In this week's post, we share our Innovation Research Framework updated for 2025. This is our seven-step framework that we have used extensively in our client work. It is designed to develop, process and prioritize innovations for monetization. As with any such process, it needs to be customized to each organization's unique situation, but the essential steps are featured, and at a minimum, it will serve as a checklist to ensure that new innovation ideas have been fully market vetted. We update it each year. I have also included a link to download a complimentary template for our clients and community members. It is in PowerPoint format so you can customize it for your organizations unique needs. Some highlights for this year:
- As the infographic illustrates, Product/Market fit is first established in Stage 2, Concept Validation. However, it is an iterative process and needs to continue through stages 3 to 7. Product/Market fit is most difficult to establish at strategic inflection points as we find ourselves in currently with AI as our recent client work with disruptive new solutions is demonstrating.
- For software offerings, monetization opportunties for AI-powered additions and enhancements are tested in stage 5 are tested. This is proving to be a critical and controversial topic with decision makers who are balking at pricing. SBI research indicates that 20% of software companies are monetization their AI-powered features as an add-on. However, only 20% of new customers purchase the AI add-ons, underscoring the need for validation and price sensitivity analysis as well as testing of limited-time price offers for these add-ons. SBI also reports relatively low usage of only 38% for AI-powered add-ons, indicating increased churn risk down the road at renewal time.
Besides changing the market landscape, AI is also disrupting the frameworks and processes we use to deliver research insights to our client work, including this one. Stay tuned, we will provide updates to this framework as they become available
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Alan Nazarelli is Founder & CEO of Silicon Valley Research Group. Based in San Jose, CA with offices in Seattle and New York, the company works with the world’s most innovative brands to provide timely and actionable market intelligence and strategic guidance to enable them to make well-informed decisions to positively impact revenues and profits and to achieve their growth targets. Connect with Al on Linked in