Focus and openness to alternative paths
Too narrow a frame and lack of flexibility drive many potentially viable concepts to an early grave
Dr Sharon Tal and Prof Marc Gruber, co-authors of ‘Where to Play – 3 steps for discovering your most valuable market opportunities’
Start-ups need to avoid emotional attachment to their “killer” business idea and be prepared to take a much wider view of the application of their core concept if they are to achieve commercial success. That’s the view of Prof Marc Gruber, a leading international researcher in innovation, entrepreneurship and technology commercialisation and Vice-President for Innovation at the Swiss Federal Institute of Technology in Lausanne.
“Novice entrepreneurs fall in love with their ideas and stick doggedly to them. Our research amongst hundreds of start-ups in diverse sectors and geographies shows a clear pattern where those who looked at alternative opportunities – typically serial entrepreneurs – were on average three times more successful,” he tells The Irish Times.
Prof Gruber is co-author with Dr Sharon Tal of Where to Play – 3 steps for discovering your most valuable market opportunities (Financial Times Publishing). The book provides a step-by-step framework for assessing market opportunities.
Too narrow a frame and lack of flexibility drive many potentially viable concepts to an early grave whereas a “look before you leap” approach could provide a sounder basis for business success, he says.
“Focus is important for a start-up but so is agility and you need to balance the two. If you are not open to alternative paths while concentrating your available resources and can’t handle change or adaptation efficiently, then you risk losing the race.
“A laser-sharp focus on one market opportunity doesn’t pay off for most firms. On the contrary, firms that implement a wider approach, by keeping related market options open, outperform those who don’t, mainly because of their greater agility,” he adds.
Prof Gruber emphasises the need for cognitive flexibility, the mental ability to see things from different perspectives. He advises describing your technological elements in the most generic manner as they will form the basis for different applications.
“Applications are designed to address specific needs so as you uncover potential applications, you should also consider who may have the need for them. These will create your possible sets of customers. Think as broadly as possible about who may have the need for your application. An environmental monitoring solution, for example, could be useful for hospitals but it could also be useful for child-care institutions and food manufacturers, to name a few.”
Even very specific technologies can find wider applications. He cites Inka Robots as an example. This start-up is developing an autonomous tattooing robot controlled by computer vision and is looking to shake-up the tattoo world by revolutionising technology, prices, hygiene and safety. The promoters now realise that their innovation has potential applications in the medical field as well as other areas that require computer controlled cutting.
How you frame yourself and the markets that you think you will play in can often be the basis for your brand name. Again, Prof Gruber’s advice is to think more broadly, contrasting the name Salesforce. com with Oracle.
Taking a wider view of potential market opportunities has another benefit – it can be a hedge against competition or even obsolescence. Take Fuji, The Japanese firm synonymous with colour film. Having spent decades researching and developing everything related to photographic film, from raw materials to processes and systems, the firm became an expert in many different advanced materials technologies, including coatings, membranes and organic compounds. Having learnt to combine these with newly developed technologies, the company today creates unique materials that can be used in an extremely wide variety of applications including desalination, gas membranes and astropore filters. When digital effectively destroyed the colour film business, Fuji survived while competitor Kodak’s inability to think outside the box led to its swift downfall.
Sometimes, the killer application is buried in the detail and can take the venture in an unexpected direction. Flickr started out in 2002 as a developer of a multiplayer online game with real-time interaction through instant messaging. One of its features was a chat environment with photo-sharing. The popularity of this photo feature was so strong the developers put the game itself on hold and focused instead on the photo-sharing application that we know today.
Prof Gruber says openness to new concepts needs to be balanced with concentrating on a handful of ideas, otherwise the process becomes impossible. “Having three to five market opportunities is a good starting point. We have worked with start-ups that could identify more than 50 market opportunities.”
Paralysis by analysis is a common problem that needs to be avoided. Ultimately, uncertainty is normal when bringing innovation to the marketplace, he says.
“Get used to uncertainty. Try gathering the most critical information and validate it as much as you can before making a decision. Just as importantly, update your evaluation as soon as new data becomes available.”
Gruber and Tal on evaluating market opportunities
* Be systematic – Having a firm structure in your evaluation process makes sure you will not overlook key issues. Compare options based on the same considerations.
* Turn hypothesis into knowledge – perform desk research and talk to customers and market experts. Conduct small experiments with customers if feasible.
* Be aware of your biases – don’t use the evaluation process to rationalise your intuition. Remain objective and sceptical and debate your analysis with peers and stakeholders
* See the wood from the trees – Ask whether there is a real unmet need and can you provide an effective solution much better than what already exists within a viable business model
* Do the maths – Avoid five-year plans but do ask can you achieve sizeable margins, are your customers capable of paying the price you want and how sticky will those customers be.