my experience with CDI

In the product development world, there are "mainly" two forms of innovation.
1.Customer Driven Innovation(CDI)
2.Technology Driven Innovation(TDI)

As the names suggest, TDI is all about coming up with a solution to a known problem using a very novel technology(might also be invention of new technology) and CDI is more about finding the right problem that needs a solution.

CDI is a very broad topic and there is no one fixed answer to what it is, What I'm about to write here is just my experiences. CDI is one methodical way of conceptualizing and building something that people are likely to use but not an exclusive epitome of creating money-minting products.

For the last couple of months I've been part of researching the business needs of typical small business owners in emerging markets and to conceptualize a product around them. This is where I got some grounding with CDI techniques.

Ideation:
Usually, you start with a very high level sense of a set of ideas and there are two formal techniques to narrow down the choices.

1. D4D(Design for Delight): Here we ask everyone in the team to write down their good/bad thoughts on sticky notes and stick them against respective idea. So basically against every idea we get a list of goods/delighters and bads.
2. Brainstorming: Above session is followed with a long brainstorming session where every thought received above is discussed collectively and agreed upon.

Once we're done with above, its time to make visits to the target audience(customers) and further drill down the high level idea. This is where the CDI starts, you are talking to/observing the customer and constructing the details of the idea. When you're visiting the customer, Following are some important points at this state to be kept in mind...

1. Watch their (work)activities very closely. Observe very very carefully or maybe try to put yourself in their shoes, lookup the world from their eyes and you might see their business problems.
2. Find out their business priorities and filter the ones where they have problems(or inefficiencies in execution).
3. Find the most important problem they have by sorting them according to the business priority and solving which would make the person happy(and more importantly, for its solution he will be very likely to even pay money)
4. Now design a solution/product(just in concepts) around this problem that solves the problem really really well.

So, Now we have conceptualized a product.

Validation
This is one stage that many people forget about. Most of the times, After conceptualizing the idea, people just create the product with all their might in 8-10 months(or whatever) just to learn that the problem they identified was very real but the the solution(they built) is not quite right to solve it(or not perceived right by the customer). So, one should not forget that its very very important to validate their proposed solution and to fill the gaps(improve the solution) iteratively. And, following is a summary version of CDI techniques for same..

1. Create a UI-prototype(not necessarily in the real software form but some screens or designs on paper are just fine).
2. Go back to your target audience and see how they respond to it, let them show their creativity and allow any modifications if they want to make. Adjust your design according to the feedbacks you receive.
3. Continue iterating step#2 until you come to a fairly stable design.
4. Now, create a running prototype of the product asap and hand it over to a couple of people from your target audience to get a taste of it.
5. Take their feedback about the product, adjust it again and hand over the new version.
6. Keep repeating step#5 until you come to a point where your target audience is really happy with the prototype and *ready to pay* for it. Then we're done here.

Productization
This is a fairly well known stage. Following are few things we should keep in mind at this early stage of building the product.

1. Durable Competitive Advantage: What is the competitive advantage built into the product that noone else can copy and catch up with you.
2. Stickiness: If someone else replicates the product, why users would not be easily able to migrate from you. This brings in the "services" aspect in the product.
3. The viral effect: Can you build some feature in the product so that it automatically spreads itself(not spread as in virus but it should be easy for one user to talk about it to others and very easy for others to get it). It should be easy in the product to leverage word-of-mouth marketing.
4. It should not have chicken-or-the-egg problem. That is, it should not be that for your product to succeed, it needs mass adoption from two communities and one community is not going to adopt it unless you have enough adoption from other community. The only way this can succeed then is that somehow you force one community to adopt it and others will follow automatically, but this is usually very hard to achieve.
5. Have a business model ready, there should always be a very good answer to the question, "Why and Who is gonna pay for it?".