NEW YORK, NY--(Marketwired - Apr 22, 2014) - Innovators often use terms like "greenfield" opportunities and "blue oceans" to describe empty market spaces that appear to hold enormous growth potential. But often these empty "white spaces" exist for a reason that the innovator fails to see.
"Many great growth businesses came from creating new markets, so it's not hard to understand the attraction," says Scott D. Anthony, Managing Partner and head of the Asia-Pacific operations of the innovation consulting firm Innosight, and author of The First Mile: A Launch Manual for Getting Great Ideas into the Market (Harvard Business Review Press, May 2014). "But innovation requires specialized structures and systems to weed out the great ideas from the non-starters. Without the right innovation skill set, companies seeking big growth opportunities can go drastically wrong."
He cautions that innovators need to pay particular attention to three red flags that may indicate the market isn't what they think it is:
- NO NEED: The presumed customer need isn't a real customer need -- even when research may identify and define a need, customers quite often say they will do things that they actually won't do.
- BARRIERS TO ADOPTION: There are powerful stakeholders that can inhibit adoption of a new idea -- e.g., regulators, purchasers, or other market players.
- POOR ECONOMICS: The fundamental economics of the space/idea aren't attractive.
"Executives and managers of every stripe need to resist the urge to continue doing the same thing that is making them successful today," says Anthony. "They need to see past the corporate culture, controls, and mindset of the moment to envision what will be driving growth five or ten years from now. But in doing so, they need to be realistic in their assumptions and projections. Not every great idea translates into a viable business or a commercial success."
Example: A medical tourism business that failed before launch.
Anthony points to an example that failed all three tests: a business based on medical tourism to Asia (e.g., Singapore, Thailand), where low cost and high quality might attract American customers. But the business model failed in three critical ways:
- NO NEED: American patients showed tepid demand for all but a few expensive procedures.
- BARRIERS TO ADOPTION: American hospitals were willing and able to lower prices on those procedures to attract patients to domestic providers.
- POOR ECONOMICS: The economics of long-distance travel were not as attractive as travel to closer international medical sites like those in the Caribbean and Mexico.
Six key questions to ask before trying to create an entirely new market.
Anthony believes that innovators approaching "blue ocean" and "greenfield" opportunities need to ask some very tough questions, including:
- Why hasn't this been done before?
- Who are the people who might have done it?
- Did they try?
- Why did they or didn't they?
- If it is obvious to us, why wasn't it obvious to other smart people who had opportunities to make money?
- What do they know that we don't?
"'White spaces' exist because some technological, regulatory, or societal shift has opened up a new opportunity, or the innovator has a unique asset that suddenly makes an unreachable market reachable," says Anthony. "If that's the case then by all means proceed. Some people see markets before the world does. But if your future success is based merely on your superior intelligence, that you think you see something that others don't, then you need to proceed with a high degree of caution."
To arrange a conversation with Scott D. Anthony of Innosight, and/or receive a copy of The First Mile: A Launch Manual for Getting Great Ideas into the Market, contact Katarina Wenk-Bodenmiller of Sommerfield Communications at 212-255-8386 or firstname.lastname@example.org.
ABOUT SCOTT D. ANTHONY
Scott D. Anthony is the Managing Partner of Innosight. Based in the firm's Singapore office, he leads its expansion into the Asia-Pacific region as well as its venture capital activities (Innosight Ventures). He has worked with clients ranging from national governments to companies in industries as diverse as healthcare, telecommunications, consumer products and software. He is the author of The Little Black Book of Innovation (Harvard Business Review Press, January 2012) and The Silver Lining (Harvard Business Review Press, 2009). He is the co-author of Seeing What's Next (Harvard Business Review Press, 2004) and The Innovator's Guide to Growth (Harvard Business Review Press, 2008).
Innosight is a strategy and innovation consulting firm that helps organizations navigate disruptive change and manage strategic transformation. We work with enterprise leaders to identify new growth opportunities, accelerate innovation initiatives, and build innovation capabilities. Innosight is based in Lexington, MA, with offices in Singapore and Lausanne, Switzerland.