The Catch-22 of Launching an Innovative Product

As entrepreneurs or small business owners, our decision to move forward with a new project is often driven by market research. While evaluating a particular idea, we spend a great deal of time digesting market trends, researching competitors, identifying potential customers, and determining the market size. The thought process isn’t particularly illogical is it? If we are going to invest our time and money in something, we, along with our potential investors, undoubtedly want to calculate the potential payoff before making a yes/no decision. If our market research suggests that the opportunity is either nonexistent or too small, we simply don’t proceed. However, market research may not always get it right.

With truly innovative products, assumptions tend to be flawed because no product like it has ever existed, so how can one feel confident in any market prediction? Peter Drucker, in his book Innovation and Entrepreneurship said it best:

One cannot do market research for something genuinely new. One cannot do market research for something that is not yet on the market. Around 1950, Univac’s market research concluded that, by the year 2000, about one thousand computers would be sold; the actual figure in 1984 was about one million. And yet this was the most scientific, careful, rigorous market research ever done& Similarly, several companies who turned down the Xerox patents did so on the basis of thorough market research which showed that printers had no use at all for a copier. Nobody had any inkling that businesses, schools, universities, colleges, and a host of private individuals would want to buy a copier.

Thinking a little more critically, it is not really the analysis that is flawed, but rather the assumptions upon which our analysis rests. Univac’s analysis, for example, was correct under the assumption that demand for computers would come primarily from the scientific community as it had in the past. The companies that rejected Xerox’s patents did so rightly on the assumption that printers were the only viable consumers for copier technology.

Acknowledge Limitations & Validate Assumptions
Unfortunately, any market research we do is inevitably tainted by our own predispositions and therefore limited to the areas with which we are familiar. The products we build were designed to solve a specific problem but may solve problems and gain traction in markets we simply cannot anticipate. Innovative products carry inherent risks because we collectively (experts included) simply don’t know what we do not know. Given the inherent limitations, there are at least two strategies one can pursue.

Strategy #1: Starting Without A Target Market
Perhaps the best strategy therefore is to simply start - find a problem you have, engineer a solution, show it to as many people as you can. The feedback received will either validate or invalidate the implicit assumptions about the problem and solution, clarify your understand, and help you evolve the solution to the proper product/market fit. There are probably others facing the same problem you are.

Strategy #2: Starting With A Target Market
If on the other hand, if you have a target market in mind, there are at least three possibilities. In the best case, the market research and the solution to the problem being solved are a perfect fit. It is however more likely, that the market research, again, rests upon unknown assumptions. And as a result, the product may meet with unexpected failure or unexpected success. Both scenarios, according to Drucker, are simply symptomatic of a lack of knowledge, vision or understanding - things that need to be fully experimented with and not ignored. If unexpected customers utilize your service, don’t say “It wasn’t designed for this purpose.” Instead ask them, “Why are you using my product? What problem is it solving for you?”

May 20, 2008 |

The Catch-22 of Launching an Innovative Product

Comments

Recent Posts