Marketing technological innovation – what happens if you get it wrong?
The technological market is as volatile as it is potentially profitable for firms. Such is the level of demand for innovative products and the speed of technological progress that competition is especially fierce. It is therefore doubly important that firms launching new products get it right when convincing consumers that their product is the one for them. However, where does the process begin? With the technology itself? With analysis of the market? And what happens if one of the steps in the process goes wrong? Getting the business plan right in the first place can make all the difference.
If we were to assume that the process is a linear one, the story would go something like this: devise your value proposition in order to establish the added value of your product or service, perform market segmentation in order to identify the right target consumers, set up a revenue model to decide how you are going to sell, organise the commercialisation process, estimate costs and potential profits, and then bingo – the product or service is launched onto the market! However, what happens if something goes wrong within this process and the “chain” is broken? Does the firm have to go back to square one and start all over again?
Doing good business requires good business sense
It has been said that you are more likely to sell a mediocre product with a good business plan than a good product with a mediocre business plan. It is therefore essential to get things right from the very start, in theory as well as in practice. In the technological field, it is crucial to identify the right concept of value as well as organise the subsequent value creation. If you don’t think through what your product or service has to offer that others don’t, your chances of success will diminish.
The stages mentioned above are crucial – knowing the market environment, who your priority targets are and accurately estimating the pre-launch assets you will need are vital. However, everyone makes mistakes, so what do you do if you get it wrong? A more cyclical approach to doing business may provide the key.
If at first you don’t succeed…..
By studying the relative success and failure and, above all, ability to adjust and revise business plan within four different firms all offering different products (chemicals and fertilisers, hardware equipment, software and online advertising, and nanotechnology materials) we took a whole new view of the sequence of events for a successful business plan. More to the point, we saw how firms respond when things do not go to plan.
For starters, in the event of inaccurate market segmentation, market analysis has to be something that can be reviewed and revised. Above all, the initial market analysis and creation of a value proposition should take place at the very start, long before the business idea is planned and then executed. This cyclical approach, where the stages listed earlier can evolve during the process and remain inter-connected, allows for errors and gives firms a margin to rectify mistakes. Call it trial-and-error, if you wish, but at least it gives firms the option of going back on previous financial or marketing decisions and righting their wrongs.
Bridging the gap between theory and practice
Commercialisation of any product or service is deeply rooted in theory and practice. The potential value of a product has to be conceptualised before the business plan is then devised and the product launched and therefore its value actually created. The cyclical approach recommended above enables firms to establish a bridge between the original theorisation of value and its actual creation. It may be seen as a kind of professional “sin” when a car company has to call back a product due to technical deficiencies, but at least this shows a recognition of mistakes, an ability to learn from them and the desire to re-launch a higher-performance product.
The whole process is understandably very time-consuming and so firms may consider interacting with consumers while developing their business model, rather than merely waiting for consumer response once the product is on the market. Partner networks can also help during the creation of the value proposition – exchanging with and learning from others can only do good in the long run. These two examples hit the nail on the head as to where firms should be heading – they shouldn’t just look at the nature of their invention and what they think it has to offer. For successful commercialisation, they must never forget one crucial question – what impact will it have on the market?
To be continued…
The debate by no means ends here and both researchers and practitioners still have much to ponder. For example, the complexity and radicalism of the technological invention may impact the way in which it is commercialised. The set-up from country to country will never be the same, be it in terms of bureaucracy, infrastructure or the time spent on business model development. The management of the value conceptualisation and proposition phase is no doubt different from one country to the next also. What is certain, though, is that firms should start to view the process as a more fluid, cyclical one, where mistakes can be rectified, provided they have dedicated the right time to understanding the market and devising a sound value proposition from the outset.
This article was inspired by the paper An exploration of business model development in the commercialization of technology innovations, written by Viatcheslav Dmitriev, Mark Palmer, Dirk Schneckenberg, Geoff Simmons and Yann Truong and published in R&D Management – 2014 (volume 44, number 3).
Yann Truong is Associate Professor, ESC Rennes School of Business, Strategy & Marketing Department.
Mark Palmer is Head of Marketing & Reader in Marketing, University of Birmingham (Dept. of Marketing).
Dirk Schneckenberg is Associate Professor, ESC Rennes School of Business, Strategy & Marketing Department.
Geoff Simmons is Senior Lecturer, Queen’s University Belfast (Management School).
Viatcheslav Dmitriev is PhD student, ESC Rennes School of Business, Strategy & Marketing