In the uncertain environment we are experiencing, it is crucial for all entrepreneurs, business leaders and innovation managers to identify the various market development possibilities and assess related opportunities, in order to look ahead with peace of mind and build a growth strategy that will be able to adapt to change.
Make sure you are running in the right direction and remain agile, without losing your focus!
This is the ambition of the methodology imagined and developed by Marc Gruber (researcher and Vice-President of Innovation at the EPFL science and technology institution in Lausanne) and Sharon Tal (lecturer and former director of the Technion Entrepreneurship Center at the Israel Institute of Technology), who drew on fifteen years of research and business creation support (with more than one hundred business cases studied and analysed)1.
This methodology is recommended by Alex Osterwalder and Yves Pigneur (authors of the Business Model Canvas), who make it a perfect partner for the lean startup approach and Business Model Canvas tools to define your field of play.
It is based on three steps to provide step-by-step assistance with your thinking, linking each one with decision-making tools, in order to:
- Explore opportunities and clearly understand your field of play
- Assess options through comparison, to identify the most attractive ones
- Define an agile strategy with a focus on a single option, while keeping alternatives open to take new directions
These three steps will enable you to make a well-informed decision, establish a common language and receive support over time.
The aim of this first step is to gain an overview of essential technologies and capacities that are specific to your organisation, in order to identify opportunities on the market. To help you do so, the methodology suggests using the ‘Generate your Market Opportunity Set’ model.
- The first step involves identifying your business and technological expertise, through the resources and skills that you currently possess or are being developed. View them as they are, uncorrelated with their usage context (product, customer need, etc.), in order to describe them in a generic way, in terms of properties and functionalities, in the ‘Abilities’ section.
- Once you have established a list of your capacities and technological assets, you can move on to the discovery step by looking for potential applications. The idea here is to look beyond your market of choice, in order to generate a diverse range of applications and unleash your creativity. Do not hesitate to combine your technology with other types of technology in order to enrich your range of applications. Exploit all of your knowledge and experience, and use external sources, online platforms, patent databases, etc.
- Alongside this discovery phase, for each application, you need to identify potential customer profiles. Segment them in order to identify sub-segments, which will enable you to be more relevant in your analysis.
- Finally, combine applications and customer profiles to obtain market opportunities that you consider to be promising, in order to fill your basket of opportunities and move on to the next step: evaluation.
This discovery phase can take a fairly long time, which is normal, and even preferable, as this is a reflection of serious work and should produce a large number of opportunities, which will need to be filtered, in order to discard those that are not promising enough: no existing customer need, lack of skills, technical constraints that are too great, not in line with your values, etc.
Once your basket is filled with the most promising opportunities, you will be faced with the challenge of prioritising them! They will not all be equal, so you need to compare them in order to focus on those that are most attractive and have the greatest chance of coming to fruition.
The methodology is based on two dimensions: the potential they represent and the challenge of implementing them. This provides you with a map that you can use to compare them.
Before you get to the map, however, you need to evaluate each opportunity by asking the right questions and confirming assumptions, in order to transform them into knowledge and analyse them, which will enable you to draw precious lessons for decision-making. This is the key moment to gain a better understanding of your customers, your environment, the market value chain and your internal capacities.
It is also the right time to set up workshops bringing together your team, to jointly evaluate each of the opportunities, through the lens of two dimensions, each with three parameters:
- The potential
- A convincing reason to buy: would someone want our product/service and would they be willing to pay for it? Is there a real unsatisfied need? Are we able to meet the need and, if so, can we do it better than others?
- Market volume: what is the size of the market today, how many potential customers are there, and how much consumption does this represent over a one-year period? What are the growth prospects and what is its maturity? Has the market grown over the past two years?
- Economic viability: is the investment-revenue ratio interesting from an economic point of view? Do the target customers have the necessary financial means? Will they be loyal?
Once you have answered all these questions, you can first give a score to each parameter, ranging from ‘weak’ to ‘medium’, ‘high’ and ‘very high’. You can then give an overall score, which may be weighted to reflect the relative importance of the parameters (to be decided based on your specific situation). The score is purposefully non-numerical in order to take into account all the subtleties of the evaluation.
- The challenge
- Obstacles to deployment: what difficulties will you encounter when developing your product/service (technological, UX/UI, regulatory, etc.), accessing the market (distribution channel existing or to be created) and getting funding (seed capital)?
- Return on investment time: How long will development take before production can begin? Is the market ready? How long is the sales cycle and what is the buying process (B2B)?
- External risks: how strong is the competition and what threats does it pose? Are you dependent on third parties or regulations? Is your product/service compatible with existing practices?
As with the potential dimension, each parameter should be given a score before an overall score is given.
