From Innovation to Competitive Edge Getting the new-market product proposition right
The New Market Proposition Problem In a study of 229 electronics manufacturers’ innovation failures by Stanford, 16% of executives cited marketing, 13% cited insufficient customer benefit and 7% cited difficulty of market development. Conclusion: new product development is expensive and risky, The low success rate of new products means that roughly 50% of the resources allocated to product development and introduction is wasted, either through cancellation or failing to achieve adequate returns1. For every four products that enter development, only one makes it to market. Conclusion: but it’s worth doing for the growth and profit.. A study in Harvard Business Review found that 86% of product launches were line enhancements and only 14% were new market innovations. The line enhancements generated 62% of the total revenue and 39% of total profit in the study, while the new market innovations generated 38% of the revenue and 61% of the profit. Conclusion: ..and some of the problems can be fixed – but how? By understanding how to get a competitive advantage 1. “3,000 Raw Ideas = 1 Commercial Success!”, Stevens and Burley, Research Technology Management, 1997
Competitive Advantage – what’s changed since 1980?Updating competition theory for the information age Competitive advantage is the strategic advantage that one company has over its competitors that allow it to make above-average returns Michael Porter’s theory of Competitive Advantage is over 30 years old
Reducing New Market Product Failure RiskBy targeting competitive advantage in the market • ..for, which requires a .. .. whose attributes lead to.. ..who need a job done, which they.. ..which require a.. ..targeting particular.. ..with specific..
A simplified example of attribute-based product differentiation Room Temperature Maser • The individual capabilities of the new technology are categorised • The capabilities are combined in different ways, and with other technologies, to develop marketable attributes • The attributes are matched to market requirements – if an attribute is not good enough, when will it be good enough? • Potential markets are assessed for size, value and competitive offerings • A differentiated product offering is constructed and market-tested Characteristic Attribute Application Size Portability Pulse ,but CW shortly Mode Operating Temperature Satellite phone Operating Bandwidth Operating Frequency Tunability 1.45GHz only Power Output 500 Gain Medical Scanning High Gain Thermal noise Low Noise <140mK Stability High stability Good enough Cost £200-£500 per unit est. Not good enough
Case Study 1: Security Protocol Developer Result: Company closed additional funding using my report and is close to first sale
Case Study 2: Waste to Energy Technology Result: JV formed which is arranging planning permission on first site.