Recently, we had the privilege to help a medium size family business with their overall expansion strategy. After facing external industry challenges, on-going competitive pressures and plateauing growth, they were primed and ready for a change in approach.
While the resulting growth strategy for this particular client was comprehensive, I’ve chosen to share a smaller part of the process that we utilized to help the executive team build a strategy for new product development.
Since this particular client already had garnered enough insights on their target audience through prior work, we elected to move directly into the ideation and business case phase of the strategy. However, I would highly suggest an extensive body of research to understand your target audience prior to ideation.
The timing to share this approach to new product development is ideal, as many of you are in the throes of assembling your strategy for 2016 right now. Your organization’s ability to innovate – create new products, services and experiences – is critical in building a growth-centered organization. With that said, it’s vital that you get the strategy elements in place first, before you proceed into the development phases.
We subscribe to the notion that all great strategies are a result of a big discovery. In other words, your new product or service development ideas should be triggered from one or two major learnings: 1.) a solid understanding of solution gaps that might exist in your markets 2.) unmet needs that lie at the heart of your customer target.
Moving your new discovery to a complete solution ready for market delivery is not an easy task by any stretch. The best way to begin this process is by formulating a strong business case or hypothesis on the products or services that you believe your organization should go develop as part of a cohesive growth strategy.
To help guide you through this process, we’ve developed a quick and easy template (table) for you to organize your discoveries into business cases that can inform which ideas are deserving of more research and validation. [Pictured below]
THE BUSINESS CASE TEMPLATE
First and foremost, I would highly recommend that you keep your business case template confidential or protected, as your ideas might eventually qualify for intellectual property protection.
Across the top of the table, we’ve provided space for up to six different product or service solutions. You may not utilize all of the columns or you may need more – during our work with our client, we landed on nine different products that were eventually narrowed down to three for the next phase. Think of this table as a formal brainstorming map to organize your innovation possibilities side by side. Once this table is complete, you will proceed to narrow the field to two or three that will undergo a next round of research and validation before being ‘development-ready’.
Along the left hand side of the table, we’ve identified some simple criteria for organizing your business case. In this case, I am using a fictitious product (for the skin) in column 1 to serve as an example for the kind of information needed at this stage.
With respect to the criteria listed on the left hand column, the top and bottom third grouping of items are fairly self-explanatory at this stage. The section deserving more explanation is the middle third.
In the context of our fictitious example, I’ve provided some additional color as to the focus in each area:
- Target Audience: Who is the primary audience for the new product or service? Our hypothesis is that the largest segment of the audience is likely to be female of age 50 or greater. While we may reach other age groups, etc, we are concerned most about the largest segment at this stage.
- Market Size: Having basic information on our target audience as well as the problems our idea solves allows us to get a surface idea of the total market size in potential dollars. We can potentially use that information to evaluate what kind of market share we might expect against the segment of consumers looking for these kind of solutions. Ultimately, this information will be critical in evaluating which ideas move forward or not.
- Right To Win (core strengths leveraged): One of the best ways to grow into new markets, products or services is to leverage existing strengths that you possess as an organization. In this particular example, I cite ‘retailer relationships’ – the hypothesis is that we have a portfolio of current products in position with established retail relationships. Those relationships serve as an open door for bringing additional products to bear, even if they are outside our core product categories.
- Right To Win (capabilities needed): With new products or services, you’re likely to uncover capability gaps in your organization. In this particular area, we identify our belief that we may require design and manufacturing capabilities to not only bring this new innovation to life, but to compete and create a long term position in the space.
- Rational Need / Gap Met: What is the specific problem the idea solves for this particular audience? In this case, the fictitious skin product would remove sun spots without the need for removal surgery. The rational need that it ultimately addresses (to be vetted further in the next stage) would be less expense, hassle, convenience and ease of removal.
- Emotional Need / Gap Met: Based on the points outlined above for rational needs, an emotional need, therefore, would address how the solution makes your target audience feel. In this case, the emotional needs tend to be along the lines of ‘feeling young’, ‘healthy’, or ‘ageless’.
- Go-to-Market / Business Model: Lastly, you might use this item to identify any early hypothesis you have on how to best get your new product or service to your target audience or market. In this case, we choose to identify direct sales as a viable path to market for this new skin product. Another option might be to license the skin product to a large manufacturer to distribute under a recognizable consumer brand, or perhaps we decide that B2B sales to dermatologist and physician offices is the best fit. Maybe it’s appropriate to explore a subscription model through e-commerce to distribute the refillable erasers for our skin pen.
Through the example provided in column 1, you should get a feel for the detail you need to complete the business case stage. While your information does not need absolute accuracy or feasibility yet, you should have enough baseline knowledge to serve as a hypothesis.
The insights for product or service expansion exist within your organization, your people, and the unique desires of your customers. Without question, one of the biggest challenges for organizations of all sizes is in capturing, aggregating and actioning those insights.
In other words, it’s the start that stops most businesses, isn’t it?
The front-end ambiguity and perceived risk associated with innovation sends most of us back to comfortable hiding areas in the business.
There is nothing safe about innovation and growth. And, conversely, there is nothing safe about doing nothing, is there? So….which risk would you rather take?
Having the mettle to act on customer insights is ultimately what will distance you from the pack. The business case template is designed to be the starting point for you to put forward movement behind your insights and ideas.
Make sure to grab the download here.
I would love to know if you found this approach helpful as a starting point exercise to translate your insights into action.
As this is only a starting point exercise, we will use future posts to continue sharing the successive steps in the development and expansion process. If you happen to know someone in your network who might find value in this post, please use the share buttons below! And be sure you’re subscribed so as not to miss upcoming strategy content and advice.