By Trevor Holmes – MD Advivo Innovation Commercialisation Partners
Why do 90% of Commercialisation Projects Fail? What We Can Learn?
Over the last decade we have seen an explosion of innovation; from start-ups to mid-tier businesses and large corporations, many businesses are feeling the realities of disruption and are seeking to innovate products, technologies and service models to seek out their special niche of competitive advantage. The next decade ………… expect this to escalate at a mind-blowing ever increasing rate!
What this means is that businesses in almost every corner of our economy, big and small, can expect some form of disruption to their markets at varying degrees; some are feeling the effects of this disruption now. The ways in how we engage with customers, provide our products and services and the cost structures attached, have and are changing and posing headaches for many CEOs, a real commercialisation conundrum.
Why Attempts To Innovate Fail
This real global event is in itself forcing in particularly mid-tier firms to rethink their business strategies and to innovate themselves. But why do so many attempts to innovate fail so regularly?
One of the key reasons is uncovered within disruption theory. Traditionally, innovation comes from listening to our customers; a very good thing to do when looking to create sustaining innovations. A sustaining innovation is where we are looking to improve an existing product or service within the incumbered market i.e. to “improve” our offering to the market we and many others are already servicing. Within mid-tier firms, often the approach is to discuss the improvement internally, talk to a few customers, make a decision and then implement ………. then pray that we have got it right!
No longer do mid-tier firms have to take this “best guess” approach and end up wasting so much investment money in learning that the assumptions they made ended up being wrong. Today, access to data science to validate or in actual fact sometimes invalidate the market opportunities means that risk mitigation and market validation become the secrets to commercialisation.
The reality with disruptive technologies (as opposed to sustaining innovations) is that often the customer doesn’t know whether they will need, desire or value the innovation that you may be considering. And this is where validating scientifically can uncover latent demand markets. Latent demand simply means markets that may not be that obvious and are different to the incumbered market, with the incumbered market likely to be the market you (and many others) are already operating in and fighting over. A great example of a latent market could be something like AirBNB which identified an entire market of private residents who had a need, desire and valued the opportunity to rent out their properties or even a single room in order to generate extra cash.
Lessons From Innovation Failures
So, the first lesson about why so many commercialisation projects fail is to ensure that your innovation actually has a high probability of generating market demand and creating statistical insights as to who that market may be. You see, what you have traditionally been looking at by way of the market you normally deal with, may not necessarily be the market that delivers you the growth and opportunities that you are seeking. Today, we have the ability to uncover new market opportunities.
Secondly, the entire commercialisation process is often about an internal team going from “concept” directly to “solution”. The result; the team builds and invests in what they believe is the final product, only to find on launch that they haven’t quite got it right. Commercialisation under MVP (minimum viable product) and lean startup methodology, results in a completely different approach. This approach is driven by a process of creating assumptions of what and how we believe the market will respond and then at the lowest cost possible actually testing these assumptions in order to literally validate or invalidate our assumptions. With criteria validated, we build confidence to progress further, however where results are invalidated we make critical project management decisions and often results in what we term as “pivots” that allow us to retest before moving forward. This is a method of rapid iterations of our assumptions that get us to learn not only what our market is thinking they like, but actually seeing them transact (and transact could be as simple as following an instruction or process), and therefore validate that what we are building is working ……………. or not!
An Evolution In Doing Business
This is a cultural shift in how to commercialise new ideas. And it is being driven through access to data, predictive analysis and a more formulated control of the commercialisation process which is centred on risk management and real market validation before finally coming to a product that can be launched, usually in Beta form, and then progressively (and sometimes quite rapidly) building the market because we are literally seeing in real time, how the market is responding to our offerings.
This is an exciting evolution of how we now do business and access to these methods are longer limited to the big corporations. Mid-tier firms seeking to open up global opportunities can approach their innovation strategies and commercialisation processes in a scientific manner that results in a greater probability of success, more rapidly and with less capital at risk.