How do you know if you’re accepting too much commercial risk in your new product development? You know if Joe answers, “Not sure. Guess we’ll find out next month when we launch it.” Future B2B innovators will think this is nuts. When you innovate for a B2B market, nearly everything needed to eliminate commercial risk is “knowable” in the front end of innovation, before development begins. That’s because your B2B customers have high knowledge, objectivity, interest and foresight (as explained in 2-minute video, Understand your B2B advantage.).
More in article, Target Customer Needs and Win
You conduct front-end-of-innovation customer interviews so you can design a great new product, right? Well yes, but… if you do these well, you’re doing more. You’re also 1) learning the unknown unknowns, 2) unlearning the things you do know that simply aren’t true, 3) aligning your development team for action, 4) making better decisions through improved market intuition, and 5) building stronger relationships for near-term sales opportunities.
For more download e-book, Reinventing VOC for B2B
Years ago, a study by APQC found the most successful teams invest 20+% of their total new-product work in the front-end… while most teams spend 10% or less here. Roughly speaking, a Market Case requires about 3 person-months of effort, while a full Business Case needs about 6 person-months. So if you “do the math” for 20% in the front-end, you should require a Market Case for projects needing 1 person-year of development, and a Business Case for those needing 2+ years.
More in article, Business Case Excellence: The 12 Key Components
Our research shows “strong value propositions” are the #1 driver of B2B organic growth: The ability to develop such value propositions separates the “winners” and “losers.” Here are the 3 growth drivers (out of 24) that show the greatest competency differences between these winners and losers: #1 Front-end Work (creating a compelling business case), #2 Market Concentration (disproportionately focusing resources on attractive market segments), and #3 Customer Interviews: (gaining the insights needed to establish your value proposition).
More in research report, What Drives B2B Organic Growth?
For years we’ve advised new product development teams to write a Business Case… to request moving their project into the development stage. But now we often suggest they use a simpler Market Case for their smaller projects. The Business Case has 12 sections while the Market Case has but 6. But the Market Case has the most important section… “Value Proposition”… in which solid evidence of customer needs is presented (usually in the form of Market Satisfaction Gaps).
Download Sample Market Case (after Step 3)
Our research into the views of B2B professionals regarding organic growth revealed: The #1 driver of profitable, sustainable growth is strong value propositions. The #1 differentiator between strong and weak value providers is front-end work. The #1 most desired area to improve is market insight. See a pattern? Today’s key to growth isn’t an improved stage-and-gate process or hiring more R&D staff. It’s understanding customer needs better than competitors.
More in article, Market Satisfaction Gaps… your key to B2B organic growth
Over the years, we’ve seen business leaders question the employee time and airfare bills needed to interview customers in the front-end of innovation. But how much R&D and marketing was squandered developing a product that made customers yawn? That’s a question that should probably be asked more often.
More in white paper, Guessing at Customer Needs
We see three areas where leaders can have a greater negative impact on innovation than positive: 1) organizational friction (travel bans, spending freezes, hiring delays, excessive re-orgs, etc.) that slow innovation to a crawl, 2) spreading too few resources over too many projects so that nothing moves briskly, and 3) short-changing the front-end of innovation, so that a clear picture of customer needs is lacking. Companies pay a heavy price for keeping such leaders in place.
More in article, Accelerate New Product Innovation
The difference between speed and velocity is that only velocity has a direction associated with it. Many in business are focused on going as fast as they can… in any direction. Avoiding solid front-end-of-innovation work because you want to develop your new product faster is a prime example. Sure, you launched your product quickly… but no one bought it, because you failed to first understand customers’ needs.
More in e-book, Reinventing VOC for B2B
I call this the golden rule of investment. In the case of innovation, it explains why the front-end-of-innovation is the critical battleground. The winning company is the one that most efficiently learns whatever intelligence is needed to drive this important decision: “Should we advance this project into the costly development stage?”
More in article, Should Your Stage-Gate® Get a No-Go?
Imagine a team spent $50,000 traveling to interview customers about their needs. What would it take to recover this front-end investment? Typically, just one of these… Improve probability of success by 1%, increase market share by ½ share point, accelerate time-to-market by one month, or raise pricing by 0.5%. Buy new headlights and speed up.
More in article, The Harsh Realities of Organic Growth (Originally published in B2B Organic Growth Newsletter).
