Many technology-driven corporate companies tend to thrive on the exploitation and commercialization of what used to be a breakthrough technology. However, industries are continuously evolving, which makes it increasingly difficult over time to realize growth in markets that are known to the company. At the same time, market needs change and novel trends emerge, drastically impacting the field of play. Consequently, incumbent companies are urged to innovate, both from a technological and a business point of view, to keep their value proposition relevant.
We noticed one of our customers, a global healthcare solution provider specialized in diagnostic imaging with over $3 Bn in annual turnover, experiencing this challenge. On the one hand, healthcare needs are changing at a fast pace. We see several evolutions, such as patients becoming digitally empowered (think of Doctor Google), care providers operating under increasing financial pressure and health systems moving towards value-based healthcare, just to name a few. On the other hand, as an incumbent market leader, the company faces pressure from manufacturers in emerging countries, so they needed to take action to stay one step ahead.
As a market leader, our customer realized they should leverage their current technology as a competitive advantage and adapt it to novel applications in adjacent markets. This would ultimately unlock growth for the company and strengthen their market position.
Together with our client, we went all-in on three must-do’s to successfully identify and pursue innovative product offerings in novel markets:
1. Get deep adjacent market understanding
Market leaders know the ins and outs of the markets they have been operating in for years. However, other markets are unexplored territory. It is therefore crucial to build a validated understanding of potentially valuable markets out there. This starts with determining the relevant dimensions to assess potentially adjacent markets on. This can range from customer needs and benefits, over technological readiness, to road-to-market. Next comes the identification of markets that show similarities to the ‘core market’ for at least some of these dimensions, followed by an in-depth analysis of the attractiveness of each market based on the extent to which synergies are present.
Whereas this may sound as an intuitive exercise, reality shows it may be harder than you think. When you’re immersed in the business, there is little time nor capacity to take a step back to create this holistic view of the field of play. This focus on the day-to-day rat race makes it tough to identify which other markets could be relevant for the business, let alone to distill and pursue promising market opportunities.
An appropriate approach to overcome this hurdle, is to complement internal know-how with an outside-in analysis. This allows to analyze the situation from a distance, identify valuable adjacent markets and leverage cross-industry experience to inject novel ideas and insights. Thanks to this approach, our customer in diagnostic imaging identified more than 10 adjacent markets and narrowed the scope down to 5 tangible market plays, each with a potential of +€100M in revenue. Even if only one of the markets get unlocked, a sustainable growth track for the next 5 to 10 years is ensured.
2. Find the brightest minds in all corners of the organization
Once the valuable adjacent markets are identified, it is crucial to understand how to adjust the product offering to the needs of these markets. This requires a crisp view on the needs of potential customers, what a useful solution would look like, and how it should be built. Especially in highly complex technology-driven environments such as diagnostic imaging, deep technical know-how is required to understand how to adjust the product architecture accordingly.
To put the pieces of this complex puzzle together, it is crucial to find the brightest minds in all corners of the organization. Our customer employs more than 2,000 FTE in the EU, US and China. The company realized that they have all crucial know-how in-house, but both their technical and business expertise were scattered all over the world. Thanks to a unique digital way of involving employees, the management team could involve 600 people across the entire division and was able to identify no less than 25 high potential talents that had not been on their radar before. In addition, a new product architecture blueprint was identified with the potential to serve multiple market domains.
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3. Align leadership and ensure active endorsement
Leadership endorsement throughout the entire innovation process is crucial to ensure identification of promising avenues, as well as successful implementation. Once the organization has identified promising innovation opportunities and has put sharp business cases on the table, the leadership team needs to validate the different cases, align on the way forward and commit to the investments required to bring the innovations to life. This step is essential to kickstart the implementation phase, and to give a clear message to the organization of the leadership’s commitment to innovation.
In case of the diagnostic imaging company, the leadership team validated ten concrete business cases on client desirability, technical feasibility, and market potential. As a result, they selected three concepts for further exploration, and allocated the necessary resources to further pursue these opportunities.
Overall, by leveraging internal know-how, complemented with outside-in analysis, and driven by the full support of the leadership team, the company found its recipe for successful innovation.