BOOK REVIEW: Capturing New Markets – How Smart Companies Create Opportunities Others Don'tBy Stephen Wunker McGraw-Hill. €24.99, reviewed by  FRANK DILLON

BOOKS ON corporate strategy frequently fail to live up to the promises on their jackets. It is not easy to strike a good balance between bland observation and academic inaccessibility. In this book about finding and succeeding in new markets, Stephen Wunker gets the formula right, blending research, case studies and strategic analysis in a free-flowing text.

Wunker, a successful technology entrepreneur who now advises other firms, is himself a specialist in finding and entering new markets and has also worked closely with Harvard professor Clayton Christensen in the area of disruptive innovation.

New markets are especially relevant at the moment as firms emerge from the “great recession”, Wunker notes.

Rather than engage in the high costs of competing head-on with established competitors, there is a compelling case for pioneering businesses with low entry costs but high potential rewards.

Several factors unpin this. Globalisation means that if firms do not tackle emerging markets, they may face competition on their home turf from globalisation’s new winners. The rapid information flow in today’s economy means that markets form quickly. Niche communities can discover highly relevant new offerings. However, industries can rise and decline quickly.

In a rapidly changing environment, traditional business planning tools, based on historic data, cannot deliver any certainty. Upstart competitors, fast-paced technology developments and changing consumer patterns are all conspiring to create discontinuities.

The key to finding a new market is to focus on unfulfilled needs. As Wunker observes, demand in new markets frequently comes from the latent, often unexpressed needs of customers who scarcely participate in the existing market. He quotes Henry Ford’s observation: “If I had asked customers what they wanted, they would have said a faster horse.”

The Mini car brand provides a perfect latter-day example. Consumers may not have expressed a need for a tiny vehicle when the car was relaunched in 2001. However, factors such as individuality, ease of parking in urban areas and consideration for the environment were highly influential and, once the product existed, the idea clicked.

Supporting this analysis, Wunker provides a well-explained methodology for how to assess latent consumer demands and has good practical observations on how to conduct and interpret focus group research.

Other success factors for new markets are examined. Timing is crucial, for one. While it is not difficult to identify changes in consumer behaviour, marketers often fail to resist the urge to proclaim that a tipping point is at hand. Wunker provides examples of businesses that had good ideas but which were a little ahead of their time.

The first mobile “friend finder” services were launched in 2000, with the prospect of allowing mobile users to see where their friends were at any point – an attractive proposition to teenagers and young adults.

Mobile networks loved the idea and the services won industry awards. There were very few customers, however, as location finding was imprecise as handsets did not contain GPS technology. A decade later, with the application of better technology, these services became commercially successful.

One of Wunker’s more interesting observations is that the venture capital approach provides a better model for pursuing new markets than the traditional corporate planning process. Venture capitalists succeed because they are strategic opportunists, he notes, following strategies suited to the moment, and they focus resources on what has high-growth potential today, not on sustaining businesses that have already passed their peak.

A venture capitalist firm knows that half of its investments will fail and realistically aims to have one or two big winners in every 10 investments. It rigorously limits the amount it invests until the enterprises prove their worth, ensuring the inevitable failures are quick and inexpensive.

Crucially, a portfolio approach provides the courage to kill new investments, something that is harder for a large traditional company to do.

Wunker has produced an excellent, thoroughly researched and accessible book on corporate strategy that should be of value to entrepreneurs and managers seeking to move established businesses in new directions.

Frank Dillon is a business journalist