New Markets Blog

Why Many Businesses Will Hire and Fire Corporate Futurists

Posted by Stephen Wunker on Apr 12, 2016 10:17:56 AM

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Keeping up with customer demand is getting harder and harder.  More than half of new products fail, and those that really move the needle are even more unlikely.  While businesses may be struggling to understand what tomorrow’s customers want, the need to do so will only continue to grow more pressing.  Customers will continue to demand more and more, and they’ll let the world know quickly if your new solutions don’t meet expectations.  Competitors will continue coming up with strategies to undercut your prices, add new features, and slowly steal away market share.  Startups will offer customized products and on-demand services that reduce demand for traditional offerings.

Corporate futurists are one way that companies will respond to these increasing market pressures.  Futurists have the tough job of looking at social, technological, and economic trends from across industries and creating a view of how those forces will impact the direction your business needs to head.  Unfortunately, most organizations aren’t in a position to add futurists to their ranks.  At least not successfully.  We’re seeing that companies are having a difficult time bridging the divide between customer insights and strategic planning, yet that’s exactly the area in which futurists would need to sit.

In a recent article for Forbes, we looked at several strategies for closing the research-to-strategy gap and integrating important trends into the product development process.  These include creating a common innovation language that is used cross-functionally, mapping trends to specific use cases, and integrating a defined transfer plan into your innovation process.

Click here to check out the full piece on Forbes.

Topics: Strategy, Forbes

What Jobs to be Done Predicts for the Future of Food

Posted by Stephen Wunker on Feb 29, 2016 10:03:44 AM

Most new startups fail.  That’s particularly true in the food and beverage space, where entrepreneurs often have great homemade products but lack the resources and business expertise to get their products to the next level.  However, those skilled few that do succeed can be valuable bellwethers for how the industry will evolve.  What’s more, the startups that take off often have important lessons for even the biggest consumer goods incumbents.  That’s because those that succeed don’t do so based on luck.  They thrive because they take a different view of the market – one that focuses on consumers’ jobs to be done.

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The team at Mass Innovation Nights – an organization that helps local entrepreneurs promote their businesses – recently hosted an event to connect New England food startups with media members and innovation experts.  Several of the companies featured at the event were already showing promise.  Looking at how those businesses got their start and why they’re gaining so much traction, we’ve extracted three lessons that any consumer goods company would be wise to pay attention to.  And in the process of learning from these young companies, we may well get a better idea of what’s coming down the road in the food and beverage realm.

Target Jobs-based trends to broaden appeal.  Fads are particularly common when it comes to food.  Every year, companies launch products hoping that the fad of the moment – whether it’s low-carb, vegan, or Paleo-friendly – will be the one that sticks.  Rarely do these products appeal to a large enough crowd to become sustainable.  Longer-term trends, on the other hand, are industry movements that are based on satisfying several jobs that are important to consumers.  For example, the “natural” food trend has grown steadily in prominence precisely because it meets several under-satisfied jobs that consumers have.  According to a December 2015 survey by the Consumer Reports National Research Center, 62% of shoppers usually buy foods labeled as natural, often to satisfy jobs related to removing potentially harmful chemicals and pesticides from their diets or minimizing the environmental impact of food production.  Notably, 87% of shoppers said they would pay more for foods labeled as natural if the term met their expectations as to what natural means.

In December 2015, a chemistry professor at the University of New Hampshire launched CoffVee, a product designed to address several common and under-satisfied jobs of consumers.  To start, CoffVee is infused with the same antioxidant that is known for making red wine a heart-healthy choice.  CoffVee therefore allows consumers to take easy steps to potentially lower their risk of heart disease.  Because the antioxidant – resveratrol – occurs naturally in the skin of grapes used to make red wine, the product is also positioned to satisfy some of the natural food jobs we mentioned earlier.  Beyond just helping to satisfy these jobs, CoffVee has been successful because it does so in a way that fits with current consumer behaviors and drivers.  Many consumers don’t like the idea of taking pills and supplements.  Substantially increasing red wine consumption also isn’t generally a viable option – at least not as a daily habit.  But the average coffee drinker already consumes about 3 cups of coffee per day.  This means that without altering their routines, coffee drinkers can achieve the same health benefits as if they’d consumed the antioxidants from three glasses of red wine.

