How To Evaluate Market Opportunity → When To Launch A New Product. Part 2, The Box

Hello back, on the Launching Toolbox Series.

In the previous part we had a look on the main concepts and models that evaluate the relationship between a disrupting technology/product and market readiness:

• Product engines + conditions for an innovation to emerge: desirability, feasibility and viability
• Gartner’s Innovation Hype Cycle (or The Wave) → how people are perceiving a new technology on its lifetime cycle → emotional value
• Technology Adoption Lifecycle (aka The Bell) → how different social groups are adopting a new product/technology → utilitarian value
• The chasm (aka Death Valley) → between the first group that is adopting an innovation (Innovators + Early Adopters) and market majority is a gap. Very hard to cross for most of the startups and small companies.

Now, is time to build the The Toolbox and put all the models together. By getting one single view over the market forces, we’ll prepare the ground for a real use-case and see if there is a real, big, and actual market potential for smart locks.

Connecting the dots. And the curves.

The market traction shows its first signs when the Innovators and the very first Early Adopters are starting to use the product and/or technology. They are delighted, they are advocating across social bubbles, and eventually more people are following them. The glam is at its highest.

At the end of the market life span, usually the entire customer lake is drain out, or the space is being already disrupted by new players. Last Laggards are finally adopting the product, but its days are counted down. It will soon rest in peace among its peers in the Grave Memorial.

The Market Cycles

There are two important market windows, or cycles:

Early Market → The Short Cycle

First window opens once the MVP is launched, public or close beta. The technology is not yet mature, has a lot of interoperability issues and could be buggy. But the Innovators are excited, TechCrunch is spreading the word and the product is climbing up on ProductHunt.

There is a plethora of such of products, coming not only from startups but also from corporate innovation centres. Innovation is hard, but getting market traction is much harder. So, most of the products are dying by crossing The Death Valley, failing to scale from Early Adopters to Early Majority.

Classic examples: Google Glass, Apple Newton, MySpace, 3D TV. More here.

Complete Market → The Long Cycle

If the product/company is not dying during the Valley of Death (not being able to bridge the gap between Early Adopters and Early Majority), if the technology itself is not killed by the mess of fighting standards and if it proves some real benefits for the people out of the building (just be aware, your manager or the guy next to you are not real customers), it potentially may succeed on long term. This is a moonshot, this is a product that proves its innovative component is adopted by the market on a large scale.

Examples: Spotify, Netflix, Facebook, e-commerce, smart phones

Summing up (from Part I):

• “The Bell” curve shows how an innovative product is adopted by the customers. This is the ADOPTION.
• “The Wave” shows what people feel, their expectations. This is the SOCIAL HYPE

The Challenge

Is there any correlation between social hype and market adoption? Between emotional and utilitarian value?

By using the Long Market Lifecycle described above as calibration referrence (starting when the first customers are in, and ending when the technology is dead), some correlations are shown:

1. Early Adopters are driving the Inflated Expectations
2. Valley of Death (adoption) triggers the Disillusionment phase
3. The tipping point fits with the Slope of Enlightenment

The Gates and The Paths

There are four points where the hype waves are touching the adoption bell. These are The Gates Of Product Lifecycle.

✅ Pioneers Gate → category starts → the first MVPs are launched, the hype is booming. The golden rush begins.

There are several types of entities that usually enter here: startups, serial entrepreneurs, university spin-offs or the deep pockets FAANG’s “garages”.

⭐ Golden Gate → growth starts, hype is decreasing. This is the gate to the Holy Grail, the mass market, Early and Late Majority.

Most of the startups are still inside of Dead Valley but some of them already got some good investment deals.

⚠️ Disruption Gate → category is being disrupted → the category is already commoditised, there is not any other differentiator beside price. The perfect moment for some new cowboys to start disrupting and for old players to die.

❌ The Grave Door→ category dies and goes in peace in the Humanity Innovation Memorial

… and two important market opportunity phases:

The Golden Path

This is a good time for blue chips to acquire → the technology is doing well and the valuations just started to rise. FOMA is already started.

Example: RPA, Robotic Process Automation, with its flagship growing-like-crazy startup, UIPath.

The Harvest Season → is the place where the technology/innovation is already established and the users (and their money) are flowing in.

During the Harvest Season only the deep pockets can enter. The cost of market penetration is at its highest — there are already some well established players and the cost of acquiring one of them is huge.

Also, the first IPOs are seen around this point. So, are people already talking about Uber and Lyft IPOs? Well, this is a good sign the Harvest Season is coming for ride hailing industry.

Conclusions

• There is a clear correlation between social hype and market adoption. The Gartner Technology Hype model and Moore’s Adoption Cycle can be unified by using market open/close moments as calibration points
• In spite of common believes, the market starts to perform well when the hype is low.
• There are two conditions for disruption: the current solution is already commoditised and a new solution and/or innovation is technically feasible.
• There is not a right time to invest in developing of a new product. Everything depends on the resources, the appetite for risk and the launching moment.
• Choosing the right launching time is crucial. Too early is a big threat for companies that don’t have the resources to sustain it until the Early Majority comes in.
• The moment when the public perception and the hype is skyrocketing, is the most dangerous time. Don’t open the champagne yet, tough times might come.

This was the theoretical part, in preparation for the big challange: is there a true/real market potential for smart locks now, as we speak? Is it the market ready for the shift?

Stay tuned.