or bar. Afterwards, iterate and introduce changes regularly, reacting to feedback that customers provide. New dinner specials and custom-packaged appliance upgrades may not sound like sexy wares to prototype and experiment with. But mixing things up can help you see how customers respond, and provide invaluable information on variables like pricing, packaging, presentation, usability and consumption patterns.

By proactively taking steps to understand customers' needs and specific problems they're looking to solve, you skip random guesswork and gain the opportunity to smartly and organically expand product lines, service offerings or value-added components. Succeed or fail with individual offerings, rapid iteration will help you stay on top of changing markets. Similarly, by conversing with shoppers and playing to their desires, you'll not only generate new and potentially recurring sources of revenue. You'll also present a ready excuse to keep customers buzzing, thereby constantly staying top of mind and relevant.

2. Make Everything a Work in Progress - Take a tip from social game maker Zynga: Products are never perfect and constant iteration vital - rather than spend years perfecting a formula, oftentimes, it's better to ship when desired quality levels are achieved, then rapidly improve and innovate based on user feedback. Per smash hits like The Ville and Zynga Slingo, enhanced and expanded upon daily based on user analytics, prototyping isn't just a research tool - done publicly, it can actually be a profitable business.

Letting entrepreneurs quickly gauge consumer reaction, rapid product or service rollouts don't just streamline development compared with full-scale launches by trimming excess features. They also cut costs, improve cash flow, generate ongoing buzz and allow for better market response times. Coupled with extensive data mining, the practice can keep your business from wasting time and resources by rightsizing based on consumer response, and improve overall conversion rates. Whether launching larger initiatives in parts or simply teasing diners with limited-time blue plate specials, consider. It may pay greater dividends in the long run to fail rapidly and often, and grow more organically through ongoing iteration. Sometimes, less is truly more.

Also important to note: Make certain you're capturing data every step of the way. Valuable information includes not only end-user feedback, but information on how your product is being monetized, when and how consumers are using it, primary reasons for purchase, how price changes affect sales and more as well.

Repeat it to yourself until it sinks in - you can never have too much information. Gather and decipher as much of it as you possibly can to fine-tune new upgrades, service offerings, deals, specials, promotions and/or future releases, and constantly respond to market feedback. Think of customers and prospective clients as the most sophisticated and opinionated market focus group you could ever meet. Knowing this, it's imperative to create feedback loops both active (respond to our survey) and passive (tracking every click made on your online storefront) at multiple touchpoints to mine this data, and use the insights they provide to your advantage.

3. Be Objective and ROI-Focused with Concepts - The days of speculation and idle tinkering are at an end: In an age of endless competition and cost-cutting, every feature products and services offer must add meaningful and easily discernable value. For senior management teams and entrepreneurs, that means having to be brutal - and brutally objective - when assessing new concepts, features or milestone additions.

Whether financial in nature, or a means of boosting engagement and usability, you can't afford to waste resources or manpower. Just ask the increasing number of startups hoping to secure venture capital through public donations on crowdfunding sites like Kickstarter, RocketHub or Indiegogo. You can pitch until you're blue in the face - if the idea doesn't convince customers, it never even moves beyond the concept phase. Harsh? Perhaps, but it's better to experience a reality check before manufacturing thousands of units that unexpectedly spend years moldering in your warehouse.

To this extent, don't spend the time and money necessary to add a feature to your product or service line unless that feature adds significant value. Introducing social media elements to your company's creations, for instance, gives people a chance to interact with one another (say, by sharing user reviews and video dedications), and also gives them a reason to sign in over and over again and keep clicking. The longer those users hang around, the more likely they are to spend money on microtransactions, add-ons, upgrades or time-saving features, or become familiar and enamored with your brand.

The key takeaway here: Do extensive due diligence and weigh choices carefully when considering every option on the table during the preproduction, build-out and deployment phases. Knowing when to pull the plug on projects, and not waste time, money and manpower, is also every bit as important as knowing when to take risks or add new options.

4. Promote Awareness and Hands-On Trials Before Asking for the Sale - The smartest concept software leaders from Skype to Spotify, Dropbox and Google ever came up with? One that essentially says "Steal this software - please!" The concept of "freemium" (giving away software at no cost, then upcharging for added services and features) has been around since the days of shareware. But today, it's among the most effective ways to rapidly grow awareness and remove user friction - zero charges for installation and usage can often be a great way to eliminate barriers to entry. With supporting software effortless for users to obtain on myriad mobile devices, the practice promotes mass trial and sharing, and provides a showcase for advanced features and add-ons, available for optional back-end purchase or subscription.

