Ensuring success of a new product idea is a challenge difficult to address. In the case of SMEs it could be as crucial a question as the life or death of their business.
This article explores the factors that an organisation should consider when making decisions on new product ideas to be released on to the market. The principles proposed in this article would also help an innovation cell within a larger organisation achieve a better success rate.
The situationGenerally, people involved in innovation are expected to be masters of their trade that exhibit a strong natural urge to innovate. However, they are generally not equipped with expertise in "market" knowledge. Therefore, a group planning to create a new product idea in an organisation preferrably requires complementary skill sets in both the market and the technology knowledge.
Even if this problem is addressed by the formation of the right group, it is difficult to judge whether a new product idea really has potential or not. This is precisely the issue addressed by the "A-KIT" principle, elaborated on below.
The A-KIT principleSuccess of a new business idea in any market is determined by the extent of Affordability, Market Knowledge required for implementing the idea, Innovation content and Technology used. Success factors of the business idea can be measured using the following, where each of Affordability, Knowledge, Innovation and Technology are measured in a scale of 0 to 1:
Reduction in potential users due to affordabilityThis is the most important of all the factors mentioned. This factor measures the reduced percentage of potential users of the product idea due to the cost of the idea. This is crucial, because it can drastically affect the ROI computation for the product idea. This is defined as the percentage of affected users (or organisations) who can afford the business idea. Affected entities are the total number of entities who can avail the benefit of the business idea, without considering the cost. In other words, it is calculated as follows :
Total number of entities who can potentially benefit from the business idea
Market knowledgeThis factor considers the amount of market knowledge involved in implementing the business idea. Measurement of this criterion is dependent on the context of the maket.
The guideline for scoring on market knowledge is as follows:
Scores can be made evenly between two guiding points, for example a score of 0.2. The guiding values do not have uniform value increases, since basic values contribute much less than the advanced values.
The meaning of each guiding point is elaborated on below, however, it should be noted that these are indistinct meanings and can be concretely defined only for a given context and organisation:
Only a faint touch of market knowledge needed for implementation of the business idea. One example of this could be the formulation of a new pricing model for a telecom by a telecom provider. Here, the market knowledge used is of minimum level.
Uses the market fundamentals for implementing the business idea. An improvisation of usage of an existing technique could be an example for this.
Uses advanced market knowledge for implementing the business idea.
Uses front-end technologies for implementing the idea. In some cases, it could mean discoveries or new concepts in the market for the implementation of the business idea. An example of this is the search engine algorithm for the Google search paradigm.
InnovationThis factor measures the level of innovativation of the business idea. In other words, it measures the novelty of the idea in the context of the market. Innovative measure does not necessarily mean the measure of technology innovation. An innovation could be completely unrelated to technology.
The guideline for scoring on innovation is as follows:
As the name suggests, this is a case of a very limited innovation. One common example is service organisations associated with the IT industry. Here, the innovation in the field of IT is very limited.
When the innovation is there, but of a limited nature it would be categorised in this section. A classic example of this could be a user interface change in existing software to make it easier to use or to make it more effective.
For innovation that is substantial, but does not open up completely new opportunities. One example of this could be the use of the "undo" button on various software systems.
This type of innovation could bring in a complete change in terms of opportunities available. A good example of this would be a drug curing cancer.
TechnologyThis factor measures the appropriateness of the technology used for implementing the business idea. More often than not, it would be a measure of cutting edge technology. It should be noted however, that this is disjointed from the Innovative measure of the business idea.
The guideline for scoring on technology is as follows:
|Guiding points:||Initial||Basic||Advanced||Cutting edge|
In this case, the technology needed for the business idea needs very little technological help to make it fly.
A business idea with limited use of technology with respect to contemporary ideas. One example of this is a Visual Basic technology based software solution for automating the operation of the hotel industry.
A business idea with considerable use of technology would be categorised here. One example of this could be fly-by-wire technology for aircraft operation.
When the technological need becomes crucial for the success of the business idea that it needs to use fore-front technologies. One example is the recently invented cyber knife for treating cancer patients.