De-risking Your Innovation

Jacquie Potts

By Jacquie Potts, Managing Director, Marketwise Strategies Limited.

This blog was first published via the North East LEP on 2nd February 2017.

New product development – understanding is power

What makes a new product or service innovation most likely to succeed – and how can the risks be reduced? In my experience, whilst what organisations ‘do’ around new product development  (NPD) is crucial, what organisations – and the people running them – ‘believe’ is often worthy of a closer look.

As MD of Marketwise Strategies, which is in its seventeenth year of helping clients de-risk their innovations, I’ve worked with a wide variety of organisations across the UK and internationally: from technology companies to universities, major not-for-profits and some of the UK’s best-known public sector agencies.

Thinking upfront = value from research

What those clients (and their projects) have in common is some sort of ‘knowledge-focus’ and a risk that needs to be reduced. Together, those factors produce a need for robust, insightful research; into markets, customers, competitors and – often – into a whole range of wider issues that can shape the product’s (or project’s) success.

To get maximum value from their research, however, each client organisation needs to do some thinking upfront – and this is where beliefs and values, corporate culture and internal information flows can become incredibly important.

Beliefs really matter

Beliefs around new product development can make an enormous difference to the de-risking that takes place and how effective that is. Beliefs matter because they can lead to market research taking place at the wrong times, among the wrong audiences, and via entirely the wrong methods. Any one of those can send a new innovation ‘off course’.

So I would like to challenge a few of the beliefs that inhibit the de-risking process and that lead to faulty NPD decision making.

Three of the most common ‘unhelpful beliefs’ are that:

  1. Knowledge of the market =power – and data will drive success
  2. The main research need is to measure the market
  3. The time to research the market is after you have developed the product.

Let’s consider those one by one.

 

1            Knowledge is power – and data will drive success

At a time when data is increasingly available – and plentiful – it is easy to be seduced by the belief that the more data accumulated the better. What really matters, however, is developing actionable insights. In other words, understanding what is going on (in the market place, in competitor organisations and in the mind of the customer), what is influencing this, and what you can do to shape future events.

Data drawn from surveys, developed through data-mining exercises, or aggregated in dashboards cannot help to solve problems unless time is taken to understand it and to use if effectively. Unfortunately, it is increasingly common for organisations to be ‘drowning in data’ that they cannot easily analyse, interpret and therefore act upon. In that situation, what matters most is to step back and assess what you already have – or bring in some help to do that – before spending time or money on any further data/research.

 

2            The main need to measure the market

Among smaller businesses – and sometimes even among university spin-outs – this is a fairly common view and can lead to the ‘wrong kind’ of market research taking place. In essence, the danger is that all is measured, but little is understood: as not enough investigation takes place into why customers and markets behave in the ways that they do. This focus upon the ‘what’ rather than the ‘why’ produces shallow insights and can lead to:

(i) NPD market research being conducted twice (for example, if the initial, quantitative-focused work fails to spot important barriers to purchase).

(ii) a product/innovation progressing too far before being ‘killed’ – or even going to market with some very inaccurate assumptions in place.

Either scenario is expensive, compared to getting it right first time.

 

3            Develop the product then research the market

This assumes a ‘one shot’ approach to NPD market research, rather than a – usually more effective – drip feed, that can inform each stage of the development process. If research is left quite late, then there is a greater risk that product prototypes, initial software developments or other potentially costly areas of spend will take place before customer requirements are properly understood.

 

Five Stages of NPD market research

To avoid this, we recommend a Five Stages approach, made up of:

  • Initial market scanning
  • Detailed market scanning
  • ‘Proving’ the market
  • Market entry research
  • Post-launch market monitoring.

The Initial market scanning stage builds secure foundations for the NPD process and often acts as the first ‘stage gate’ for Go/No Go decisions. This can often be a DIY exercise, conducted internally, using mostly desk-based research and known contacts.

Detailed market scanning then adds the detail and validates assumptions about demand (current and potential), competition, technologies, trends etc. This stage can benefit from an independent perspective.

Proving the market involves more detailed customer research that will inform product/service design, the business model, pricing strategy, competitive positioning etc. This needs to uncover what ‘value’ really means to the customer and what barriers to purchase exist, as well as getting to grips with the competitive environment. The full range of ‘W’ questions should be brought into play: Who; What; How; Why; Where; and When. This type of research tends to be at its most effective when it is carried out independently.

Market entry research – to inform the details of going to market, such as brand strategy, promotional planning, pricing tactics and to help finalise marketing resource. This also acts as a useful check on any changes within the marketplace, that might influence success. Very much tailored to the product and market, this stage tends to require a mix of methods and might involve a team – across the business – plus external market researchers and the marketing agency that is developing the brand and the promotional campaign.

Post-launch research is just as important as the earlier stages, in that it keeps the product or service on track for success. This can largely be built into day-to-day business operations, enabling low cost, data gathering and ongoing customer feedback.

