IDDwhere can be viewed as the first market litmus test of the innovation, which forces further efforts to be based on real first hand market intelligence rather than, in many cases, very time and money wasting assumptions.
Based on the key facts gathered in IDDwhat, it’s now time to verify the need in potential markets, analyze the results and decide on the most optimal route forward, e.g. what are the target markets that we need to gain further insights into.
IDDwhere is a funneling process where the aim is to:
This approach looks very simple, and that’s because it should be. Key problems we’ve encountered is that the time for many inventors and solution developers to actually gain real market insight is far too long. This step aims at gathering initial findings in a broad range to help both guide further efforts and analyses, but also to access information that might change tech development and the IDDwhat – brief.
To make these initial calls [3-5 per potential market] you need to have a structured approach, and this is one of the key other problems: Lack of structure makes it hard to frame the need, e.g. dig deep enough to actually find where in the market the problem exists, and to capture the full market potential, e.g. understand what the market actually is and how big it is.
The learning process consist of 4 general stages and a closing remarks section, please drag the arrow over the stage-map below to get an understanding of the content. These stages will present the key input activities and outputs created to capture the relevant aspects of the IDDwhere – target market selection effort
A template is available for download here, and it is recommended to use this format for completing the learning process of IDDwhat.
Expected time: 20-80 hours [depending on CRL and TRL]
The aim of this exercise is to develop a process and structure for identifying potential target markets. This process starts with the observation and hypothesis building of applicable markets based on needs, and through a structured process eliminate all not applicable or non-relevant markets. The finalized output is a selection of potential target markets to be tested.
The identification of potential target markets is a crucial step in the process for evaluating the potential of the solution. This will also provide valuable insight regarding which individuals and market participants that are relevant in the validation process.
Challenges include keeping a structured approach and to include an open mind for new and not obvious potential target markets, while still relying on hypothesis driven discovery.
With the knowledge obtained from IDDwhat, the next step is to identify potential target markets. Based on the features, benefits and values from the current state you should develop hypotheses on potential markets that might have a need for your solution.
The hypothesis of need areas serve as the starting point for the discovery of target markets . The identification of potential markets will guide you in finding the potential individuals to interview with the objective to validate the market.
The complexity of the processes may vary between different products/services and potential target markets may in some cases, where the innovation is developed with a very distinct application in mind, have been identified at an early stage of the innovation process.
It’s still recommended to perform a comprehensive search and structure the potential target markets since the process itself may reveal additional application areas and markets. The output from the exercise will also provide a structured insight to the market and additional opportunities and challenges.
The starting point could be to identify all potential relevant application areas at the broadest level and by process of elimination find the potential target market derived from the benefits and features.
From the current state we have a summarization of benefits/features which may serve as the starting point to identify potential target markets by workshop, internet search, talking to contacts and as an intellect process.
In the example a researcher has developed a new material for the production of food containers made of pulp.
In the current state we identified three benefits. From the benefits we develop a hypotheses regarding the potential markets and to frame the potential need for the solution.
A key to scoping target markets is to have a structured approach since the process is very iterative and evolving. A recommended approach is to start with the need and work towards scoping the potential target markets.
The process varies significantly between different solutions due to the maturity of the innovation and the inherent benefits. It is recommended to have a structured process and allocated time to intellectually reflect on the target markets, as well as using external sources and experts.
After having formulated need hypotheses and identified within which markets they reside, it’s now time to identify potential validators. At this stage, depending on width of markets to test, it’s recommended to aim at interviewing at least 3-5 validators per market/need area.
The key here is to understand if there is a need and if the solution is viable and it’s of main interest at this stage to investigate and get insights from the users or user-close validators of the technology, e.g. Interview hairdressers and retailers if you have a new hairdryer innovation, and interview key persons at a mine if you have a new bolt innovation.
Though; there are other categories of validators that are also of interest to interview, which are relevant to the sales process, legislation or have technical insights. These will also be of interest when embarking on deeper analyses on chosen target markets.
Finding contacts is mainly about getting to know the markets and identify what types of validators there are [based on the categories earlier described]. Then try to reach out to key validators, either by mail, phone or in person.
As the key is to find the most suitable markets regarding their need, that’s where the focus of the questions should be.
Though; in some cases, the innovation is built to a very specific application area, where even the need is 100% verified by a market. In these, not so common, early innovation projects it´s of higher importance to also focus on other questions as well, e.g. regarding go-to-market, business model, partnerships, operational demands etc. In most situations this is not the case, and that’s why we recommend to at least build the structure of questions around the following topics:
These 3 areas are the recommended basic starting points when addressing the initial viability of potential target market, because it enables relatively fast feedback on the most critical questions. If abundant time and resources is available, you can always add additional questions relevant to the specific context and maturity of your case.
Keeping a hypothesis driven approach while keeping an open mind regarding new findings is key while interviewing, at this stage. Remember; here we’re still focusing on finding the most suitable target market for further analyses, thus the focus is still very broad . Deep interviews are not as necessary as in later steps of the IDD process.
Key here is to understand the problem and how it fits your solution!
When interviewing a validator [user, buyer, legislator or other stakeholder] at this early stage it’s important to get them to share their insight on a very open manner, while still keeping key questions as a guiding format [semi-structured].