Once each of the opportunities has a score, it is important to perform a global review, in order to make any necessary adjustments to the scores and ensure a consistent evaluation, before moving on to the next step: the attractiveness map.
To complete this map, simply take each opportunity and position it according to the scores it has been given. This will give you an overview, enabling you to compare the opportunities, and then identify a main market opportunity and alternatives.
- Gold mine: these opportunities generally reflect a need that is important, but remains unsatisfied, which is relatively rare these days. If this is the case, then you most probably have a unique capacity to address a very widespread issue. This will undoubtedly be your main market opportunity.
- Moon shot: highly technological and innovative offerings, which involve a significant degree of risk, but are the most interesting if they succeed. If you are robust in terms of technology, then this is a main market opportunity for you. If not, it can be seen as a long-term option.
- Quick win: these opportunities offer little in terms of results, but also require little investment. You can integrate them as initial milestones in the short term, as part of a more global long-term approach.
- Questionable: the least interesting opportunities, ultimately bringing little value and difficult to implement. To be put to one side.
3.Build your Agile Focus Strategy
The discovery and evaluation phases will have enabled you to define a set of market opportunities with many lessons to be learnt. Now, it is time to make a decision to focus your efforts on the most promising opportunities, while remaining agile to deal with uncertainty. And it is in this decision that one of the keys to success of any entrepreneur lies: knowing how to consider other options to turn to if things don’t work out as you expected… because things do not always go to plan!
Rather than putting your focus entirely on a single opportunity, Sharon Tal and Marc Gruber put forward a strategy that makes it possible to strike the subtle balance between focus and agility. This strategy is based on their various works (500 plus technology projects put under the microscope), which have demonstrated the benefits of selecting a main opportunity to focus your initial efforts, while keeping options open to fall back on and respond to changes.
By using the above-mentioned map, you will be able to choose the most attractive opportunity, but the aim is also to build an intelligent portfolio of options that will strengthen your agility. This is what the Agile Focus Strategy is all about.
There are two categories of options:
- Backup: an attractive opportunity that does not involve the same risks as the main opportunity and will give you something to bounce back off if you don’t succeed.
- Growth: an attractive opportunity that enables you to create value over time and know what to do next if you succeed.
Ideally, all of the opportunities you choose should be linked, so that you can reuse the capacities and resources that you will have implemented for one or another.
How to build your Agile Focus Strategy? As a team. Team discussions are an opportunity to develop various points of view and drill down into the details, so you can make a well-informed and shared decision. Success begins with the creation of a team!
1- Choose your main market opportunity
This is not such an easy choice, as it is rarely the case that one opportunity really stands out. Most of the time, the options are either very similar or diametrically opposed in terms of risk versus ROI (quick win vs. moon shot). The only advice that the two researchers give is to consider your personal preferences (values, passion, ambition, risk appetite, etc.) and the interests of your stakeholders, on the one hand, and to avoid choosing an option in the ‘questionable’ quadrant, on the other.
2- Look at backup and growth options
List all of the attractive opportunities that remain as potential candidates. Next, evaluate those that are not very, fairly or very similar to the main opportunity, in terms of products or markets.
- To what extent do the products share the resources (human, material, etc.), technological capacities (foundation, functionalities, etc.) and networks (commercial, distribution, partner, etc.)?
- How well do customers know your brand (value, reputation, promotion, etc.) and do they use existing distribution channels?
Define the type of each option:
- Backup option (plan B): it does not involve the same risks and is not based on the same assumptions, but it shares resources or technological capacities with the main option, so those that are already deployed can be reused.
- Growth option (long-term plan): this will enable you to use the main opportunity as a springboard to increase your value creation potential. It should be part of a long-term roadmap.
3- Define a strategy for each option
A final choice needs to be made: you need to select a backup option and a growth option to accompany your main opportunity in your Agile Focus Strategy. To do this, ask yourself the following questions:
- Use now: Can we use this option now? Are we able to support its human and financial investment? Does this option enable us to reduce risks and/or increase the main opportunity’s value creation potential?
- Keep open: Should we keep this option open? Should we stay informed about the target market and develop a flexible service or product? This means that, alongside the main option, you will need to allocate some of your time and budget to watching the market (new trends, studies, competition, network, etc.), and take the modularity of your offering into account very early on in order to reach several targets.
- Put in storage: How about the remaining opportunities? Keep them on a list, as they may come in handy one day.
You are now all ready to describe your Agile Focus target. Use the diagram below to position your main option, backup options and growth options. Don’t forget to accompany your chosen options with arguments that will defend their position and convey the right messages. Success requires effective communication!
While the methodology and associated tools are designed to define your strategy, the learning process along the way is just as important. It will help you better identify your organisation’s strengths, your competitive landscape, your clients and the difficulties you will encounter. The knowledge and lessons you will gather are equally precious.
innovation consultant SQLI