By targeting key jobs, CoffVee has already seen a number of indicators of success.  Despite launching just two months ago, demand has soared nationwide, causing the company to increase its production capacity from 1,400 to 20,000 pounds per week.  Over 25% of customers who have tried the coffee have reordered it, and it was voted as the fan favorite at the Mass Innovation Nights event.  Perhaps most remarkably, the Baltimore Orioles – a Major League Baseball team – have already reached out to CoffVee to make it the official coffee used in their clubhouse, which the company hopes will lead to other teams following suit.

Compete beyond a traditional product category.  One of the big benefits of taking a Jobs-based perspective is that it allows you to define the competition more broadly and position yourself accordingly.  When Borders struggled in the late 2000s, it defined itself narrowly as a bookseller, doubled down on selling more of what its customers happened to be buying (books, CDs, and DVDs), and failed as a result.  Instead of simply accepting industry norms, successful startups often find ways to position themselves against particular jobs that can be satisfied by a broader array of options.  This is part of what makes space for new entrants even when a particular product space is already crowded or heavily commoditized.

Let’s consider the cupcake market.  It was just back in 2014 that Crumbs – which was the world’s largest cupcake company at the time – filed for bankruptcy, ultimately being saved by a buyer that drastically reduced the number of Crumbs locations and expanded the bakery well beyond cupcakes.  Yet even in a saturated cupcake market, ShotCakes is a startup that is finding a way to stand out.  ShotCakes uses proprietary technology to fill freshly-baked cupcakes with soft serve ice cream.  And as the company looks to expand, it has realized that it isn’t just a cupcake company.  As the company’s founder put it, ShotCakes is just as much a tech company as it is a food company.  By exploring ways to use and license its technology to solve for jobs of other businesses, ShotCakes is ensuring that it has multiple stable revenue streams even if the cupcake market goes into decline.

Create value with business model innovation, but ground that innovation in Jobs.  When people think about innovation, they often jump to thoughts of new products.  Beyond creating new products or services, however, businesses generally have several other opportunities to innovate, including innovation around policies, processes, and business models.  One of the last lessons we can learn from the food startups we talked to is that a new business model needs to be carefully crafted, not copied.  We hear about so many companies that want to be the Uber or Tinder or Airbnb of their industries, yet they often fail to give much thought as to how the model needs to be adapted to fit their circumstances.  Certainly, bringing an on-demand element, an app, or a marketplace format might be one way to innovate.  But countless companies have failed trying to force-fit consumers into what looks like – or elsewhere has proven to be – an attractive business model.  Those that succeed are the ones that focus on how a new business model can more efficiently and effectively address under-satisfied jobs to be done.

TBD Foods is a good example of how a Jobs-based perspective can increase value for both sides.  The company was started by a restaurant chef who wanted to transition to being a private chef.  Specifically, he wanted to start offering multi-course farm-to-table dinner parties featuring local ingredients.  So he did.  But he didn’t just adopt the traditional private chef model, nor did he try to make his company some sort of Tinder-meets-private chef business.  Realizing that most consumers can’t afford to hire private chefs with any sort of regularity, TBD Foods embraces a model that lowers the cost to the customer in a way that actually satisfies more jobs to be done.  As you might expect, TBD dinner parties satisfy obvious jobs around adding variety, trying new cuisines, and supporting local businesses.  But what makes the model more affordable is that customers become hosts, who open their dinner parties to other guests who can pay to reserve seats for themselves.  Thus, the costs are spread out.  At the same time, this gives all guests an opportunity to satisfy social jobs related to meeting new people.

