Advivo ICP Innovation & Commercialisation Specialist Steve Davis unpacks the most common myth about innovation, discussing the latest advancements in market knowledge and how it is almost impossible to be “the first one”… you’re going to need to be “the most informed” to succeed.
Myth – “There’s nobody else doing this”
I’d love a dollar for every entrepreneur who has said to me when enthusiastically telling me about their new idea that “there’s nothing else like this” or “there’s nobody else doing this”. Unfortunately, that is rarely the case, and you need to understand what the situation really is.
Before you start pumping money into a new venture idea you need to validate that idea has a high probability of success in the marketplace. In order to succeed you need to understand market needs and have the right market entry strategy, and for that you need to know the structure of the market you are entering. There are a number of examples of market data reports like Ibis World which give a good overview of the size of a market, general trends and details on the leading companies in those markets. However, what you really want to know is who all the companies are in the space (competitors, and potential customers and partners) and details for much more specific market segments in which you intend to compete.
You’re Going to Need a Bigger Data Set
There are some very useful data science tools now available based on big data and sophisticated AI algorithms which can map markets by identifying all the companies involved and their linkages to each of the segments within that particular market. This is incredibly powerful as it provides a complete landscape of that market which can be done on a global scale. “Global scale” can certainly be an eye opener as more often than not it reveals there are far more players in the market than you thought.
Data science tools can identify just how crowded a market is and who the actual players are in that market. They can also be used to help identify white space opportunities in the market, i.e. market segments or interfaces between market segments where there is relatively little activity. These tools underpin the Mese computing system developed by Growth Science in the USA with their Australian partner Attractor Network providing Advivo ICP access for use in Australia.
A recent Growth Science blog by Thomas Thurston: “Galaxies Unknown: how discovering the true scale of markets is changing what we thought we knew about business” gives a good example of the telehealth market. Thomas in investigating this market started with an assumption that there might be a few hundred companies involved but found there were actually over 11,000. Fully mapping markets like this with manual searching is virtually impossible.
“In essence these data science tools are market research on steroids, what traditionally can take months or even years can now be done in a matter of hours.”
Knowing the companies competing in your intended market facilitates much more comprehensive competitor analysis and also serves to identify potential collaboration or licensing targets. There are other tools which can then be used to identify the most common search terms being used in relation to the market and how specific companies may be winning business. The market mapping tools provide a very good overview of the competitive landscape within markets but can also be used to map the landscape of the potential customer market for B2B products.
Professional Analysis – Making Sense of Big Data Reports
However, as powerful as these market analysis tools are, there is a considerable amount of strategy and validation work which needs to be done to work out when and how best to use them to derive real value. Like with a Google search, the quality of the data returned is heavily dependent on the structure of the search terms used. There are a number of aspects which need to be addressed in order to ensure a higher probability of commercial success and which need to be understood in order to be best supplemented by the data science tools, for example understanding:
- The job to be done and the value proposition delivered by the proposed solution (i.e. how does it address the drivers for adoption and what returns does it provide in relation to the job to be done?)
- Who the customer is
- The competition – how is the job currently done and what alternatives does the customer have that you are aware of?
- The Minimum Viable Product (MVP) required to enter and further test the market
- Validating the idea with potential customers to test how they view the value of the solution
Investing first in understanding the market, how your product fits in the market and whether you have the right market entry strategy before traveling too far down the much larger cost development pathway is likely to ultimately save you money or improve returns. The exercise will certainly provide a much better indication of the probability of success (or failure) of your idea. Some 80% of new ventures fail, don’t be one of those! And don’t believe in the myth that there’s nobody else doing this.