According to Statista, the global market research industry's revenue exceeded $73 billion in 2019. Yet a vast percentage of products launched will fail within three years.
How come so many products miss in the market? Why do organizations get blindsided when their markets change, panicked when competitors move in or message in a way that conveys exactly the wrong tone?
Why doesn’t innovation drive market success?
There are reasons why innovation doesn’t result in market-driven success. Reasons that can be recognized and, with a little work, overcome. What are the principles to innovate on purpose and become - successfully - market-driven?
Align Innovation with Organizational Strategy
Too often, the product team is asked to come up with "the next big thing." And they do. They brainstorm ideas and bring forward brilliant, radical offerings that would take their companies into new markets to serve new personas with cutting-edge technology. These ideas are discussed, but deemed "too radical." The product pipeline continues to fill up with tweaks to existing products requested by the same three power-users you always build for.
Is the right answer radical innovation or continuous improvement? It depends. But - aligning your teams around your appetite for innovation is critical.
Determine what your organization is trying to achieve in the market, then create a plan that will provide insights to get there. If your strategy for next year is to open the South American market, speak to prospects in Chile and Peru about what they need. If your organization wants to be the end-to-end solution provider for a current market, talk to adjacent users at your existing customers to discover the nuances of that extended workflow.
"Aligning teams around your organization's appetite for innovation is critical."
This is also the time for an honest conversation about “innovation.” I’ve worked with many CEO’s who’ve asked me and my team to bring them “the next big thing.” But ideas were rejected as fast as they were offered, wasting time and building frustration on both sides. You can mitigate that by reaching a mutual understanding of what a "big idea" really is. Get a sense for magnitude, market and timeline before you put together a business plan for a car that runs on potato peelings.
"Determine what your organization is trying to achieve in the market, then plan your innovation efforts."
Respond with a Plan
Respond to your organization's appetite for innovation by creating a plan that drives it. As a general rule, the more innovative your organization wants to be, the broader your market understanding will have to be, from the perspective of both who you learn about and topics you research. You will not find disruptive new ideas talking to the users of today’s product.
Disruptive organizations – the ones intentionally delivering those “wow” products that seem completely new – are listening to their markets far beyond buyers and users. Such organizations are gathering and synthesizing extended market knowledge including legislation, regulation and industry trends; changing demographics and market expectations around buying, receiving and using the solutions they need.
"Disruptive organizations – the ones delivering those “wow” products – are listening to their markets far beyond buyers and users."
Now that you have alignment on goals you're trying to achieve, you can estimate time, effort and budget to gather the knowledge necessary to achieve them. Budgets and time are never infinite, but if you tie requests directly to delivering on your strategy, you establish a legitimate case to get the resources you need. Prioritize this work to gather the most important insights first, and report on plans and progress by creating a market research roadmap and backlog – just as you would for a product.
Inventory What You Already Know
Now you know what a big idea looks like, and the insights you need to inspire it. But rather than jumping into the market with new surveys and focus groups, gather up the research you’ve done in the past 6-18 months to determine what you already know. Do this before diving in to do market research that may duplicate prior efforts.
This may be more difficult than it sounds. Are the various forms of market research done by your organization aggregated anywhere? If not, now is the time to start. In my work with product teams, I’ve found that the quickest and least expensive method for gaining insights is to sweep what you already have into a pile and look at it. You may be surprised what you already know. You'll also identify knowledge gaps to be filled.
Rather than jumping in with new surveys and focus groups, gather up the research you’ve done in the past to determine what you already know.
By focusing on those gaps that are most strategically important, you can ensure that every hour and dollar spent on market research is delivering value. An additional benefit of aggregation is that you can assess trends in your market that you might otherwise miss.
A caveat – don’t confuse “data” with “knowledge.” For example, your NPS scores have dropped from 73 to 64? The typical reaction might be, "Not good! Must be fixed! Create videos! Train sales!" But – is there any indication that these actions will work? An NPS score is a flag – an alert that something is wrong or right. Before wasting effort “fixing the problem,” have a quick chat with customers to find out why those scores are down. Effective research is a constant, focused, conversation with your market. Leverage the market research experts in your organization to choose the right tools to learn what you need to know.
Effective research is a constant, focused conversation with your market.
Communicate to Empower
Congratulations! Now you have market knowledge gathered intentionally to drive your innovation efforts as defined by your organization’s vision and strategy. Too bad no one else has this information. Too often, market knowledge is only distributed to a very few individuals. Yet everything from your products to your pricing to your onboarding could improve if the teams creating them had those insights.
Identify who in the organization needs to know what and fold this communication into your time and budget as well as your backlog of research activities. Effective communication of market insights follows the principles of any type of awareness building: deliver knowledge through the channels your targets expect and want to find it, in a format that works for them. Repeat key insights over and over. Communicate in layers. Establish an update workflow.
"Everyone in the organization needs a thorough and current understanding of your markets."
Monitor for Change
Maybe there’s a new persona showing up in the buying process. Maybe your reps have been losing to a competitor that was formerly a nonentity. Maybe survey responses on your beloved flagship product have been including the word "obsolete" more and more often.
Markets change. Regulations change. The people playing the roles you serve change. Sometimes slowly, but occasionally quickly, radically and significantly (COVID-19, anyone?). It’s the failure to listen for change that results in so many otherwise market-driven companies responding poorly in stressful situations.
Innovation is defined by an organization's ingenuity over time - to be "innovative" once is to get lucky. True innovation requires a constant conversation with your markets. But how can you continue the conversation without succumbing to analysis-paralysis? Establish low-touch, early-warning methods to ping you if something is changing that you need to respond to.
"Innovation is defined by an organization's ingenuity over time - to be 'innovative' once is to get lucky."
Monitoring can include everything from quarterly check-ins with an industry association on the latest hot-button issues, to setting weather alerts that could foreshadow supply-chain disruptions. You’d be surprised how few surprises you’ll encounter in your markets when you implement this step.
Innovation is foundational to being a successful, market-driven organization. How well you plan, execute and communicate the opportunity, scope and focus of innovation is difference between good and…wow.
About the Author
Diane Pierson is the Founder and Principal Market Strategist at Innovate on Purpose, a consultancy helping organizations achieve market-driven success through planning, executing and communicating effective product innovation. Diane is also a visiting instructor at Pragmatic Institute. Contact Diane at firstname.lastname@example.org.