What is Market-Driven Innovation?

Market-Driven Innovation (MDI) is designing, managing, and implementing your innovation process around the needs and wants you capture from your key markets. MDI is not new, but still today, many companies find it difficult to transform their innovation work from the entrenched technology-forward approach they have been using to a market-back or human-centered approach. Often, their entire business processes have been built around the assets and products they produce and their go-to-market strategy based on their historical sales experience and sets of customers with whom they have the best relationships. This results in the premature commoditization of their value propositions, their most important assets.

Business oriented toward targeted markets

Market-Driven Innovation begins with a business oriented toward targeted markets. These markets define strategy, which informs resource allocations—especially those resources dedicated to the innovation process. Market-Driven Innovation is based on a strict set of principles:

Engineering/technical resourcing decisions are made based on a validated market need and drivers of customer behavior as the foundation for an attractive business case.

Organizational focus is achieved from understanding market segments – sets of customers who are similarly motivated – and targeting the most attractive segments for growth.

A cross-functional team approach where marketing, technical, and sales all contribute to the growth initiative together, and thus are aligned on the strategy.

Accelerated ramp-up occurs after launch from greater operational knowledge of the market.

Technology development is accelerated because better design specifications of a targeted set of customers are captured from the onset of development.

All are driven by business leaders who make resource allocation decisions consistent with the strategic direction of the business, and link development to the marketing process.