Incubators can be critical to sustained corporate success, but they are fiendishly difficult to get right. With a broad mandate and scant constuituency or resources, they struggle then fall victim to inevitable cost cuts. But there is quite a silver lining to the dark cloud -- when incubators do well, success can be spectacular.
In a piece for Forbes, I explore seven dimensions of incubator design through the example of one in healthcare. There is no single model for designing an incubator, but there is a set list of factors that need thinking through for success.
Click for more information and a book chapter on building corporate innovation capabilities and incubators.
Occasionally, new markets spring from technological leaps that create huge improvements in tackling well-known challenges. At least as frequently, though, the companies that push these new solutions intp the market find themselves solving for problems that customers scarcely recognize.
When I led one of the world's first smartphone development programs, for Britain's Psion PLC in the late 1990s, we had dazzling technology. You could send a fax from a PDA! But we seldom paused to nail down the exact question we were trying to answer. As a smallish, albeit cutting-edge, company in a rapidly-moving market, we had to be precise about what we would and would not try to do. Yet we were bewitched by our cool solutions, and utterly flummoxed by how people could flock to a bare-bones PDA (Palm) or a primitive two-way pager that could send some e-mails (the Blackberry). It was a hard lesson to learn.
In my piece for Forbes, I lay out when asking the right question matters, and how to ask it in a broad yet rigorous way. Companies that thrive in new markets not only have good solutions, but they apply them to precisely the right problem.
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Creators of disruptive innovations are frequently seized by the power of their idea. They envision all that it can become and the transformative effect that their innovation will have. Unfortunately, their zeal can blind them to the need for walking customers through several stages of adopting revolutionary ideas. Counter-intuitively, to launch a disruptive innovation you need to start small.
I came to this realization the hard way. In 2000 I led a team creating one of the world's first smartphones. We knew all that smartphones could potentially do, but we could not accept that customers would use only a small fraction of these functions at first. Later, I founded one of the first mobile marketing companies and was perplexed that the idea took off so slowly. Eventually I researched the patterns of how disruptive innovations get adopted, and I discovered useful insights I wished I had known years earlier:
1. Focus on one example -- Rather than try to show the full potential of an idea, concentrate attention on one very obvious pain point that you solve brilliantly. The pain point does not need to be important, but it should demonstrate quite clearly how existing solutions fall short.
2. Concentrate on a widely-shared problem -- If your hope is to generate publicity about your disruptive innovation, focus on a problem that many people have. People love to talk about common issues, even if they are trivial in nature.
3. Address low-risk situations -- The disruptive innovation may solve some critical problem, but in those situations the risk associated with a new solution may be high. If the problem is really critical, it is likely being addressed somehow already. Failure of a new solution could cause untold difficulties, so customers will wait on the sidelines to see if others have a good experience. That dynamic can immensely lengthen the process of adoption.
4. Cater to incremental adoption -- Don't make the adoption decision binary. Give people a way to get their feet wet.
I explore these points in more depth in my piece for Forbes on how to launch a disruptive innovation. The idea is not enough; it must be launched in a way that fits how customers embrace new ideas.
Stephen Wunker is the Managing Director of New Markets Advisors. Read more of our thinking on innovation capabilities.
The fallout from Wal-Mart's corruption scandal in Mexico -- $20 billion in market value lost in 2 days -- illustrates the perils of navigating foreign business practices poorly. Too often, advice about corruption in emerging markets comes in extreme varieties: avoid it entirely, or take on a local partner and embrace the system. The reality is that companies can laregly steer clear of corrupt practices, and they should if they intend to build businesses for the long-term...but it isn't easy. In this piece for Forbes, I explore how we handled these challenges at the pan-African cellular network Celtel, and how other firms have dealt with them far more effectively than Wal-Mart seems to have done.
Stephen Wunker is Managing Director of New Markets Advisors and the author of Capturing New Markets: How Smart Companies Create Opportunities Others Don't. Click for more of our thinking on emerging markets.
Apple -- famed for its engineering and marketing -- is less renowned for its innovative business models. Historically that wasn't a problem; the company sold high volumes of a small number of products that were ingeniously engineered but not very expensive to build. It managed to do this at a high margin, enabling its iPhone to grasp over 50% of the profits in the entire mobile handset industry.
