|Book Review: Getting It Right the First Time|
Getting It Right the First Time: How Innovative Companies Anticipate Demand
Written by: John Katsaros and Peter Christy. Westport, CT: Praeger Publishers, 2005. 151+xiv pages.
How do you do market research when the market does not exist yet? John Katsaros and Peter Christy think they have the answer. Their approach to anticipating demand involves asking the right people the right questions and then using the answers to create a product development and launch strategy that has a high chance of early success. Though this may seem obvious, their experience as industry analysts, consultants, and market researchers in Silicon Valley has taught them that many companies bring products to market with only a vague notion of whom their biggest customers are likely to be or how large the market actually is. Getting It Right the First Time will interest anyone trying to bring a highly innovative product to market but will be of greatest interest to those in marketing. Although the examples in the book focus on the high-technology industry, the techniques discussed will be useful in any highly innovative situation.
The authors' thesis is that to maximize the value of an innovation, it is critical to launch it in the right product and in the right market at the start. Competitors are too nimble and technology is changing too fast to allow a company to launch a generic new product across a broad market in the hope that some unknown segment will adopt it and allow them to become successful with a more targeted “version 2.0.” They dispute Christensen's (1997, p. 147) statement in The Innovator's Dilemma that “markets that do not exist cannot be analyzed.” They offer the alternative principle that “markets that don't exist can't be analyzed with traditional techniques” (p. 29). These authors believe that you can indeed understand markets that do not yet exist if you are willing to use new methods and are willing to go patiently through the process of looking under the radar for evidence of the elements needed to ignite a market.
The first quarter of the book explains their technique for anticipating new markets, and the remainder shows how to apply market anticipation to different aspects of product planning and launch. There is a good index, a selective bibliography, and a short list of recommended websites.
To anticipate markets, the authors advocate a three-step approach: (1) select alternative markets and applications for the innovation; (2) conduct expert interviews to explore each of the alternatives; and (3) rank and choose the most attractive alternatives. The core of their approach is the expert interview, which substitutes for more traditional market research. These expert interviews are a combination of a sales process to develop an overall picture of an incubating opportunity and a marketing process, profiling and categorizing clusters of business opportunities, to understand strategic possibilities.
The authors contend that for essentially any future market there exists a set of experts who are close to the technology and applications involved and that it is possible to use them to get answers to the critical questions needed to properly position and launch an innovative product. These experts can be potential customers, suppliers, analysts, academics, or even competitors. The ideal expert would be the future customer who will gain the greatest benefit from using the innovation. The most important qualification of these experts is that they are thoughtful people who are, knowingly or unknowingly, incubating the market disruption that the innovation will exploit.
The expert interviews are the direct opposite of traditional market surveys. They are nonrandom, directed conversations with open-ended questions. They are conducted by your own experts rather than by market researchers. The experts are encouraged to diverge from any script and to explore lines of thinking that emerge during the interview. Do not look for statistical significance from these results. The object is to get in-depth answers that will help you choose the best alternative for your new product by identifying the customers and applications where your innovation will create the greatest sustainable value for the customer. To do this you must identify the potential customer's real needs and constraints, as well as estimate the size of the potential market.
Once the expert interviews are complete, you extract the most relevant information and use it to rank the alternative applications and markets. From this, you can create a strategy for the innovation and develop the right product to address the strategy. This requires a partnership between technologists and marketers. The authors discuss a number of techniques to help in this process, including imagining what next year's annual report will look like if the product is successful; imagining the annual report of your best customer, detailing how your product has helped their success; and determining what customer, or type of customer, best exemplifies the use of the innovation and then imagining a marketing campaign based on that customer.
At this point, you should be able to answer three critical questions about the alternative you select:
The authors then proceed to apply these techniques to creating “the big play” (p. 69), which they describe as “that combination of product innovation, business model, financing, route to market, and complete product offering that maximizes investment return over a relatively short period” (p. 71). Separate chapters deal with positioning, market segmentation, value propositions, and lastly, “finding the next big thing” (p. 133). The section on value propositions is especially interesting, as the authors give their top 12 value propositions and discuss their strengths and weaknesses. They are particularly negative about value propositions based on cost savings to the customer because they are not unique; the projected cost savings are often out of the control of the selling company, and “when you're selling ROI [return on investment] … the lower your price the higher the ROI … that's not where you want to be” (p. 112).
Though this book details the authors' market anticipation technique well, the later chapters tend to be somewhat repetitious, and poor copyediting introduces some distractions. The book would also have been improved by more detail on how one locates and recruits the proper experts, as well as more specific examples of the types of questions used in the expert interviews. Overall, however, the book points the way to getting a solid grasp on ill-defined and emerging markets. As the authors point out, “It is impossible to figure out the immediate future of everything going on in business, but it is possible to figure out the immediate future of what is happening in the areas that matter most to you” (p. 7).