Urenio Watch Watch: Innovation

In-market Innovation

Alexander Kandybin, Surbhee Grover, and Nami Soejima of Booz & Company write about an alternative product launch strategy that they call in-market innovation. This strategy recommends putting out new products in large volume and letting the marketplace ‘” not focus groups ‘” separate winners from losers.

The authors argue that traditional market research (chiefly, consumer surveys and interviews as well as sales data for related products) is not a particularly good predictor of success. Worse, it tends to thwart creativity. For one thing, market research is not suitable for assessing novel product ideas. An innovative product, virtually by definition, is not going to have existing real or anecdotal data to support whether or not it will be well received. Consumers cannot respond intelligently to items they’ ve never heard of or seen before. To circumvent this shortcoming, companies often focus on products and ideas that are research-friendly ‘” in other words, incremental offerings that seem to fulfill an existing, discernible need. As a result, true innovation loses out to a proliferation of line extensions.

With the new approach (called in-market innovation), companies debut a substantial number of new products with limited up-front testing or filtering, and the marketplace itself doubles as the focus group. Rather than attempting to predict how products will perform through old-fashioned studies and surveys, in-market innovation lets the consumers dictate the portfolio of winners and losers. Although this approach may seem to be more expensive than market research (because of the larger number of items developed and launched), a deftly implemented in-market innovation strategy is potentially more efficient and less costly than traditional efforts and often provides a quicker path to enhanced revenue.

Moreover, because in-market innovation requires true collaboration with consumers through simulations and mini-launches, it enables companies to enjoy an early, quick, and accurate read as to whether customers really want a new product and would be willing to pay for it. This lowers the risk and, thus, the cost of each product debut, and lets companies allocate investments better to support winning brands and sidestep losses associated with failures.

To best understand the value of in-market innovation, the authors analyse how the strategy can be implemented in each of the four steps of product innovation:

  1. Feasibility
  2. Product Development and Design
  3. Commercialization
  4. Branding

The authors conclude that when companies focus on learning from real world performance rather than the time-consuming and expensive market research techniques that are traditionally used to measure customer intent, innovation is the reward. Indeed, more than anything, in-market innovation is a strategy that stresses the value of the new and the creative ‘” the engines of business growth that few companies today can afford to ignore.


Strategy+Business magazine – The Promise of In-market Innovation