From the business’s perspective, the model also makes sense.  The traditional market for private chefs is rather small.  It’s a luxury that many can’t afford.  By focusing on dinner parties for slightly larger groups of people who don’t know each other – rather than, say, being a low-cost private chef for couples – the average profit from each dinner is higher.  TBD can target a broader market (by offering lower costs) without having to prepare an impossibly high number of meals to stay in business.

A Jobs-based view of a market can give us a good perspective on what customers are trying to get done, what products they’ll consider to satisfy their jobs to be done, and how a company – whether it’s a startup or an incumbent – can create value by responding to those under-satisfied jobs.  New offerings don’t succeed when they merely mimic products of close competitors or force-fit ideas from other industries.  They succeed when they address important jobs that consumers are struggling to get done.

 This post was orignally published by Dave Farber on Medium.  Click here to see the original post and to read more of Dave's posts on Medium.

Topics: Strategy, Consumer Products

How Netflix Socks Prove that Innovation Isn’t About Complicated Ideas

Posted by Stephen Wunker on Feb 9, 2016 2:09:10 PM

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On two recent occasions, we’ve heard about tech-savvy companies solving common problems with one of the least innovative products we can think of – socks.  Kind of fancy socks, but socks nonetheless.  Oddly enough, that pretty quickly made a lot of sense.  That’s because innovation isn’t really about solving complex challenges, developing fancy technology, or even having that phantom “Eureka!” moment.  Companies that develop breakthrough new products do so by responding to newly relevant customer needs.  More specifically, they find ways to address under-satisfied jobs that customers are trying to get done in their lives, or they alleviate the pain points that stand in the way of getting those jobs done.  To better understand how a Jobs to be Done mentality can help break down problems until the right solution seems obvious, we’ll look at how two companies – Yondr and Netflix – have started addressing real customer needs using little more than some socks.

 We’ll start by looking at Yondr, a company that satisfies two different types of jobs – functional and emotional – that have become increasingly relevant in recent years.  Yondr essentially makes socks for smartphones.  Once individuals put their phones in the socks, the socks lock and prevent those individuals from using their phones until they step outside of a defined geographical area.  On the functional side, Yondr is helping venue owners and performers combat the problems that have developed as phones have become more advanced.  Concert venues and comedy clubs, for example, now have a way to prevent attendees from capturing and posting images and videos of their events – an issue that has become increasingly problematic as phones with high-quality cameras have become ubiquitous.  Similarly, testing centers can have students put their phones in these socks before taking tests, preventing them from accessing the Internet or copying testing materials.  On the emotional job side, Yondr’s socks also give individuals a way to more fully experience the events they’re at by taking away the temptation to view the event through the screen of a phone or to rely on their phones as a social crutch rather than interacting with other attendees.

 Although Yondr’s “socks with locks” may seem like a particularly clever idea, finding the need for such a solution is actually quite intuitive.  It simply involves giving some thought to how the world is evolving, finding those jobs that are either new or more important than they once were, and learning where customers struggle to get those jobs done to their satisfaction.  In this case, cell phones have become both more widespread and more powerful.  Instead of thinking about how to incrementally improve phones and add more functionality, Yondr looked at a broader set of stakeholders to understand what jobs they were trying to get done – and where they were struggling – in this new smartphone-first era.  It quickly became clear that among other needs, there were under-satisfied jobs related to protecting IP rights and sensitive content.  Framed in that light, a simple sock with a locking mechanism provided a fairly obvious solution.

 While Yondr is still a pretty new company, Netflix is a bit more established.  Its innovation achievements – from fundamentally altering the way videos are rented to becoming a data-driven producer of original content – are widely recognized.  Yet one of the company’s lesser known creations, Netflix Socks, is perhaps most illustrative of its dedication to customer centricity.  As Netflix and others have reshaped the industry, the resulting changes in how individuals consume media content have caused new pain points to appear.  In particular, one of the pain points Netflix wanted to respond to involves viewers falling asleep while binge-watching a TV series.  As Netflix noticed, viewers would often fall asleep during an episode, only to wake up several episodes later bombarded by spoilers and struggling to remember where they actually left off.