Yet this model is highly dependent on two factors: 1) the iPhone, which makes owning the full suite of Apple products much more appealing and 2) big subsidies from mobile carriers that make the iPhone price-competitive with Android and Windows offerings. A French upstart is starting to break that model, with dramatic results. Read more in my piece for Forbes.
Stephen Wunker is Managing Director of New Markets Advisors and author of Capturing New Markets: How Smart Companies Create Opportunities Others Don't. Read more of our perspectives on telecom.
The sinking of Titanic 100 years ago wasn't a simple matter of moving too fast through dangerous waters. That is good news for companies that have little choice about how quickly they move in fast-changing industries. The causes of Titanic's sinking are more complex, and they hold important lessons for any organization trying to act boldly in poorly-understood areas. Read about them in my piece for Forbes.
Stephen Wunker is the Managing Director of New Markets Advisors and the author of Capturing New Markets: How Smart Companies Create Opportunities Others Don't.
Reframing markets is hard. Companies that may have succeeded with the same basic strategy for decades have a tough time re-defining where they play when their core business starts commoditizing. An even more difficult challenge is orienting the firm around that new strategy when the resources, processes, and priorities of the company are tightly linked to the old model.
For many pharmaceutical and medical device companies, a great hope for escaping intense pricing pressure is to change what they sell from drugs and implants to integrated solutions for major diseases. They reason, correctly, that the cost of pills or devices can be a small component of the overall cost of patient care, and that a holistic approach toward patient needs can create far more value -- through better medical outcomes and lower total costs -- than disconnected therapies like a prescription.
The strategy makes sense, but there is a very big problem. The buyers of these integrated solutions would be entities that have a holistic view of the patient. Physicians compensated on a fee-for-service basis have little economic incentive to manage overall costs down. Health insurers are typically a step removed from patients and, for all their aspirations otherwise, may be little more than claims processors. Pharma and device companies are pinning their hopes on "economic customers" that gain financially from improved patient care and that have the capability to align physicians around protocols which achieve these outcomes. But, at least in the U.S. healthcare system, few of these economic customers actually exist yet.
What can pharma and device companies do about this conundrum? The answer lies in aiming first for footholds, not the ultimate prize. My piece for Forbes explores what the footholds might be.
Stephen Wunker is the Managing Director of New Markets Advisors. Read more about our perspectives on healthcare.
"First mover advantage" is a well-worn business maxim, yet too often it leads to futile efforts in a market not yet ready to support profitable enterprises. "Fast follower" is a rival maxim, yet it can lead to companies missing out on huge opportunities. Too often, companies follow one school or the other like some sort of corporate religion, assuming the approach to be right in all circumstances. In reality, the suitability of each of these strategies -- as well as the feasibility of a late follower strategy -- completely depends on a market's particular circumstances.
In a new article for the journal Strategy & Leadership, I explain each of the three approaches and when to employ which one. Click to download "Better Growth Decisions: Early Mover, Fast Follower, or Late Follower?"
Read more about New Markets Advisors' consulting approach.
In a prior life, I had a happy existence as an executive for a wireless network. Growth was stunning, profit margins were excellent, and the party showed few signs of ending. Today the industry faces vastly different prospects. Cash flows are still strong but there are serious signs of trouble. In the last year alone, the industry missed out on nearly $14 billion in text messaging revenues due to the rise of "free" texting platforms such as Skype. To avoid the fate of many other industries that were disrupted by new business models, wireless networks need to make four difficult calls on who they will be in the very different age that is now dawning. Read about them in my piece for Forbes.
Click for more of New Markets' thinking on telecom.
Some of the greatest business success stories have started out in tiny markets. "Foothold" markets enable companies to target efforts narrowly, create solutions quickly, and adjust approaches rapidly. Yet targeting footholds runs counter to the political processes at work inside many corporations. Read about how foothold markets work, and how to identify them through a rigorous process, in my piece for Canada's Ivey Business Journal.
Stephen Wunker is the Managing Director of New Markets Advisors and the author of Capturing New Markets: How Smart Companies Create Opportunities Others Don't (McGraw-Hill, 2011).