Modern entrepreneurship started at the turn of the century, noting that startups are not smaller versions of big business – large, grassroots companies run well-known business models, while startups are looking for scalable business models. The Lean methodology consists of three tools designed for entrepreneurs who build new businesses:
These tools tell you How to quickly find a product / market fit for a market and how to pivot when your assumptions are incorrect. However, they do not help you understand or to start the search for your new business.
A new tool, the Market Opportunity Browser, allows you to do this. It offers a broad perspective to look for different potential market areas for your innovation, before you zoom in and design the business model or test your minimal viable products. This new framework can serve as the front-end of the client Development. This helps to determine the most promising starting position – market area – for your customer's development process. And this will help you identify the promising options of Plan B and the new growth options if you are already engaged in your innovation drive.
Over the years, I have seen many startups and innovation projects perform a painful "restart" in completely new market areas. With a little more thought, these entrepreneurs and innovators could have identified more promising business contexts in which to play, and thus avoid this difficult pivot. However, while academic literature abounds with articles dealing with market selection and some popular works (Blue Ocean Strategy, etc.) have been published, there is a lack of easy-to-use tools for the market. make.
In large corporations and government agencies, the problem is even more acute. Where do we spend our time and limited resources on our next moves? While the innovation pipeline tells us how to move from selection to delivery, how to prioritize our choices? The Market Opportunity Browser is a useful addition to the curation and prioritization steps.
Just like Business Model Canvas, the browser market opportunities has bridged the gap between academic theory and books by providing a simple and visual way to navigate the process of selecting a market. Developped by Marc Gruber and Dr. Sharon Tal and based on hundreds of cases they have studied during their practical and academic work, the Market Opportunity Navigator is featured in their new book, Where to Play.
In three simple steps, Market Opportunity Navigator can help you:
- Identify a portfolio of market opportunities from your technology or unique capabilities
- Reveal the most attractive area (s) by assessing the potential and challenges of each option
- Smartly prioritize market opportunities to define the limits of your Lean experiments
I asked Sharon and Marc to summarize why market selection is important and to describe an example of use.
Different playgrounds mean different rules of the game
You may have identified a market for your business in several ways. Some of you may have identified a market need based on your own experience, you may have been approached by potential customers or, if you are a business innovator, you may have applied a innovative solution to an existing target market. Still, are you sure it's the best opportunity? Could there be greener pastures (larger markets, more profitable markets, etc.) to commercialize your technology or unique capabilities?
Taking the time to reveal the most promising market – the best starting position – before engaging in a targeted customer development process is essential as market areas vary in their value creation potential, their competitive landscape, their regulatory regime and the risks associated with launching new products. In fact, by not asking "Where to play"Innovators risk choosing a lower playground that does not allow the project to flourish. Beyond the potential loss of revenue, this quick decision can be difficult to change, even irreversible: it influences the way you develop your technology, raise funds, write patents, recruit employees and choose a brand name. If a restart on another target market is required, such a pivot is painful, expensive and sometimes impossible.
Finding the best starting position is a learning process that takes time and bandwidth – two scarce resources. So, instead of taking a deliberate setback to understand their portfolio of opportunities, entrepreneurs and innovators often start running. They make a bet and engage in customer development experiences – adopting "local" pivots in a relatively fixed context, until a scalable business model is either ( hopefully) revealed. This can be a large bet! The search for a product / market fit and a promising and evolving business model must therefore begin by discovering and understanding the different market contexts in which you can play. In fact, by taking a broader perspective, the research process moves from 2D (find a market-product adjustment) to 3D (find multiple market-product matches in different market contexts).
Academic research published in Management Science has focused on 85 venture-backed start-ups and has come to a conclusion that seems obvious a posteriori: "Look before you jump." Experienced entrepreneurs tend to create a portfolio of market opportunities before deciding where to play., paving the way for significant performance. In other words, understanding your area of opportunity is a key asset for entrepreneurs and innovators.
Identify your arena and choose where to play
The Market Opportunity Browser provides a visual framework for discovering, comparing and prioritizing different market areas and business contexts. It helps you think about your field rather than your industry – a major change of heart in today's competitive landscape.
