Guest post by Dr Sharon Tal and Prof Marc Gruber co-authors of Where to Play, 3 steps for discovering your most valuable market opportunities.
From technological change to economic success: 3 steps for finding your best market opportunities
Technological change is everywhere – digitalization, artificial intelligence, machine learning, 3D printing and the Internet of Things are just a few examples. While humanity had faced many technological revolutions in the past, it has probably never faced such a massive bundling of technological changes before.
New technologies create the basis for new products and services as well as new processes and business models, and therefore they offer great opportunities. At the same time, however, they present many challenges and risks for companies. Established firms, for example, often perceive a technological change to be a threat and, in many cases, they do have the required skills to proactively use it. For a start-up, on the other hand, technological change can represent a considerable opportunity to offer unique products or services and quickly establish itself as a valued player in the market.
The challenge: systematically recognise new market opportunities
In order to turn these technological possibilities into economic success, it is necessary to identify the emerging market opportunities and understand how valuable they are. While a random discovery – or an “Aha moment”- is often described by innovators, such random moments can’t be enforced, and therefore a more systematic approach should be adopted.
Over 15 years ago, Marc Gruber began to study what distinguishes companies that perform this activity particularly well. One of the most important findings from this work was that so-called serial entrepreneurs – act differently from new founders: they tend to recognize a variety of business opportunities before they decide on a specific path, deriving performance benefits from doing so. Together with Sharon Tal, they have deepened these findings in recent years, analyzing data on more than 1,000 start-up companies in total and revealing nsights on how companies can be more successful and and systematic in this discovery process.
In order to make the results of these scientific studies accessible to the business world, Gruber and Tal developed the “Market Opportunity Navigator”- a three-step business tool for discovering your most valuable market opportunities.
The Market Opportunity Navigator
This new and successfully tested method is intended to help start-ups as well as established companies to systematically detect new business opportunities, evaluate them and set a promising strategy. This process has three steps:
Step 1: The Market Opportunity Set
The goal of the first step is to identify as many different market opportunities as possible based on the company’s existing abilities or in combination with new emerging technologies. This can generate a wide range of options from a broad spectrum of markets. Openness to new ideas is extremely important at this stage. New market opportunities can sometimes differ considerably in their attractiveness, so that a broad view can clearly increase the chances of finding a valuable option. To support this identification, it is important to understand the generic functionality of the company‘s abilities and core technologies – what can they do in their own right- independently of any specific application. These core ‘building blocks’ can form different products to address different needs in the market. The Navigator offers a practical worksheet to support this discovery activity.
Step 2: The Attractiveness Map
The next important step is to assess the attractiveness of the different market opportunities that were identified. Each opportunity should be systematically evaluated, leaving aside your prior beliefs and biases. To assess how attractive a new opportunity for your company is, you should estimate its value creation potential, as well as the challenge in capturing this value. The Navigator suggets to visually map your assessed opportunities on the Attractiveness Map- a matrix that helps to distinguish your options based on their potential and challenge levels. This visual map enables you to understand better the pros and cons of each option, and to get an overview of your opportunity portfolio as a whole. Again, a dedicated worksheet supports this activity.
Step 3: The Agile Focus Dartboard
The goal of this last step is to develop a strategy that creates new economic value for your company while mitigating the inherent risks. In other words, you want to clearly focus on pursuing a promising new opportunity but also maintain your flexibility and agility while doing so. To set up this strategy, you should carefully select opportunities that are closely related to your primary focus and make sure to keep them open as backup or future growth options. Keeping this future roadmap in mind is crucial for decisions concerning technological development, human resources or marketing and branding. It will help you to develop these capabilities in a wider way, to make sure that you will not need to start from scratch if pivoting is required. Once again, a hands-on worksheet supports this strategic design.
The “Market Opportunity Navigator”: An ongoing process.
In our work with young entrepreneurs and established companies, we have repeatedly noticed that the greatest benefit from the Market Opportunity Navigator can be achieved if you adopt its process in an on going manner. This is because new opportunities are constantly emerging and it is important to understand them in the context of your current activities, and to set your strategy accordingly. It is also sometimes necessary to look back at previous strategic choices, so a structured framework is recommended for documenting these all-important business decisions.
As previously mentioned, we are living in times of enormous technological change. This creates the foundation for new products and services, but a rigorous approach is required to recognize and exploit these valuable new business opportunities. A systematic, structured framework can therefore be extremely helpful on your entrepreneurial journey for value creation.
Where to Play, 3 steps for discovering your most valuable market opportunities, has been published by FT publishing, and is out now on amazon, priced £16.99. For more information go to www.wheretoplay.co