How to Use Incremental Innovation to Build and Grow SaaS Products

What is incremental innovation? How is it different from other kinds of innovation? Why is incremental innovation important for product managers?

In the article, we’re answering these as well as many more questions, so dive in!

TL;DR

• Incremental innovation is a process of gradually modifying a company’s existing products or services through small improvements.
• Breakthrough, disruptive or radical innovation are all more dramatic and often involve challenging the existing business model or introducing completely new technology.
• Small but regular improvements are a more reliable way to achieve product-market fit.
• Incremental innovation gives you time to listen to user feedback. As a result, it helps you develop only the features that they need and avoid falling into the feature fallacy trap and creating the consumption gap.
• By concentrating your effort on the few relevant features, one at a time, you can improve their usability and increase their adoption.
• While innovating in small increments, you continue generating income from your product. This is harder when you dramatically overhaul big parts of your product at once.
• In-app surveys, usability and prototype testing, or user interviews and focus groups can help you understand your customers’ requirements.
• Publishing a public roadmap enhances communication with your customers and shows you’re listening to them to make the product satisfy their needs.
• Continuous Product Discovery and Opportunity Solutions Trees help you stay true to your business strategy while iterating on the product.
• Riskiest Assumption Testing (RAT) and Fake Door Testing are good ways of validating ideas before you commit to developing them.
• If your customer feedback shows your product is very different from what they need, don’t wait and pivot.
• Closing the customer feedback loop will help your product stay relevant in the face of changing market trends and user expectations.
• Most successful companies like Hubspot and Apple are known for incremental innovation.
• Userpilot, compared to its competitors, is committed to improving user experience by incrementally developing the most relevant features one at a time. This makes the product loved by our users (check G2 reviews).

What is incremental innovation?

Incremental innovation is about constantly making small improvements to your products or services.

The aim of incremental innovation could be improving functionality, usability, UI, or any other aspects of the user experience.

Incremental innovation is often associated with Agile development, which promotes frequent but small releases of product improvements. It depends on empirical evidence and allows teams to modify the product to satisfy the needs of the users quickly and accurately.

What are the types of innovation?

Incremental innovation is very different from the other types like breakthrough, disruptive or radical innovation.

Incremental innovation vs breakthrough innovation

As we’ve already mentioned, incremental innovation relies on marginal improvements. Each of them may not be significant on its own. However, their sum makes the product more successful in the long run.

Breakthrough innovation, on the other hand, is dramatic and changes the position of the business in the market. However, such change is built on the foundation of the processes developed previously.

Incremental innovation vs disruptive innovation

Disruptive innovation is what many SaaS startups aspire to. They enter the market at its bottom, challenge existing business or product norms and work their way up.

By offering products that appeal to the untapped sectors of the market, they slowly grow their customer base. Ultimately, this results in the reshaping of the landscape in the particular market niche.

If you would like a good example, think AirBnB or Uber. They have both reshaped their markets by offering products that were affordable to consumers who couldn’t always afford those of their competitors.

Both faced backlash from the established competitors but ultimately managed to secure a robust position in their markets.

Incremental innovation vs radical innovation

Radical innovation, aka blue ocean strategy, involves creating a new business model, process, or product that changes dramatically from what’s around in the market.

Instead of competing in the existing markets, a radical innovator creates new ones.

Why should product managers focus on incremental innovation strategies?

There are some serious benefits of incremental innovation.

Achieve product-market fit faster… and keep it

Incremental innovation helps you achieve product-market fit quickly.

Building and shipping your product in small batches is easier and faster. Instead of releasing one big update every now and again, modern product teams release daily improvements to their product.

Small increments mean it is easier to test the effectiveness of the changes. If the user data and feedback show you’re heading in the right direction, you keep going. If not, you modify your course to better meet the demand. Every iteration brings you closer to your goal.

Once you find your product-market fit, incremental innovation makes it easier to keep it. The needs of your user will evolve, and so must your product.

Product managers need to keep track of changes in the user sentiment. PMF surveys can help with that.

Avoid the feature fallacy trap and the SaaS consumption gap

Innovating your product in small increments is also a safer and more methodical way of developing your product.

As we mentioned, access to granular user data allows you to identify the right features and functionalities to build. By using the data, you can avoid falling into the feature fallacy trap and wasting your resources on features that no one will use.

Developing only the features that your customers need also means a smaller consumption gap. Your users are more likely to use the majority of the product features.

Even if you end up developing functionality that doesn’t get adopted, small increments mean that you never waste massive amounts of money or time.

Enhanced product usability that leads to faster adoption

Isolating features that are more important for customers helps you improve overall usability, which will drive adoption.

When you focus all your energy on the features that bring the most value to the customer at the time, you have a better chance of getting it right.

Keep the product’s competitive advantage

Incremental innovation helps SaaS companies to stay competitive.

Developing groundbreaking innovations requires huge resources and a lot of time. Such investments are necessary if you are an underdog and want to break things, but they also mean that you have to wait for the returns much longer.

However, when you already have a product and committed customers, it makes more sense to prioritize developing it over-investing in revolutionary ideas.

By gradually innovating your existing product, you are not only improving its market fit but also generating revenue that you can use to fund further development. This will allow you to stay ahead of your rivals.

How to get started with incremental innovation for existing products

What should the incremental innovation process look like? Let’s check it out.

Understand what your customers want

If you don’t understand what your customers need, how will you know what feature to develop? Are you perhaps going to look at your competitors and copy what they offer?

If you do, you are likely to fall into the feature parity trap and develop unwanted features.

Customer research is essential to avoid this. However, don’t overdo it. Try to minimize the time you spend running tests and experiments and concentrate on developing the product instead.

In-app active and passive surveys can help you with that. They are a great way of figuring out what your users like and dislike about your product features.

