The consumer electronics industry is experiencing a period of rapid innovation and change. Today’s consumer electronic products include app and web experiences as well as the physical device. Consumers expect their experience to be updated periodically and to evolve after the purchase of the physical device.

The type of organization required to innovate these extended products is very different from the consumer electronics environments of the past, requiring innovation also in organization, leadership and processes.

Characteristics critical to success for today's consumer electronics companies include:

• Focus on consumer engagement: Product success can no longer be measured with simple metrics such as sell-through and gross margin. Today’s products are tracked using the metrics of the internet – active users and engagement. Innovating products that engage users on day one and build a loyal following over time is neither simple nor straightforward. For consumer companies, it means earning loyal customers who will continue to upgrade and purchase new products. It means creating: a brand that resonates with the customer, a great purchase experience, a great out-of-box experience, and a product feature set that evolves with the consumer.
• Leadership: Today's product teams require a broader set of domains, each with their own perspectives, processes and timelines. Innovation (and enthusiasm) comes from the creative dissonance of a well-functioning team. Building the team and providing leadership direction – while balancing the process, constraints, and challenges of each of the domains – is significantly more challenging with these new products.
• Organization: Often when new products are launched there is strong control and direction from senior leadership. But as product lines mature it is critical to build leadership and collaboration and to delegate. Creating an organizational culture of performance and effectiveness is a significant ongoing effort for companies of all sizes.
• Product strategy: This is often performed by senior management in startups and in new initiatives of larger organizations. While this provides for effective decision-making, it is critical that product management leaders allocate enough time to engage with the team to understand significant detail and to effectively drive the product/business trade-offs. As organizations grow, it is easy for product management to become a bottleneck in product innovation and development.
•  Innovation: It must be ongoing and resonate throughout the organization and in all steps of product development. Innovation is as much about constraints as it is about opportunities. It is a process of pursuing a path that takes advantage of both. Teams must share a willingness to look at impossible opportunities and challenge the roadblocks.
• New product development: Many different technical domains are involved – electrical, mechanical, firmware, app software, back-end software, communications and others. Each  has its own development process and requirements. Building an organizational language and process is critical to coordination between teams. Neither traditional waterfall nor new agile methods work with these complex projects. 
• Supply chain: Much of new product development involves re-purposing existing technology to provide new features and experiences.The supply chain must be an active part of innovation and development, providing information about existing solutions, and low-risk development and supply chain paths for the physical product.

Creating an effective product innovation environment is critical for both small companies looking for the maximum leverage in delivering their first product and for larger companies looking to engage their customers more deeply.