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Putting Theory Into Practice Part 2: Expanding and Developing the Business Hypothesis

In our last blog installment (Monday, April 2, 2012)> our development team used the Jobs-to-be-done marketing lens in reverse order to define potential and important jobs that people are trying to get done where their wireless sensor solution becomes an obvious choice for hire.>Here’s what they came up with:

“Construction and in-the-field workers are constantly losing their tools or forgetting to bring the right tools and parts onto the job site. If there was a simple way for them to kit up their tool box before coming to the site as well as helping them find a tool that they lay down temporarily only to lose sight of it and search for ever to find – they would achieve more productivity and be less frustrated in getting their construction jobs done.”

Based on the team members own personal experience of working on job sites – including field installations and home improvement projects, they can relate to the problem and would probably “hire” the solution themselves to get their construction jobs done better.

Thus the concept passes the first “mustard” test:

“Given my own situation – would I use this product to improve my job outcomes?”>

But from experience the team leader, Linda Cantor (fictional character), >knows that the team may or may not represent the real opportunity and potential customers out there.

“It’s a good start and it feels plausible to me, but does is it really commercially viable?”>Linda goes on to say >”We could just build and launch it and adjust as we go – but to launch a winning product will require significant development and manufacturing cost – perhaps upwards of $750K to properly launch the product – and I can’t see management giving us the required resources to launch this without better proof…. They are risk adverse after all – and perhaps justifiably. Remember the last product dud we launched?>So how can we reduce the risk and uncertainty?”

Linda is right – the team has something that looks promising but she knows top management needs more evidence to move forward. They know through the research done by Dr. Robert Cooper that only 11% of product development failures are for technical reasons associated with the performance of the product itself. The predominant causes of new product failure are marketing or market-related reasons including the development of products the customer did not want and the development of ‘me too’ products.

Further management also recognizes that too many promising ideas are killed off too early because the ideas seem too far outside >of their core competency and strategic direction. While focus and direction is important, if taken too far it will lead to the creation of “me-to” products Cooper refers too.>

And indeed our fictitious company – let’s call it Teknovantage, is experiencing flat growth and has not been able to launch any significant new product in years.>>Seems like nothing Teknovantage has launched in recent memory is new or bold. They are actively looking for ways to grow their business through bold new products and escape the “me-to” product doldrums.

Therefore it’s not a case where management doesn’t want to explore and take some risk, they just don’t want to bet the ranch on a unproven concept without some feedback through test and experimentation. >They are willing to look outside of their current business model and want the development team to innovate but manage the risk. Luckily for Linda Teknovantage realized its dilemma and has committed to using “iterative discovery based innovation” where the mantra is to “think big and start small” and test early, often and cheaply.

Linda and her team’s next step is to start framing the business opportunity and use iterative discovery based innovation principles to define and develop the concept and business model using real market insights and feedback.>But where does the team start? The topic for our next blog.

In our next blog we will show how Linda and her team used design thinking to frame the opportunity which led to the formulation of a business model based on best assumptions. These assumptions – especially the critical assumptions – are the heart of their discovery based innovation process that they will embark on.

Till the next time remember – think big but start small – prove the basic customer value proposition and business model before scaling. Iterative discovery based innovation is all about learning quickly and inexpensively and making the best possible decisions using real customer feedback and learned market insights as you go. Keep on learning!


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