Idea generation is the first step in the New Product Development (NPD) process. During this stage, numerous ideas are generated, but not all of them will be viable or implementable. Also, these ideas will come in many forms and under different circumstances. It is left to you, as the business owner, to select the best ideas and implement them. After the ideas have been generated, each must be assessed and analysed to prove it's viability.
Here are 6 good ways of generating new product ideas:
1. Basic research using a SWOT analysis (Strengths, Weaknesses, Opportunities & Threats)
A SWOT analysis is simply defined as a process that companies undertake to understand where they are and then find ways to improve. In this process, the look for ways to build on their strengths, minimize their weaknesses, maximize their opportunities, and snuff out threats from within and without their organization.
In generating new product ideas through this means, emphasis is placed on the need to build on strengths and make the most of opportunities.
In June 2002, Ben Horowitz began transforming Loudcloud, his application hosting service company, into Opsware, a software company that offered products for servers and network devices, among other things. This transformation was a product of necessity, in a bid to keep his company alive. Loudcloud had been facing hard times so much so that the company almost started trading penny stocks on the stock market. After looking at the situation at hand, and considering the strengths, weaknesses, opportunities and threats that lay before the company, Horowitz took the bold step of remodeling and re-presenting his company as a different product.
In 2007, Horowitz went on to sell Opsware to HP for $1.6 billion.
Click this link for examples of SWOT analysis: http://articles.bplans.com/swot-analysis-examples/
2. Market and Consumer Trends
Allan Gutterman, in his December 2009 publication, "Corporate Counsel's Guide to Management and Administration", says that customers are the second leading source of new product ideas. He explains that customers tend to suggest improvements and changes to existing products as opposed to proposing totally new ones.
However, the smart business man will know how important it is to observe market and consumer trends so as to know which product to remove, remodel or create. The inability to follow this simple rule is what cost Kodak and Nokia their position as industry leaders. When digital cameras were becoming a major trend, it would have been a smart move for Kodak to join in, or even to have initiated the trend in the first place. But instead, the neglected the massive movement of people towards digital cameras and today, they have lost their place to Canon, Nikon, Fujifilm, Olympus and Sony, majority of which are Japanese companies.
As for Nokia, it is no news that they are no longer the biggest phone company in the world. They lost their place to Samsung. All because they failed to move in time with the smartphone trend.
3. Company's R&D Department and Competitors
Another way to generate product ideas is by research & development, and studying competitors. In the area of research and development, small business are likely not very strong as merely a handful are able to afford the costs that R&D incurs. However, what small businesses can do is to read up on the R&D escapades of the big companies and tailor some of these ideas to their own level. Also, small companies can actually perform small scale customer and market research to generate new product ideas and improvement strategies.
Frankly, some times, the easy thing to do is to look at what the competition is doing and copy or improve upon it. This was a major step that Apple took with the iPod. Steve Jobs looked at the Sony Walkman (which was the rave of the moment at the time) and improved upon it. This act is what birthed the iPod, the iPod Touch, and now, the iPad. It worked for Steve Jobs, it can work for you too.
4. Create Effective Customer Feedback Channels
As highlighted in number 2, customers are a very important factor in new product idea generation. For a small business owner, the best way to get ideas from your customers is by walking up to them and asking them to make suggestions based on their experiences with your business so far. You will find out how eager many of them will be to talk to you because it will make them feel important, and like a vital part of your progress.
Another way for small business owners to get feedback from customers is to provide channels for it, e.g. feedback boxes, survey questionnaires, informal interviews, focus group discussions, etc. It will amaze you how much these people will have to tell you. BMW knows how important customer feedback is to its business. It created a Virtual Innovation Agency (VIA) to collect customer feedback, in a bid to remain the "ultimate driving machine".
Honestly, I thinks are the most neglected source of new ideas, and Alan Gutterman says they are the best source. Good companies value their employees input, and ask for it. the bad companies usually don't. Some of the reasons why employee involvement in the idea generation process has been on the decline include: negligence of top management, not giving credit to the employees who deserve it, fear of intimidation and rejection, etc.
As an entrepreneur, you need to create an atmosphere where your employees will not be afraid to make suggestions and propose good solutions and new ideas. HCL Technologies, the fourth largest tech company in India has been able to generate $500 million from employees' ideas since 2008 when it started the "ideapreneurship" programme which encourages employees to come up with innovative solutions to their customers' business challenges.
6. Trade Shows
This doesn't cost much, depending on the type of trade show. It is important to select the right trade show. This will give you access to right people, right connections and you will gain new ideas, just by looking around. If you are allowed, you could take photographs of products that interest you and are relevant to your business.
Back in the university, we held regular trade fairs. I never bought things during these trade fairs, but I would always move around to look at what people displayed. During my third year, I and some of my classmates, opened our own trade fair joint. We called it 'The Calabar Kitchen' where we cooked and sold locally made dishes from Cross Rivers state in Nigeria. It was my first and best entrepreneurship venture and we made profit from it. In retrospect, one major factor that contributed to the success of our venture was the knowledge and ideas I had gathered from scouting in previous trade fairs.
It worked for me and I am certain it will work for you too.