Innovation Strategy

Value Proposition Design

The first step in innovation is for companies to decide what type of innovation to develop, who they want to serve, and the promise of value to deliver to them. These upfront decisions are fundamental to successful innovation.

We help companies figure out the type of innovation initiative to pursue, target markets, and the ultimate value proposition. We do this by following a structured approach. We start by obtaining customer input on desired outcomes, which discloses opportunities. Next, we analyze results to determine where customers are underserved. Third, we prioritize opportunities by choosing to make improvements in areas that satisfy essential outcomes. Finally, with this information, we can design the value proposition.

Opportunity Assessment

We evaluate the financial and market attractiveness of the innovation, including the following analyses:

• Value proposition
• Market size
• Cost structure
• Competitive dynamics
• Go to market strategic options
• Internal capabilities
• Required investments
• Cash flow and risk
• Financial attractiveness

This work results in the most appropriate strategic course of action for the company to capitalize on the innovation opportunity and secure a defensible market position.

Market Sizing

Market sizing for a non-existing product can be challenging. Most companies struggle with measuring the potential number of customers for products that don’t exist yet. They use traditional methods to fit products or customers into existing groups which by definition don’t apply.

We help clients measure the size of potential future markets for innovative products. Our approach is based on outcome-driven segmentation. We segment customers for desired under-served outcomes and estimate the total size of the segment.

This method allows us to address several innovation challenges, including the following: identifying unique opportunities in mature markets, identifying demanding customer segments that may be willing to pay a premium for more elaborate solutions, identifying underserved market segments ripe for disruption, and more.

Stage Gating

For companies competing on innovation, time to market is a critical competitive advantage. As a result, the objectives of the development process are to get the winning product to market and to get there in the shortest amount of time possible ahead of the competition.

We support our clients through the development process by using the Stage-Gate system to help move products quickly from idea to launch. Our approach allows (1) maintaining high fidelity of concept between the original value proposition and the final product, (2) meeting the timing specifications, and (3) delivering the innovation within budget.

Business Model Design

Winning innovations become subject to attack as competitors want a piece of the action. New products are particularly vulnerable during the start-up stage, i.e. the weakest point. As a result, it is important for the firm to protect the profit streams.

We help clients protect their innovation against competitors. Our approach is to help secure the relevant strategic control points (SCPs) in the industry. These mechanisms come in many forms, including owning essential patents, securing technology standards, locking up the distribution, and much more. Typically, there are 15 to twenty SCPs in the industry, and the best-positioned innovations have at least two. We make sure that the innovation is founded on relevant SCPs to establish an impregnable market position.

R&D Strategy

Companies that compete on innovation maintain a pipeline of innovation projects under development. Often, they feel pressured in investing in a large number of initiatives hoping that some of these will pay off. In fact, it is not atypical for some to maintain anywhere from 15 to 150 projects at various stages of development. This R&D strategy is very expensive. Ultimately, it costs the Fortune 1000 roughly $50 billion per year in wasted resources.

We help companies focus their R&D efforts for maximum effectiveness. Outcome-driven innovation provides a disciplined approach to prioritize initiatives in the pipeline. We help companies evaluate projects that present a high likelihood to deliver outcomes of high customer value that serve large underserved customer segments. This evaluation serves to predict with a high level of certainty which projects to fund and which to kill, increasing the odds of success and cutting wasteful capital spending.