As already stated in step 2 of IDDwhere, questions should at a basic level focus on understanding primarily the problem, how your solution fits their need and try to capture some initial challenges and opportunities. Focusing on these factors will make the interviews easier to handle, and make the output more relevant and easy to analyse.
Understanding the problem is about getting insight into the process, who it affects, when the problem occurs and all other aspects that captures the key pain point where the need of a solution is. It is also important to capture the ‘depth’, what does the problem lead to and how costly is it [e.g. how acute/valuable is a solution], and the ‘width’ of the problem, e.g. how common is this problem [installation base/market size].
Solution fit is about, after having understood the problem, test the hypothesis of the solution; how well would the solution that you’re testing solve the need discussed. Try to keep this relatively open, though here you can be more precise: Let the validator react to your solution’s key aspects/benefits.
Capturing challenges and opportunities is about finding some initial insight on problems and potentials that might not be directly related to the need and solution fit. This might be comments regarding distribution, lock-in effects by other competitors, changes in trends, difficulties in the selling or adoption process or other factors that affects the go-to-market implementation. This is further examined in a full IDDhow, but it’s relevant to already now capture some facts.
Remember: Important when interviewing, is to understand the problem and how well the solution could solve the need. The desired output is to mainly to find an initial fact base on target markets for further investigation, but also to find real market insights that can be implemented into tech development and IDDwhat – current state.
Sometimes the need that you address is not always perceived as a problem – because current approach works and always been done the same way Then you need to show and describe the improvement potential offered by your innovation – often this leads to them realizing that there is a problem.
If you’ve interviewed a very knowledgeable validator, always ask respectfully if they know any further contacts that might be of value to your investigation.
After having conducted sufficient amount of initial market testing, based on key guiding questions, it’s now time to make a decision on which market[s] that are of most interest to further analyze.
Hopefully all information is now gathered in a uniform and structured way, enabling objective comparison of the markets. In cases where one or a few markets have considerably higher amount of data-points; you should aim at leveling this so that the analysis is fair.
At this point a set of objective eyes is recommended to bring into the process. During the data-gathering phase, although still not very deep in content, biases and preferences can be created. To mitigate this, where the problem is that market potential might be missed out, you can bring in at least 2 outside [case-external] persons and present them with the facts from the market research.
Don’t try to justify or defend an initial hypothesis that’s been proven wrong in the actual market testing. It is theoretically still possible that the hypothesis is right [in which case later analysis might re-direct you to this market], but you should focus efforts on the markets where the hypotheses have been proven right, or at least more promising.
As already stated IDD is a very iterative process, but key in every step is to capture the most relevant and value creating information, incorporate this into the overall analysis and then move forward, but never be afraid of going back and re-think the actual innovation.
To make the decision on which initial target markets to focus on, you should aim at creating a funneling process starting from the most basic information needed to pursue any further efforts.
Starting point: Start by clearly stating basic information regarding the markets: What is the market, what is the application area and what benefits are of interest to offer? A tip is to include benefits that is highly interesting to the market, but not currently offered by the innovation. This step is not a part of the core funneling process.
First selection: Is there a verified need?
The first key question to answer is if there is a need. State clearly what the need is, so that the nature of the problem is understood. Then show what the value and spread of the need, based on the interviews, seem to be. Those markets with non-existing or weak needs or diffuse problems should here be left out of further analyses.
Second selection: Can the solution satisfy the need sufficiently well?
Of markets with clear, valuable and/or very despersed need we now should compare how well the solution can solve the problem/need expressed by the market. Capture both solution-need fits that is based on existing benefits offered by the solution, as well as benefits requested by the market that is not currently included in the technology [which would impose different degrees of investment needs]. Exclude markets with very low solution-need fit, but keep an open mind towards potentially high solution-need fits, e.g. where additional features and benefits need to be developed. A brief business case or rationale is needed to exclude these markets.
Third selection: Any additional up- or down-sides affecting the choices?
The markets that are now still of interest might be the targets that should be further investigated, though if any relevant opportunities or challenges have been identified, include these factors to further shorten the list.
Below we have presented some key recommendations and tips on how to best conduct the steps and analyses presented in the process-section. These are learning we have found from conducting more than 150 IDDwhat/year.
Don’t try to cover everything in the IDDwhere-interviews – This stage is about making the first alignment between the innovation and the core need of the market, and focus further efforts. If you’re covering 8 hypothetical needs/markets testing 5 validators with a long set of questions [1 hour] you’ll be spending at least 1 week doing nothing but interviews, and in reality it will probably take you at least 1-2 month to finish IDDwhere. Stay with core questions!
Frame need and capture market – Always dig deep enough to find where the actual need is [don’t be too high level], but ensure that you can extrapolate the full market potential from there.
Incorporate new info in IDDwhat and IDDwhere – Make sure to feed back market insights into the IDDwhat – current state template, as it focuses and improves it. Interviews can also present new hypotheses on potential markets.
Focus on width – If questions are focused, you can instead aim at having a wide range of markets to test. Make sure to not be biased and focus too heavily on one market [unless the scope is very narrow].