Market-Driven Innovation Needs Context

Often, the resistance to market-driven innovation is that it may be in conflict with the firm’s technology base, it may require the firm to engage unfamiliar markets to pursue, or it just may be out of sync with the firm’s comfort zone. Although each barrier may turn out to be real, the basis for market-driven innovation is generally the firm’s strategic business focus and core competencies. Without that basis, it would likely be unrealistic to expect success in any new business venture.

Overcome that Resistance with a Market Orientation Mindset

However, market-driven innovation success does require a “market orientation” mindset. Most often, the “value driver” is beyond the direct customer. The innovation must address the demand drivers in the value-adding chain and “pull through” the innovation. It is in this context that we establish the transactional customer for fulfillment if required and the demand driver customer for commercializing the innovation.

Market orientation should be a core competency for innovation. It should include these principles:

  • Obsession with understanding the market’s current and future needs, as well as major dynamics and forces acting on the market. There is an explicit connectivity between market orientation, customer satisfaction, innovation, and the delivery of business profitability.
  • Utilization of a cross-functional team approach to defining, designing, and delivering winning value propositions. This includes bringing innovation to their targeted markets. An organizational philosophy and business model is in place that facilitates/supporters market orientation. Evolve your business model to overcome business barriers and opportunity blindness over the long term. A growth imperative is interwoven across the organization.
  • Transforming the traditional observational role so business and technology leaders own both the knowledge about their markets and the strategy required to capitalize on that knowledge. Key performance metrics are based on what the business wants to happen in targeted markets, and how well the business is performing to that end.

With this context and these principles, it follows that strategic direction, core competencies, and focused initiatives lay the groundwork for innovation to take place. Eliminate the barriers and focus on the market dynamics, and innovation opportunities should emerge.

About the Author

Ronald E. SullivanRon Sullivan is a Senior Partner at Breakthrough Marketing Technology. He has worked with many businesses on innovation, new product development processes, strategy, building new business models, channels and distribution, and pricing optimization. He has significant expertise in study design, data analysis, and market intelligence.

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