Market Driven Innovation - 3 minutes read
Market Driven Innovation (MDI) is designing, managing and implementing your innovation process based on the needs and wants from your key markets. MDI is not new, but still today, many companies have found it difficult to transform their innovation work from their entrenched technology and product forward approach they have been using to a market back approach. Often, their entire business processes have been built around their assets and products they produce and their go-to-market strategy based on their historical sales experiences. The result of this behavior is premature commoditization of their value propositions, their most important assets. Market Driven Innovation is based on a strict set of principles:
o Engineering/technical resourcing decisions are made based on a validated market need and an attractive business case.
o Organizational Focus is achieved from understanding market segments and targeting the most attractive segments for growth
o A cross-functional team approach, marketing, technical, and sales all contribute to the growth initiative together, and thus are aligned on the strategy:
o Accelerated ramp up after launch from a higher operational knowledge of the market
o Accelerated technology development because better design specifications from a segmented market
o Driven by business leaders who make resource allocation decisions consistent with the strategic direction of the business, and link development to marketing process.
Market Driven innovation begins with a business orientation towards specific and targeted markets. These markets define strategy which defines resource allocations especially those resources dedicated to the innovation process. In this context we define innovation as the creation of value, and Market Driven Innovation as placing emphasis on customer values, beginning with choices as how a business goes to market; to how they position their brand and products in those markets they proactively choose to serve; to the nature of their product improvements; and to their search for new products and services that may more effectively meeting the emerging future needs of their targeted markets.
Identifying these target markets is core to Market Driven Innovation. Understanding what drives market growth and major unmet needs of the key market players as well as how they define value and establish the basis for generating growth ideas and concepts - straight from the market. These ideas and concepts are the genesis of the innovation process. The more market back concepts, the more opportunities for successful growth. Knowing target markets enables a business to:
o Design, communicate, and deliver more robust value propositions aimed at specific market segments
o Capture more of the value we provide because they can measure the value and make strategic pricing decisions that are consistent with their marketing strategy.
o Apply resources more effectively where they bring value by focusing them only on where value is identified.
o Develop and bring new offerings to the market faster because they know what the market values and how to deliver their offering based on value.
o Evaluate new markets where they can bring more powerful value propositions and new offerings
These elements of business design when generated from a market back learning model, form the basis for a market driven organization, and more specifically, Market Driven Innovation as a core driver of your growth process:
o Provides business management with facts from direct contact with the marketplace to decide which concepts merit moving forward with resourcing.