 Netflix Socks track when you fall asleep, then automatically pause your show so you don’t miss anything.  The socks were launched by Netflix as a DIY project.  Netflix provides the instructions, TV show-inspired sock patterns, a parts list, and the necessary lines of code to make the socks work.  Netflix Socks are the second addition to Netflix’s “Make It” line of DIY complements.  Netflix had previously introduced The Switch – a single button that will turn on your TV, open the Netflix app, dim the lights, silence your phone, and order your takeout.  Both solutions – and whatever we see next on the Make It site – have a single purpose: alleviating hassles so that you can easily enjoy the company’s core product.  Or, from a Jobs to be Done perspective, making sure that you can better satisfy important jobs related to entertainment free of any obstructive pain points.

 Both Yondr and Netflix help prove that you don’t need to shoot for the moon to have a successful new product.  You don’t need to invest in unheard-of technology or ideas that seem “so crazy they just might work.”  In the case of these two companies, their new innovations were as simple as a sock.  Plus a little light programming.  More importantly, their innovations came from reframing their perspective of the market.  By paying attention to the key trends that are affecting consumer behavior, understanding what jobs customers are struggling to get done, and identifying the pain points that are standing in the way of satisfying those jobs, companies can launch new offerings with a high degree of confidence in their ability to succeed.

This post was originally published by Dave Farber on Medium.  Click here to see the original post and to read more of Dave's posts on Medium.

Topics: Tech, Strategy

Shackling Innovation – The Iron Triangle

Posted by Stephen Wunker on Dec 14, 2015 9:30:59 AM

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Companies are often frozen in place by an “iron triangle” of failure, risk, and learning.  Even those with lofty ambitions for furthering innovation get tripped up by common business behaviors that, while innocuous on their own, create inadvertent roadblocks to new forms of growth.  Although existing structures tend to be optimized for incremental innovation in the core, they often do little to extract positive lessons from failures and fully map out risks in new areas.  While much may be invested in innovation, little is learned.  Check out our new piece on Forbes to learn more about what holds back innovation.

 

To learn more about how New Markets helps companies build innovation capabilities, click here.

Topics: Innovation Capabilities, Forbes

How Binge On Fits into T-Mobile's Three-Part Strategy

Posted by Stephen Wunker on Nov 11, 2015 3:44:21 PM

 

Just this week, T-Mobile announced Binge On, a free addition to the carrier’s Simple Choice plan that will allow subscribers to stream unlimited video from providers like Hulu, HBO, and Netflix without it counting against their data usage.  T-Mobile Binge On is the latest piece of the company’s three-part strategy to take on market leaders Verizon and AT&T.  In our recent piece for Forbes, we look at T-Mobile’s strategy for using its limited assets to make a play for more market share.

Topics: Telecom, Tech, Strategy, Forbes

Driving Innovation with Growth Platforms

Posted by Stephen Wunker on Nov 5, 2015 11:47:16 AM

Since the open innovation craze swept the business community in the early 2000s, idea competitions have taken hold at a number of companies.  While these competitions tend to bring in thousands of new ideas, most end up getting discarded.  In our recent piece for Forbes, we look at what’s wrong with the idea competition approach, instead promoting innovation processes that revolve around growth platforms.  We look at how some of the world’s leading companies have used growth platforms to create more stable innovation platforms that harvest only the categories of ideas that can be immediately put to good use.  We also explore how you can choose the growth platforms that will fit your own innovation efforts.

Topics: Innovation Capabilities, Tech, Forbes

Building a Culture of Innovation

Posted by Stephen Wunker on Nov 5, 2015 11:43:24 AM

From startups to large corporations, building a culture of innovation is high on the list of priorities for most companies.  There’s enormous potential that can be unlocked by fostering creativity among the employees who know the ins and outs of your industry and your company better than anyone.  But creating that culture is about more than adding a ping pong table, a few beanbag chairs, and some bright colors.  In our recent piece for Forbes, we look at five strategies that companies can use to build a culture of innovation.  From choosing the right type of innovation to focus on to empowering your workforce, we explore how companies from a range of industries have powered their innovation initiatives.