The Navigator guides you through a three-step process that helps you make a more informed choice. It does so in a user-friendly and intuitive way, with a visual design chart and 3 worksheets to guide the process.
You can download the browser and its spreadsheets here.
Gather it all: a superset of tools
Mapping your market opportunities to understand your most promising starting position generates valuable information for your innovation journey. In short, the enlarged view provided by the browser helps you zoom out to understand "where to play"While the detailed views of the lean approach and patterns of business models and value propositions help you zoom in and understand in detail"how to play. "Together they create a superset of tools that help you in an iterative learning process until you find a scalable and promising business.
Having a portfolio of market opportunities on which to draw, offers an added advantage By playing in multiple markets, you can incorporate agility into your company's DNA – a key component of the Lean methodology. It allows you to carefully select and keep open backup and growth options. If a "reboot" is finally needed, it will be less painful and less expensive.
Let's take a look at an example from the world of startups to see how Market Opportunity Navigator works.
We can fly anywhere – but where do we go first?
Flyability is developing drones to inspect hard-to-reach places. In theory, they can customize their drone to perform different jobs in completely different markets: industrial inspection, search and rescue, entertainment or surveillance, to name a few. Each of these markets varies considerably in its business context and in its promises of growth. In addition, each market would need its own customer development process to reveal a scalable and repeatable business model – a process that is clearly demanding and difficult to execute simultaneously in several areas.
So, how did Flyability find his best starting position – the initial market area in which the founders should engage in the detailed discovery of customers and develop their business? They used the browser and its three spreadsheets to guide their process.
Worksheet 1: Generate your set of market opportunities
The original idea of the founders was to use the drone to observe critical catastrophes, such as the fusion of reactors in Fukushima, Japan. However, by browsing the first step of the browser, the team began to discover alternative markets where their drone could bring added value to customers. They have notably studied the UAV inspection of boilers in thermal power plants, the inspection of oil and gas storage tanks and the collection of intelligence by police forces. Overall, five market areas seemed interesting and needed further evaluation.
Worksheet 2: Assessing the attractiveness of market opportunities
With the help of the second stage of the browser, the team systematically examined the potential of each market and its unique challenges. This allowed Flyability to define their options and visually compare their appeal. Gradually, it became clear that thermal power plants were a "gold mine" option that deserved to be used. They could now use the Business Model Canvas and Simplified Experimentation processes to design and validate a scalable business model in this market.
Worksheet 3: Design your agile development strategy
Once the founders have chosen their main market, they can exploit alternatives to create a more agile business by reducing risk and avoiding blockage. Using more specifically the third step of the browser, the founders designed a small portfolio of backup and growth options that they would keep. This foresight laid the groundwork for early key decisions with long-term consequences, such as how they developed their drone or chose their brand. In addition, it has helped them to clearly define the options to be stored for the moment (because focusing is not saying anything else).
Using the browser's market opportunities, Flyability has not only determined "Where to play," it has also charted an interesting growth trajectory that attracts investors. To get a better idea of this process, you can consult the Flyability Navigator below or read the full case study by clicking here.
Information for VCs, Technology Transfer Agents and Social Entrepreneurs
Identifying your arena of opportunity is not only essential for start-ups and established companies, but also for anyone involved in technology marketing. For venture capital firms, the macro perspective shows the market opportunities that can be addressed by a startup and exposes a clear monetization process over time. It also offers a portfolio perspective when selecting initial or successive investments. If you work for a technology transfer office, a broad perspective is essential to evaluate the value of an invention and to determine in which hands you should place it. In addition, if you are trying to solve a social problem, the browser helps you identify a market that allows you to generate an economic outcome in addition to your social impact.
- Lean Startup tools provide details on "how to play," while the Market Opportunity Browser helps you zoom out to understand "where to play."
- There are several "starting positions" for your customer discovery journey.
- Each starting point has different challenges to overcome
- What would be your most valuable area?
- The Market Opportunities Browser is an easy framework to apply for this process.
Posted in: Customer Development, Types of Market |