What’s Next: Identifying Unmet Demand–the Key to Long-Term Innovation Success
Achieving a breakthrough innovation is every company’s goal. They’re extremely profitable, can redefine the basis of competition, and can reinvent companies—and markets.
As the most desirable business goal, breakthrough innovations don’t come easy. Even though companies dedicate massive amounts of time, talent and resources to their innovation efforts, few initiatives yield something that’s truly a runaway success. In the 2013 Breakthrough Innovation Report, we defined a breakthrough success as one that generates $50 million in sales in year one and sustains 90 percent of that level in year two. That’s a tall order, and research shows that only one in 200 genuinely new consumer packaged goods products in the U.S. measure up. Even by the more modest standard of meeting the company’s targets for an innovation, the score reaches no higher than one in 10.
Our research suggests that’s because companies don’t originate ideas for new products in a sufficiently disciplined and focused way. So what if, rather than casting a wide net during concept development, companies made a conscious decision to focus only on the truly promising concepts at the start? That would be a radical shift for many—sidestepping the common practice of using a test-and-improve cycle to refine a large group of possible concepts until they generate a promising consumer response. But taking a more direct, sharpened approach has proven to be a highly successful strategy. Our experience suggests that doing so can lead to a better than 85 percent probability of meeting the product’s financial targets.
So how do companies identify these more attractive concepts? Enter the search for profitable, unmet, consumer demand—the holy grail of growth.