Not every organisation requires every stage – and not every stage requires the same amount of detail. but being aware of those stages is a useful first step.

De-risking is a balancing act

De-risking any new product or innovation is a balancing act between the degree of risk that is acceptable and the amount of resource needed to produce strategic, risk-reducing insights.

If the emphasis is upon understanding – and, importantly, upon timely understanding – then success is much more likely to follow.

 

Marketwise Strategies announces VentureFest North East partnership

Business de-risking specialist, Marketwise Strategies has become the market research partner to VentureFest North East, the regional innovation conference for North East England.
venturefestnortheast
Specialising in strategic research for new product development and business growth, Marketwise Strategies works with science and technology businesses and universities, across the UK and internationally. Formed in 2000, the company has a strong track record in supporting innovation and delivering robust market insights to inform corporate and marketing strategies.

VentureFest North East Executive Director, Simon Green said,

We’re delighted that Marketwise Strategies has become a partner of VentureFest North East. We’ve worked with the team there for many years, on various projects, and their specialist knowledge of innovation makes them a great fit with our plans. A large part of managing innovation projects is reducing risk, which is exactly what Marketwise Strategies’ services can help with. We’re looking forward to working together on helping North East businesses get their ideas to market.

The VentureFest North East innovation conference takes place on 8th November 2016, at St James Park, Newcastle upon Tyne. Growing to 700 people this year, it’s a unique day in the business calendar that’s packed with inspirational speakers and practical workshops to help new, existing – and aspiring – businesses to make new connections, raise finance and explore opportunities.

Jacquie Potts, Managing Director at Marketwise Strategies said, “In our experience, VentureFest North East excels at bringing people together to create new business opportunities. It attracts – and delivers results for – businesses of all sizes and sectors. Whether you are trying to raise finance, find new market opportunities, access expertise or simply be inspired, it is a superb event – and well worth attending. We have taken part in previous VentureFest North East events, including the innovation conference in 2015 and Finance Camp earlier this year, and found them outstanding, with a great mix of people.”

At the VentureFest North East conference in November, Marketwise Strategies will be delivering a workshop session on de-risking innovation.

Registrations for the conference are now open at www.venturefestnortheast.com and attendance is free to all businesses.

Academics and enterprise

Authors: Jacquie Potts and Dr Paul Koshy

Ignore the market at your peril…

Helping universities to assess markets for spin-out activity is an important strand of our work, so we have been intrigued by some recent debate in Times Higher Education (THE) about barriers to successful commercialisation of research.

In early April, THE reported the results of a National Centre for Universities and Business survey, which showed a marked decline in the percentage of academics commercialising their research.[1] In reply, Professor George Feiger, Pro Vice Chancellor and Executive Dean of Aston Business School, argued that a major factor is “the limited success UK researchers…have had in commercialisation”. In other words, limited exposure to stories of successful commercialisation means that academics invest their time elsewhere. The overriding reason, he explained, is that “successful researchers… tend to be ill-suited to commercialising the intellectual fruits of their labours”, as they are “drawn to novel challenges” rather than the standardisation that commercial production requires.[2]

Prof. Feiger suggested two ways to negotiate those barriers. Firstly, bringing in “translation intermediaries” with the experience, mind-set and skillset to “devise commercialisation paths that are likely to pay off”; and secondly, establishing a network of “connected people”, able to open doors and “help find funding and potential production and marketing channels”.

In our work with academics nurturing potential spin-outs (in fields from software development, to life sciences and robotics), our experience has been that a commercially savvy tech transfer department is invaluable in addressing those needs and in spanning the boundary with the commercial world. More specifically, however, some key factors in success are the processes in place for assessing potential spin-out businesses and the points at which those involved consult ‘the market’.

Scientist in labThe tendency to leave market research until quite late in the NPD process is a common failing and can mean that funds are spent developing products and prototypes that don’t fit the market need, or that are out of date by the time the business is launched. While the same tendency sometimes arises in new starts outside of academia, we find it is less common because those involved are often more ‘in touch’ with their intended customer groups.

For an academic researcher, full commercialisation of a research output might be a ‘nice to have’ after the main target – publication – has been achieved. There can be less incentive, therefore, to engage early with the market. The consequence can be that product or service design is well advanced before any serious attempt is made to understand customer needs and wants. By then, it can be too late to easily change course if, for example, product features or benefits need to change, or substantially different customer groups or channels need to be explored.

Keeping in touch with the marketplace during the early stages of product development – and carrying out customer research early – could save many commercialisation opportunities from going to waste.

