Market Creating Innovations – The Founder’s Holy Grail
For Founders in the early stages of their Startup journey, often, there is a lack of clarity about Positioning and Go2Market strategies. It is very important for Founding Teams to have a structured approach on how to Position their products or services based on what problem they are trying to solve and which customer segments they are trying to pursue.
Embarking on an entrepreneurial journey needs much more than a great idea. Many a time, Start-up creation/growth is driven by passion, purpose, and personal biases. For Founders in the early stages of their Startup journey, often, there is a lack of clarity about Positioning and Go2Market strategies. It is very important for Founding Teams to have a structured approach on how to Position their products or services based on what problem they are trying to solve and which customer segments they are trying to pursue.
Professor Clayton Christensen is credited with the classifying types of Innovation.
- Sustaining (Performance-improving) innovations that replace old products with new and better models
- Efficiency Innovations that help companies make and sell mature, established products or services or improve productivity
- Market-Creating Innovations that “transform complicated or costly products so radically that they create a new class of consumers or a new market that didn't exist before.”
While Innovation might be the common driver, the focus, application of resources and the quantum of impact differs within each of the following categories.
Innovation Bucket decides how big a Start-up can get and what kind of "Value" does it create in the Ecosystem (new industries, new jobs, and new economic growth). Market-Creating Innovations tend to have higher valuations both in Private and Public Markets
Growth Strategies (borrowed from Strategy) Framework helps Founders to examine drivers for new Product and Service Offerings to win or fail in the market place and how to proactively fine-tune focus/prioritization to formulate a winning strategy in the long run.
Dominant — Product or Service Performance is much better than alternatives in the market (Zoom.us or Netflix). The company charges significantly less and pursues a large share of the Market.
Differentiated — Product or Service Performance is better while Price is higher (Tesla or Whole Foods or Earlier Versions of iPhone). Allows Companies to target Underserved Customers
Disruptive — The Product or Service may be simpler or inferior to existing Options, but charges much less (Google Docs, Vivo). Targets Overserved or non-consumers with Product or Service Offerings.
Start-ups often pursuing "Dominant" or "Differentiated" Strategy achieve Escape Velocity faster than others
Entrepreneurs can leverage these approaches to calibrate their own Journey and do course corrections. However, one shouldn't try to artificially induce changes to their business models and force-fit these methodologies to look better.