Coupled with viral or sticky experiences that prompt regular, continued interaction (e.g. constant news feed updates, access to streaming audio and video collections, etc.), the practice promotes heightened user awareness and engagement. Some fans (sometimes known as "whales" in industry parlance, depending on your chosen vertical) may even spend several times as much as they would for a one-time retail buy. But you should be aware: Conversion rates can be miniscule, sitting anywhere from just 1-3% in certain cases depending on your chosen product, service or industry, making freemium strategies a volume play at heart.

To enhance chances of success here, creations should always intrigue as many people as possible and allow hands-on trials with the fewest number of required steps, links or actions. The more a person has to click, type, tap or plug in personal information to access a product or service, the more opportunities they have to lose interest in the item or opportunity. For software, apps and high-tech solutions, this includes taking system requirements into account, too: The less hardware features or minimum power your program requires out of a PC, smartphone or tablet, the larger the number of individuals that can enjoy it.

5. Try the Hands-Off Approach - Apple's App Store undoubtedly enjoyed a boost from the popularity of the iPhone, iPod and iPad. But the company's success can also be credited just as much to the work thousands of enterprising third-party software creators. The moral of the story: Sometimes it's better to take a more hands-off or more open approach to platforms and services, and worry less about draconian enforcement of proprietary solutions - empowering end-users can be a powerful way to enhance products, grow inventory and user affinity, and push feature sets far beyond levels that even your own team imagined.

Relinquishing control is often anathema to corporations. But whether offering customers the chance to personalize brand experiences by simply inserting themselves into virtual film posters or creating custom software tools which piggyback on patented technologies, consider. Rather than take the tyrannical approach, your business may enjoy greater prosperity by establishing basic ground rules, then giving partners a little freedom to color between the lines.

Accordingly, wherever possible, brands and content providers should always give end-users the tools to expand or create their own spin upon an app, service, product line or software platform (even if you're just providing the chance for fans to insert themselves into advertisements on Facebook, or make YouTube-ready remixes of favorite soda jingles). You can see this philosophy reflected in the success of the Android Market, which has enjoyed steady growth thanks to the support of thousands of enterprising third-party developers. Blogging solutions have also benefited from similar approaches, e.g., WordPress, which has quickly become a favorite with web designers thanks to a constant supply of new plugins provided by amateur and professional creators alike.

Naturally, fans should also be provided ample incentive for sharing content and passing unique creations along. In the case of popular social games such as Empires & Allies and The Sims Social, the ability to unlock bonus items, share advancements or recruit help to accomplish goals makes for a good reason for Facebook players to pass game recommendations along to friends. Word-of-mouth remains a powerful marketing tool, especially when backed by the collective creativity and imagination of the online world at large.

6. Never Stop Evolving - Little-known fact: Facebook's meteoric growth was fueled by more than glib one-liners and narcissistic profile shots. Rather, it's the social network's constant willingness to reinvent and grow value-added content by introducing new features and services or boosting opportunities for interaction that's powered its expansion.

At a base level, beyond addressing changing market tastes, each update tracks user response and - whether by sharing Timeline updates or song selections - provides added reason to stay logged in and clicking. But besides improving virality, the practice also provides invaluable data on usage and spending habits, helping enhance customer service and targeted advertising placements. If your business isn't taking steps to evolve, improve and create dialogue with customers today, it's ill-poised to compete tomorrow, let alone a year from now.

Pop culture, technological innovations and best practices never stay stationary, and you can't count on them to do so if you're investing the time and money necessary to build a modern product or service. Imagine spending two years developing a cutting-edge new social network, only to discover that micro-blogging or location-based community solutions have become the hottest new trend amongst technorati just before your finished product releases. Today's most successful products and brands - be they high-tech or otherwise - succeed because they quickly improve upon old ideas, or adapt to emerging trends, by actively listening to and acting upon user feedback.

Wherever possible, take advantage of the market's changing tastes, evolving standards and new innovations by maintaining agile production cycles and rightsizing projects/products. That way you can respond to new developments quickly, and effectively parallel industry and cultural shifts as they happen.

7. Make Customers Paramount - If you have an ongoing dialogue with your customers and data on where they're spending their time and money, then you know what proverbial levers you can pull to adjust variables like sales, revenue, lead generation and overall conversions. But you can't afford to ignore the basic building block that continues to serve so many industry-leading firms from Amazon to Zappos well: An emphasis on customer service.

Today, more so than ever, thousands of options and competitors are just a click away. So whether building custom home furnishings, on-demand food delivery services or photo-sharing applications, remember: The customer is always right. If he or she isn't solving day-to-day problems, having fun, participating in a community, sharing ideas or otherwise finding reason to stick around, be forewarned... Regardless of how good, well-informed or innovative your business is, it's liable to be abandoned in favor of rivals in record time. Strategic innovation matters above all else - but so too does the lasting value you add to any relationship.