A comment from one of our university clients illustrates this point well:

“The market research made us realise that we needed to focus on two products instead of one, which meant that we had to prepare for an entirely different business plan. Importantly, it showed that our ultimate objective of breaking into one specific market, would only be achieved over the course of around seven years (which was over double what had been expected). This meant that we needed to focus on developing a version of the product for earlier release into a secondary market, with lower barriers to entry. That product will help to support the company while we develop the second, but main, product line. In retrospect, we should have started doing market research sooner, as the design activities we had already embarked upon needed to be modified in light of the research.” (Academic and Founder of a University spinout)

Red, winning diceThis kind of comment is not a one off and  it is not uncommon for intending spin-outs to rely upon anecdotal evidence as the foundation for their product development and commercialisation strategy. That, coupled with enthusiasm and confidence about their academic research, can generate significant momentum. If commercialisation funding is available without market research being a requirement then this can compound the problem, by propelling the business even further toward launch without an
independent ‘reality check’.

Good quality market research, at the right time, can de-risk some important decisions, steer strategy and increase the likelihood of a successful outcome. It won’t revolutionise UK universities’ rate of commercialisation but, alongside the translation intermediaries and connected people highlighted by Prof Feiger, it can certainly help.

[1] David Matthews. “Dip in academics commercialising research as ‘third mission sidelined’”. Times Higher Education, 25 February 2016. (Online headline: “Big drop in academics commercialising their research.”) See: https://www.timeshighereducation.com/news/big-drop-in-academics-commercialising-their-research

[2] Prof. George Feiger. “Don’t leave potential moneyspinners in the ‘valley of death’”. Times Higher Education, 31 March 2016. (Online headline: “How to make new discoveries a commercial success.”) See: https://www.timeshighereducation.com/comment/how-to-make-new-discoveries-a-commercial-success-george-feiger-aston-business-school#comment-7686

Informing SME Engagement at BSI

One of our proudest achievements at Marketwise Strategies is the work we have accomplished with BSI, the UK’s National Standards Body. In 2014, BSI asked us to research the requirement for standards among SMEs in six sectors: Aerospace; Automotive; Construction; Food; Health; and ICT.

This major, multi-mode project was delivered in three stages and was our second research project for BSI. It involved: a review of SME numbers, activities and trends in each of the six sectors; depth interviews with decision-makers in 48 SMEs (face-to-face and by telephone); and a quantitative survey of over 600 SMEs.

Dr John Gibson photographDr John Gibson, who led the qualitative work said, “The SME landscape project was one of the most rewarding that I have been involved in. We were able to visit and interview SME owners and senior teams, and really ‘get under the skin’ of the businesses, to understand what standards meant to them, what would encourage them to adopt standards and why they might or might not want to be involved in developing new standards.

Since the project ended, we have also liaised with the consultants that BSI appointed to explore the economic benefits of standards, and have been able to see how our research has influenced that next phase of SME engagement.”

The research has informed BSI’s strategy for engaging with SMEs, and has been circulated to stakeholders throughout the UK and Europe – including to the Department for Business, Innovation & Skills, a number of UK universities that are leaders in working with advanced manufacturing, and the European Committee for Standardization (CEN).

Direct links to our Stage 1 (macro level) and Stage 2 (micro level) reports are provided below:

Those reports are also listed within BSI’s website among a series of international publications addressing the economic benefits of standards.

A case study, summarising the project, is available here.

 

Budget squeeze creates new research needs

As the public sector spending squeeze cuts third sector budgets, many of our not-for-profit clients are turning to market research to help explore new markets and new opportunities.

Often, an organisations first reaction to cash constraints is to cut spend in areas such as training and marketing, including market research. The UK Government’s own cuts to marketing and research have been dramatic, including the closure of the Central Office of Information. In public health, the Government spend on advertising to encourage responsible drinking, was slashed from £3.25m in 2009/10 to zero the following year. Now, however, there are signs of a reversal as the government announces plans to spend £285m on marketing in 2012/13, funding campaigns to promote welfare and NHS reforms and other high-profile policies.

Governments of course can make efficiency savings without facing quite the same threats that other not-for-profits suffer. For most organisations, survival into the long term requires an effective marketing strategy and, during the economic downturn, Marketwise Strategies has been privileged to work with several organisations who have invested in research to help navigate a course through turbulent times. Two of those are charities that had suffered budget cuts of several millions of pounds. Both had cut costs and undergone restructuring. Now they were ready to develop new services and explore new customer groups. Marketwise Strategies worked with them to clarify the scale of the opportunities they had identified and to work out how they could best position themselves in their new target markets.

For another of our client groups, universities, the pressures are slightly different and the complexity often greater as not only budgets and student fees but also the competitive environment and even the ground-rules for student admissions are in flux. As a result, there is growing interest in going beyond quantitative surveys and syndicated reports, to get some really detailed insights into student, applicant and influencer perceptions as well as, importantly, reviewing course portfolios and strengthening their brand positioning. Currently Marketwise Strategies is working on major strategic projects with two UK universities.

For organisations that need to generate more revenue, or move into new areas of activity, well thought out market research always has a role to play. In the current economic climate, however, when opportunities need to be taken and risks need to be minimised, it is increasingly important.