Vol. 1, No. 3
June, 2000
Doing something better than anyone else is the heart of the innovation process. Certainly, technological improvements are important. The problem, as noted in the last issue of IR, is that a lot of inventors, investors, and innovators put too much stock in being better. The basic problem with the Better Mousetrap Theory is that better mouse trappers typically ignore all else; they assume that being better in usually some relatively minor way is enough. Typically, improvements need to be significant, and they need to be supported by a well-planned marketing strategy.
The modern marketplace is a very complicated affair. It typically takes a coordinated attack on a variety of fronts to carve out a niche in the marketplace. It is often overlooked that new product success always comes at someone else's expense. There are no empty shelves or unclaimed customers floating around. Competition is everywhere, and every new product has an established alternative. Every shelf, every customer, and every dollar is committed somewhere. Whatever shelf space, customer loyalty or sales a new product gets, it has to take away from somebody else; and the last time I checked, there wasn't anyone out there who was giving away shelf space or market share. The marketplace is a battlefield. Territory is fought over, and gained or lost. This isn't a peaceful process. It is warfare, with every bit of turf occupied and hotly contested. New products are the invading force; and existing products are the dug-in defenders. The latter is experienced, knows the terrain, is dug into the channels of distribution and may well be fortified by channel loyalty. Furthermore, these defenders will likely have an element of support from the resident populace - your potential customers. Don't expect them to rush to the beach or landing strip to greet you with open arms and pocketbooks. In general, only about two percent of consumers are innovators. The rest will hang back at least a little, depending upon their personality profiles and the degree of customer loyalty earned by the defender. Don't expect anyone to be politely knocking at your door. I expect even Mr. Emerson passed by a goodly number of better mousetraps as he purchased existing products out of habit, loyalty, or in an effort to avoid the risk always associated with the new or unknown. Expect to fight for every inch of shelf space and for every sale. The notion of the world beating a path to your door, while you stay home perfecting your mousetrap, is more of a pipedream than it is a theory. It certainly isn't reality.
First, introducing a new product isn't an ice cream social. It is a war in which there are losers and winners. For every point of market share won, some one loses a point. For each dollar of profit earned by a new venture/product, someone else has lost profit. For each person hired because of the success of a new product, someone else has lost his or her job. The stakes are high, and the battle can get rough before it is over.
Second, product superiority is crucial. That's right, a better mousetrap is essential to market success. The failure rate of copycat or incremental improvement products is high, especially in our value-oriented marketplace. Consumers are better educated than ever before and a lot of consumers and companies are shopping smarter in an effort to get more for their money. No, this isn't a return to the Better Mousetrap Theory, far from it. It is simply an application of a long established principle of warfare that an invader has to be better than a defender to capture market share. According to major General Fred Marty (US Army, Ret.), it takes three times superiority to dislodge a well-defended opposing force. U.S. forces have used this ratio in strategic planning for at least as far back as World War II. Perhaps we haven't spent enough quality time and effort doing research on strategic planning in the marketplace, but I couldn't find anyone who was willing to hazard a guess as to what the actual ratio is in introducing a new product. The actual ratio isn't as important as the principle here: significant new product advantages are essential in doing battle in the marketplace.
Third, significance isn't defined by the inventor or the innovation. In this contest, only the opinion of the marketplace counts. To be sure, product advantages can often be quantified and expressed in technical terms, but the opinion that really counts is that of the marketplace. Inventors and innovators should not assume that customers, or the marketplace, share their enthusiasm. Here, it is the customer's view that is important.
Fourth, expect to leave home. The world isn't going to beat a path to your door, so you will need to go out into the world. Actually, you will need to venture forth well before your product attempts to penetrate the marketplace. Innovators who stay close to home during the research & development phase of the innovation process are likely to mold their product in their own image and miss the needs and wants of the marketplace in the process. End user research should be a part of the development process. It is important to get to know the marketplace early on. Far too often what little research that is conducted by inventors is done in an effort to validate what has already been done, rather than guide the development process. Often, such research is limited to family and friends or is conducted in such a manner as to bias results in a positive direction. Even under the best of conditions, buying intention research is of very doubtful validity. It is difficult to replicate actual buying conditions, so results often do not reflect reality. Untrained researchers make such research even more questionable. Unfortunately, conventional wisdom keeps inventors close to home and their ideas under wraps. To be sure, inventors need to be careful to avoid public disclosure, or to leak too much information about their inventions, but they desperately need to get more input from the marketplace as they develop their inventions.
Fifth, strategic planning is essential to success, even when the competition is weak. For example, when the Allied forces gathered to do battle with Iraqi forces in Desert Storm, they amassed a far superior force. Still, they didn't get cocky. They planned their attack. They kept the cost to the Allies low by doing an end run around the Iraqi forces and hitting them from behind where their forces were weak. A frontal attack would have worked because we had the firepower on hand, but it would have been costly. The same is true in the marketplace. Frontal attacks are costly and sometimes don't work, particularly where product advantages or firepower in the form of promotional resources or marketing expertise are marginal. Like in Desert Storm, a far better strategy is to look for the opposition's weak points and attack there. Instead, many inventors seem to be fond of attempting to launch their products where the competition is likely to be the strongest and at the point where the competition is most likely to be the most determined to defend. In the case of consumer products, this is likely to be the large, high volume mass merchandisers. A better strategy is to attempt to penetrate more modest markets or channels, move up the learning curve (by learning from one's mistakes), establish a base of customer loyalty and become better known in the marketplace. It takes a sizeable beachhead from which to launch and support a major attack in either the marketplace or battlefield.
Sixth, there is indeed opposition. Over ninety percent of WIN clients tell us there is no competition for their invention. If there is no competition, there is little need to pay attention to competing products. This is a great way to get ambushed or outflanked. There is always competition, and competition never takes kindly to interlopers attempting promotion, leapfrogging your improvements or copying your new product, among other competitive reactions. Ignoring the competition is also a great way to underestimate the cost of doing battle. Launching new products can be very expensive; and in general, the stronger the competition, the higher the cost of entering a new market. A lot of good new products fail simply because they were launched with inadequate working capital. Growth always consumes capital and rarely, to the point of never, produces capital. Inadequate financial planning always creates an opportunity for the competition. Hot new products that run out of capital, run out of steam and often never recover their momentum.
Seventh, do your homework. Better mouse trappers frequently fail because they have not taken the time to learn the lay of the land they are fighting over. They do not know what channels of distribution are best for their new product; they frequently know even less about these channels. Near ignorance of business practice and customs is the norm. Likewise, the mix of the product, price, service, distribution and promotion has been given little thought. Their launch into the marketplace is often more of a casual stroll in a park than it is an invasion of well-defended territory. They do not know their competition, the channels of distribution or the needs or habits of their target market. In fact, they may not even know that they have a target market as they stroll right into the waiting guns of the enemy—the established competitors.
Gerald G. Udell, Ph.D.
Copyright © 2000 by The Innovation Institute.
Permission to copy for free distribution granted to SCORE/SBDC's