Topics: Innovation Capabilities, Tech, Forbes

3 Ways Nintendo is Poised to Win in Mobile Gaming

Posted by Stephen Wunker on Apr 3, 2015 12:19:00 PM

This post is written by New Markets' Zack Elias:

Nintendo recently announced that it would begin producing video games for smartphone and tablet devices. This is a big step for the oldest market player in video games. The industry was built on the backs of its core brands, such as Mario and Zelda, which remain a key part of its business. It’s an aggressive move from a company largely perceived as a legacy stalwart in a rapidly advancing industry. Nintendo’s conservative business model paradoxically positions it well to move into a rapidly growing mobile gaming industry that threatens to disrupt its core customer base.

Aside from winning share through its established brands, Nintendo has carved a unique place in the market by owning the entire value chain of its industry: it is the only major competitor to produce most of its own hardware (the platform that games run on) and software (the video games themselves). Competitors Microsoft and Sony mainly produce hardware (Xbox and Playstation, respectively), but tend to leave production in the hands of third party developers and publishers. They build increasingly powerful expensive pieces of gaming equipment that must appeal to as wide a range of video game developers as possible. Nintendo, however, exercises strict control of its core franchises to put a greater focus on developing engaging gameplay mechanics first and then producing hardware platforms designed to support those mechanics.

As a result, Nintendo’s core customer base tends to consist of gamers that prefer casual, intuitive gameplay mechanics over those that prefer a hardcore, more cinematic video game experience (which is the segment dominated by Sony and Microsoft). This philosophy dates back to Nintendo’s earliest days as a producer of video games.

Mobile technology, however, threatens to disrupt Nintendo’s core business, as it has in many other industries. Consumers are finding the same casual and intuitive gameplay on their smartphones and tablets – devices that don’t require them to shell out an extra three hundred dollars (at the time of writing) for the WiiU console currently required to play Nintendo’s latest games.

This is why Nintendo’s decision to enter the mobile space is so interesting. The company is cognizant of the disruptive threat that the adjacent mobile market poses to its core business. Critics characterize this move as a desperate attempt to stay relevant in an accelerating industry that leaves Nintendo behind. But the evidence points the other way. Here are three reasons to believe that Nintendo’s move into the mobile space will not only pay off, but will pay off big time.

 

Understanding of jobs to be done in mobile gaming. Critics underrate a very important fact about Nintendo: that it has been the market leader in mobile gaming for decades, before the rise of the smartphone/tablet. Nintendo’s biggest seller is not the WiiU console, but the 3DS handheld system that has cultivated a very dedicated, profitable niche of customers. The original Nintendo DS handheld is one of the best-selling gaming devices of all time.

These handhelds have been so successful because they benefit from a robust library of games produced out of Nintendo development studios. The reality is that Nintendo understands how to make a good mobile game better than most others. The company understands what consumers want from a video game they can play on the go.

Critics point to the financial achievements of Candy Crush or Clash of Clans and call Nintendo’s understanding of the space outmoded. Today’s biggest mobile gaming moneymakers offer addictive, repetitive gameplay in limited amounts, and then force the player to either wait several hours or pay small amounts of money to continue playing. This is a different design philosophy than the games Nintendo is known for.

Despite the popularity of these kinds of games, their big differentiator is in the pay-to-play business model, not in the game itself. Nintendo’s deep experience in developing intuitive and addictive content for its handhelds positions it well to offer a stronger gameplay experience for consumers. Nintendo may not even need to adopt similar business models – it only needs to win in its niche, the “pay once and play” category. This market segment may not offer the same sky-high profit margins, but it is a niche that Nintendo has experience cultivating in the mobile space to produce reliable, long-term growth.

Unparalleled insight across hardware and software. Nintendo will not simply be porting its games over to mobile, but developing content custom tailored to the smart-device platform. Its unique understanding of the interactions between software and hardware means that it is well-suited to find and exploit the types of game mechanics that mobile gamers find enticing.

