Transforming ideas into winning new product concepts
The challenge for all new products facing early market adoption is to clearly create a new value proposition by solving a yet-to-be-fully-understood and exploited market pain or yet-to-be-discovered market desire.
Ultimately the successful adoption of a truly new product/technology comes down to providing compelling value propositions by either creating a new capability (i.e., being able to do a new function not currently possible without the new invention) and/or enabling a large cost and/or time savings or some other desired outcome in getting a job or jobs done.
But if the concept to be tested is truly “new” how do we validate it early on? After all, it’s highly improbable that simply asking potential end users “what problems do they have” much less asking “what new products do you need or want” will yield any significant insights into the next commercial innovation. Put simply, people know what they know and don’t know what they don’t know There are three criteria that a new idea must address to be market successes. Borrowing terminology from Design Thinking – the framework consist of three overlapping success criteria
1) Desirability: a value proposition that makes sense to potential customer. It’s critical that we think in terms of the customer – what jobs he or she is trying to get done by hiring the product. 2) Feasibility: what is functionally/technically possible within the foreseeable future. 3) Viability: what is likely to become a sustainable business model.
It’s unlikely that an initial product idea, especial a new-to-market concept will be fully formed and shaped to fully meet the criteria – thus we can use the criteria as an Iterative design and development learning framework to transform the idea into a market success. Achieving proper balance between the three criteria is the difference between successfully launching innovative new products versus incremental product extensions versus “pie-in-the-sky” solutions looking for problems.
If we are too conservative and only choose ideas that we feel extremely confident we can execute – we tend to end up with lots of line extensions and “me-too-products.” On the other have if we don’t manage the risk and march ahead without dong proper market research to gain insight and real customer feedback, we more often than not end up with a product the market either doesn’t want and/or isn’t ready for.
Innovation and new product development is a learning process. We must learn what the market wants and values by running a set of experiments to test our customer value proposition and business model assumptions. Thus we should think of the innovation development process as starting with a hypothesis and running a series of test to discover if the hypothesis (or hypotheses) sufficiently predicts the desired outcomes we want which is to “solve a real pain” that customers have and are willing to pay for at a price that results in a sustainable business model.
What are your business hypotheses? It might be useful to first understand what we mean by a hypothesis. Here’s a snip taken from Wikipedia that provides a definition for us to build on:
A hypothesis …. is a proposed explanation for a phenomenon. ….. For a hypothesis to be put forward as a scientific hypothesis, the scientific method requires that one can test it. Scientists generally base scientific hypotheses on previous observations that cannot satisfactorily be explained with the available scientific theories. Even though the words “hypothesis” and “theory” are often used synonymously, a scientific hypothesis is not the same as a scientific theory. A working hypothesis is a provisionally accepted hypothesis proposed for further research.
Forming and shaping your business hypotheses is fairly straight forward once we realize that what we are really talking about is the underlying assumptions we make in defining a product idea and business model. You may have several assumptions in your plan that we simply can’t answer till we get real feedback from customers – what they want and how willing they are to pay to get what they want.
Typically the first hypothesis we want to address is whether the concept is DESIRABLE. Do people really have a big enough problem they are willing to solve? But we also want to know early on whether our proposed business model will sufficiently deliver value to the customer that generates a VIABLE cash flow to create a successful venture. And last but certainly not least – do we have access and capabilities to create a solution within reach (time and money) to support and complement the other two criteria?
With our hypotheses now identified, we can start testing them to discover if the market will value and want what we propose by using iterative design and development learning processes. Lot’s more to come on how we do that.