Embracing Discovery-Driven Innovation: The Voice of the Customer in Product Innovation

Innovation is the lifeblood of any successful business, propelling it to new heights and ensuring its relevance in a constantly evolving market. Traditional product development processes can be slow and expensive, but in the 1990s, Rita McGrath and Ian MacMillan introduced a systematic approach called discovery-driven planning.

At Avanos, we call this approach discovery-driven innovation, and unlike traditional innovation methodologies that rely on detailed market research and forecasts, discovery-driven innovation focuses on learning from real-world experiences, ethnography and customer feedback. We used this process to develop our Digestive Health innovation pipeline, which we shared in our recent Investor Day presentation.

Importance of Voice of the Customer in Discovery-Driven Innovation

Throughout our product development and launch process, Avanos listens carefully to the "voice of the customer" (VoC) - an approach that places customers' needs and desires front and center. We actively conduct surveys and engage in direct interactions with our patients and healthcare providers to understand their pain points, desires, and preferences. By proactively seeking their feedback, we gain valuable insights about what truly matters to them. Emphasizing VoC in product innovation is paramount for us, for several reasons:

1. Customer-Centric Approach: The VoC approach ensures that our product development revolves around addressing genuine pain points and providing solutions that resonate. This customer-centric focus enhances our chances of successfully getting patients back to the things that matter.
2. Early Validation: Engaging with our customers from the outset allows us to validate their assumptions and gauge market demand before we invest significant resources. This reduces the risk of building products that miss the mark.
3. Iterative Improvement: Continuous feedback from customers aids in fine-tuning the product concepts and rapid prototypes throughout the development lifecycle. This iterative improvement process which puts actual concepts in customers' hands ensures that the final offering meets and exceeds customer expectations.
4. Competitive Advantage: By embracing the VoC approach, we can build strong relationships with our customers, fostering loyalty and gaining a competitive advantage in the market.

How Avanos Uses Discovery-Driven Innovation

This iterative and agile approach enables us to adapt our product offerings based on the insights we gain from the market, ultimately leading to more effective new product concepts that have a high probability of delighting our customers.

We follow these six key steps:

1. Perform qualitative VoC interviews across a particular product, brand or segment area with global stakeholders (patients, providers, payers, etc.) to gain a deeper understanding of opportunities.
2. Conduct a Needs Prioritization Workshop to analyze the customer "voices" and develop a list of specific customer needs.
3. Prioritize the list of unmet customer needs using quantitative global customer surveys so that we focus on solving the most important needs.
4. Ideate around the customer needs with cross-functional teams, patients and clinicians in multi-day ideation sessions to identify gaps and fill our pipeline with product opportunities.​​​​​​​
5. Create our product development and M&A roadmap once additional VoC feedback has vetted ideation.
6. Conduct concept testing and refinement with customers, sales advisory boards and key opinion leaders. A business case is developed for each refined concept once product development projects are activated. Iterative touchpoints with customers throughout the product development lifecycle help ensure the solutions we develop truly target our customers' unmet needs.

In an era of constant change, discovery-driven innovation, alongside a deep understanding of the voice of the customer, has emerged as a powerful framework for the transformation of our product development efforts at Avanos. Embracing this approach is integral to achieving our vision of getting patients back to the things that matter.

Certain matters in this blog post, including expectations, any comments about our expected performance and any estimates, projections or statements relating to the Company's business plans, objectives, acquisitions and transformation initiatives, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are based upon current plans and management's expectations and beliefs concerning future events impacting the Company. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in such statements, including risks related to market demand, financial performance, cost savings and reductions and our ability to successfully execute on or achieve the expected benefits of our transformation initiative, There can be no assurance that these future events will occur as anticipated or that the Company's results will be as estimated. Forward-looking statements speak only as of the date they were made, and the Company undertakes no obligation to publicly update them. For a more complete listing and description of these and other factors that could cause the Company's future results to differ materially from those expressed in any forward-looking statements, see the Company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.