Nintendo can also press its hardware advantage in the form of peripherals – attachments to your phone or tablet that augment the gaming experience. Additionally, its sterling track record in hardware design gives Nintendo the opportunity to integrate mobile gaming into a broader ecosystem, something it has already achieved with its handheld systems. It succeeds in hardware innovation where others have failed (see: the success of the Wii over the failure of Microsoft’s Kinect, its own attempt at motion sensor gaming). Nintendo wouldn’t be the first to integrate phones and tablets into a hardware ecosystem, but they could very easily be the first achieve it successfully.

Universally recognized brands. Nintendo’s sterling reputation alone carries great weight with customers the world over. Consumers know that Nintendo strives for quality gameplay first, and know they will not receive a buggy, half-finished product like many other releases produced for large hardware platforms. More importantly, Nintendo owns the most popular franchises in video game history. Mario, Zelda, and Pokemon are all instantly recognizable, and are international sensations that drive sales in very large volumes.

Critics say that the slow growth of WiiU sales has proven that the famous franchises alone don’t motivate players all that much. The reality is that the WiiU is an expensive piece of hardware, coming in at $275. Gamers may not want to pay hundreds of dollars to play the latest iteration of Zelda, but they have already absorbed the sunk cost of their smartphones. Since gamers already own the hardware, the cost barrier to playing the game is much lower.

The other response to critics is to point to the success of the handheld 3DS, which has sold over 50 million units worldwide (as of December 2014) and requires a similar, albeit smaller investment into hardware ($200).

Moving into mobile can give Nintendo a multitude of quick wins by tapping into the international cabal of Mario and Pokemon fans worldwide that already own smartphones. The company has the funding and the marketing talent to relentlessly promote their franchises and sell games that require investment into expensive hardware. With a lower barrier to entry, Nintendo is well-positioned to profit heavily from its growth into the adjacent mobile space.

Topics: Tech, Strategy, Business Model

How Clique Chic Won the TechCrunch Startup Competition

Posted by Stephen Wunker on Mar 9, 2015 1:57:00 PM

TechCrunch recently hosted its Boston Pitchoff, giving eight startup finalists a chance to pitch their businesses in front of a panel of VCs and tech journalists.  Clique Chic - a website that gives members access to designer clothes and a personal stylist - won the competition and will advance to the final Disrupt NY competition later this spring.

The competition boasted healthcare wearables, social networking apps, gamified education tools, and even a foray into personalized medicine.  Amidst this heavy competition, Clique Chic demonstrated that it's the business model - not the buildup - that makes a startup successful.

To learn more about the featured startups and to see what strategies set Clique Chic apart, check out our piece on Forbes.

To learn more about how New Markets Advisors helps companies enter new markets, click here.

Topics: Tech, Forbes, Business Model

Innovation Lessons from 2014’s Most Successful Kickstarter Campaigns

Posted by Stephen Wunker on Jan 14, 2015 1:28:00 PM

For the past few years, tens of thousands of entrepreneurs have been flocking to Kickstarter to seek the funding they need to get their ideas off the ground.  The crowdfunding site has given these innovators a platform to truly embrace the Lean Startup principles that companies large and small have used to launch breakthrough innovations.  By putting the core of the Lean Startup practice to use – including getting cheap, early prototypes in front of real people, gathering feedback, and iterating based on that feedback – these entrepreneurs successfully funded over 22,000 projects in 2014 alone.


Successfully Funded Kickstarter Projects by Year

2010

2011

2012

2013

2014

3,910

11,836

18,109

19,911

22,252

The most successful campaigns have shown us that winning also depends on how successfully you can utilize familiar platforms and growing trends, how significantly you can reduce trial costs and pain points, and how concretely you can demonstrate tangible value.  We have extracted some of the key innovation lessons that can help companies – regardless of their size – better understand what they can do to increase their chances of success in launching new products and services.

 

Read our piece on Forbes to learn more about the lessons we can learn from the Kickstarter standouts of 2014.

 

You can also click to learn more about our work in strategy or building innovation capabilities.