Market Sensing: How to Stay Successful in Today’s Unpredictable Market
Editor’s note: This post originally appeared on the Bain Public blog.
As today’s uncertain market rapidly changes, remaining successful requires a more entrepreneurial product-orientation. Faced with breakneck business and product growth, roadmap decisions need to be non-bureaucratic, yet remain collaborative at the same time.
During these changing times, knowledge creation is essential. It’s now more important than ever to scan the external environment for signals, look across the market for unmet customer needs, identify significant opportunities about to unfold as well as seize them, integrate them and make use of them commercially.
You have products that deliver tremendous value for your customers and significant revenue and profitability for your business, but what if everything was about to change significantly, and you had insights into those changes? How would you position your business?
Using market sensing and knowledge creation
Market sensing is a research technique involving the collection of qualitative data through interviews, focus groups, and questionnaires to help understand the external market. This method offers a better way to understand consumers, including why they choose certain brands over others and their feelings toward particular businesses.
What’s the difference between market sensing and market research, you ask? Market research focuses more on the company perspective, whereas market sensing targets the customer perspective. It’s a tool for developing an organization and responding to market dynamics.
The knowledge creation process of identifying the worth of new information and making use of it commercially brings together both market sensing and product innovation. In doing so successfully, this shows a product company’s capability of being able to scan their external environment, look at uncertain changes, meet the needs of the market (both present and future), increase customer value, and outperform competitors.
According to Harvard Business School, 95% of new products fail. But how does this happen? The problem lies in product creators using an ineffective market segmentation mechanism — and they aren’t able to hone in on a knowledge creation process that works.
Knowledge creation is central for assuming technological innovation; it’s a strategic means to develop or enhance unique products and services. This knowledgebase that you create allows you to increase productivity and upgrade your products in a way that effectively meets the needs of the market.
Be innovative and flexible
Organizations that are slow to react will be devoured by the market, which is why knowledge creation is essential. One of the toughest things to do as a product manager is to identify, seize, map, and create a knowledgebase. You have to be flexible and less bureaucratic toward intelligence obtained from the market, and pay close attention to innovation to ensure the decision-making process is more fluid. This makes it easier to take advantage of changes and trends in the market.
Test market need: product opportunity is all about timing
When you come across potential product opportunities, you need to make sure you’re making the right choice. You can change everything in your startup except the market. In a terrible market, you can have the best product in the world, and it won’t matter. If there’s no customer need, everything else falls apart.
The number one cause of startup failure (42% of the time) is no market need. CB Insights.
You have to spend a lot of time up front to make sure you’ve thought through your market. Equip yourself with a knowledgebase of information. Use market sensing and market researching techniques. Identify the struggling moments your customers are experiencing and build around that. Get to know the ‘why’ more than the ‘what’ — ask the critical questions. Customers take life as it comes. This is where showing flexibility toward product innovation comes into play. When faced with a task that needs doing, they’ll come to your product.
You should always be asking yourself two questions: What is my riskiest assumption? What is the smallest experiment I can do to test this assumption? Running frequent experiments allows entrepreneurs to test each element of their vision.
The only way to test your assumptions is to put your product in front of real users for product validation. And you’ll often find that you have to go back to the drawing board — that’s okay. This allows you to refine your understanding of customer pain and ensure your product is a success. It’s your opportunity to listen for concerns and get to the root of the issue your customers are facing.