Usability tests and prototype tests also help you identify new ways to improve your product. By getting a group of people together and watching them use your product (or its prototype), you can quickly uncover the parts of your product that cause friction.

User interviews and focus groups are another way of collecting valuable user feedback.

Your customers may not always know what solutions they actually need. What they can give you though is insights into their needs and feedback on how good your product is at meeting them.

When you decide to work on certain features or functionalities, it’s a good practice to build a public roadmap. It gives your users information on what you have in the pipeline.

More importantly, it shows them that you listen to their voice and are working to improve your product for them. This is essential for establishing strong relationships with your customers.

Discover and map opportunities

Just as the needs of your customers change, so must your product. This is the idea underpinning the Continuous Discovery Framework by Teresa Torres.

As you are innovating the product, you need to make sure that the modifications you introduce are solutions to specific user problems.

However, you can never solve every problem your users have, so you need to focus on these which will help you reach your strategic objectives.

How do you do that? Torres recommends Opportunity Solution Tree.

It is a tool for product discovery that helps product teams make sure that there is alignment between business goals, user needs (opportunities), and solutions.

Test assumptions before building

Before you commit to building a feature, make sure you test the assumptions on which it is based.

RAT, or Riskiest Assumptions Test, allows you to do just that. The idea behind is to build the absolute minimum that is necessary to validate the idea and identify failure points. Sometimes this is enough to eliminate bad ideas.

Fake Door Tests are another way of testing out ideas before spending any money on them. How do they work?

Let’s look at an illustrative example using Asana. Imagine they want to ‘fake door test’ their Goals feature. To do that, they could build an in-app notification, like the tooltip below, which highlights the new feature.

It prompts the user to try out the feature… But when they do, they discover that the feature is in fact not available.

In the meantime, you sit and watch. If enough users show interest, it’s a green light to start working on the feature. If not, you drop it without spending almost anything.

The added benefit is that you can use it to recruit beta testers for when the feature is close to release.

Pivot fast

Testing ideas early is only worth the effort if you are ready to act on the insights.

The experiments you run can give you some unexpected results. The ideas you had lots of confidence in may be invalid or unfeasible. At the same time, you may discover new avenues for your product to grow.

If that’s the case, you must pivot quickly. Drop the initiatives that don’t resonate with your customers, and focus on developing only the best ideas that will deliver the most value.

Close the feedback loop

Your customers should be constantly involved in your product innovation.

Never stop collecting their feedback. Focus on their current experiences with your product as well as their needs. Use it also as an opportunity to test initial interest in new ideas.

Once you collect and analyze the feedback, make sure to act on it, and keep them up to date on the progress you’re making. Failing to do either of them will send the wrong message to users – that giving feedback is pointless and they won’t bother in the future.

Such a customer feedback loop will help you stay tuned to their constantly evolving needs, and will help you act more quickly on new developments. It also fosters strong relationships with your customers.

Incremental innovations to inspire your next product and service improvements

Let’s explore a few examples of incremental innovation in tech.

B2B Incremental innovation example- Userpilot

Userpilot is committed to building a better product for our customers one enhancement at a time.

We never work on more than one feature at any point. Instead, we concentrate on the feature that is going to deliver the most value to our customers. This allows us to improve our functionality and user experience where they matter most.

This is how Andy Shamah, the Head of Product at Userpilot, summarizes our approach:

We started small focusing on the onboarding facet of the user journey and built slowly towards being the complete product growth platform – teams now use Userpilot for complex adoption plays, advanced engagement with their end-users, creating closed-loop surveys, experimentation, and much more.

We’re not done yet though. We’re on a continuous daily mission that we’re passionate about – figuring out the right puzzle pieces to put together the best product that better serves our customers’ needs and that’s one of the things that our customers love about Userpilot.

That’s what we did with our resource center. Initially, it was a very simple feature but it’s evolved since then a lot. We’ve added analytics, and more integrations so that you can add different modules and more customization options.

When we delivered what you asked for, we moved on to work on our checklists. This is what they first looked like…

And that’s how they look now after numerous iterations informed by user feedback.

You not only get more functionality but also insights to better understand what’s working or not and how your users are engaging with them.

We listen to our customers and deliver what they ask for while staying true to our product’s scope and brand.

Judging by the feedback Userpilot users leave on G2, it looks like we do manage to get it right!

B2B Incremental innovation example – Hubspot

Whatever tools your marketing, sales, or service teams need, there’s a big chance Hubspot’s got them.

The business started as an email marketing platform. Since then, the company has expanded its focus to include a Marketing Hub, a Sales Hub with its bespoke CRM system, an Operations Hub, a Service Hub, and a CSM system.

Hubspot doesn’t stop innovating its products. Apart from expanding their product range, they constantly work to improve the user experience for their customers.

And it does show in the reviews and the reputation that Hubspot has. Their products are widely recognized as some of the most user-friendly solutions available on the market.

B2C Incremental innovation example- Apple’s iPhone

Apple is known for its radical and disruptive innovation, so it’s easy to forget about its history of successful incremental innovation.

When the first iPhone was released in 2007, it sent shockwaves across the industry. It combined a music player, a phone, and a communicator, all in one device.

Since then, Apple has developed the product regularly by adding new features (and removing some, like the phone jack) and improving existing ones.

If you look at how iPhones have evolved over time, it’s easy to see their resemblance to the original. There is no question they all descend from the same device launched years ago. What’s inside the latest models though is technologically so much more advanced.

Conclusion

‘Going fast’, ‘breaking things’, and ‘causing damage’ may all sound sexy but it is the incremental innovation processes that allow you to develop a product that truly meets the needs of your customers.

If you would like to see how Userpilot can help you innovate your product to achieve and maintain a solid product-market fit, hit the link to get a demo!