Assessing an Opportunity - Market Readiness

“Market Not Ready!!“

1. Neural network software is available since 1980s. This algorithm mimics the structure of the brain. It improves itself by feedback from various experiences, just the way humans learn by various life events. This was conceived to be exciting technology as computers can teach themselves & develop solutions which no human can develop from scratch. However, neural networks have shown little commercial success!!

2. Desktop Video Conferencing has been there since 1990s with various companies like xerox, Intel, IBM, Picturetel investing in it. Inventors swear by this technology & companies keep on making billion dollar business projections. It is not bandwidth or technology problem. However, companies see little commercial success.

Industry is agog with various such stories every year. What makes some products/technologies  fail commercially whereas few becomes successful? One of important measures of opportunities is testing market readiness. Answering the question “Why Now”? As technologies evolve & costomer preferances’ change, it is important to assess if market is ready for. Testing market readiness involves answering following two questions.

1. Is there a critical mass in early stages? As product is introduced to market, there is certain market segment that either has compelling value proposition or has enough emotional need to buy. Later segment is essentially enthusiasts who want to be first in their group to use any new product. They have enough free cash to invest. They are not unduly concerned about return on investment. But, what is important here is to identify these customers & assess their market size. There should be a critical mass of these customers which should make project viable. This segment should provide enough cash flow & ROI to satisfy investor demands. Majority of companies fail to sustain themselves during this phase & gets shelved for non-viability. Apple’s iPhone is classic example. This product has created enough interest in early users to sustain itself.
2. Can product satisfy needs of mainstream customers? Ultimately products have to satisfy underlying needs of mainstream customers to sustain in market place. It becomes compelling for some companies to invest in products looking at early users. However, emotional needs won’t make products successful in the long run. Companies should ask if opportunity is real? Ability to create real value proposition & ability to serve profitably along with ability to sustain it in long run is essential. Will iPhone be commercial success in the mainstream market in longer run? Answer to that question depends on ability of it to satisfy various real customer problems. Value conscious mainstream customers shall look for utilities rather than fancy features.

Ultimately the companies that succeed are the ones which continuously monitor critical mass of early adopters and ability to transition it to mainstream in the longer run.