How Surfacing and Correcting Assumptions Leads to Better Commercial Success
Since the first emergence of hypothesis-driven scientific thinking in the Classical era, assumptions have been a necessary precursor to accumulating knowledge and taking informed action. However, assumptions that are not identified and rigorously challenged can skew the entire knowledge accumulation process, and can ultimately come back to bite you. Take this classic Inspector Clouseau gag as an example:
Inspector: What a nice dog!
Man: Thank you.
Inspector: Does your dog bite?
Inspector bends down to pet dog. The dog bites him.
Inspector: I thought you said your dog does not bite.
Man: That’s not my dog.
Erroneous assumptions can be made throughout the innovation process, and may range from deep-seated beliefs held at the executive level regarding strategic options to simple (but critical) information voids in assessing the commercial market. Getting things wrong is inevitable. The goal is to understand when you are wrong and why. In order to minimize damage, innovators must (a) ask the right questions and (b) question the right people.
Inspector Clouseau did get it right when he identified the critical question – “Does your dog bite?” In the case of innovative products or technologies, the critical questions are often variations on a similar theme – “Will this market bite me?” – including:
- Is the market large enough?
- Will the market value my product or technology?
- Do the economics make sense?
- Are there regulatory or technical barriers to adoption?
- Are there competitive factors that should worry me?
However, articulating the critical questions is not enough – asking those questions to the wrong parties can hurt even more than a dog bite.
Innovators must ask the right questions and question the right people.
Take, for example, a client who came to Newry several years back with a new chemical production technology. The global chemical industries market was large and growing, but the targeted customers weren’t adopting the product. Despite having invested $75MM, our client was on the verge of cutting their losses and pulling the plug.
It turned out that our client had asked the right questions – they knew the market was attractive, and that their product had value – but they had missed identifying the owner of the dog. Finding the right, but as yet unidentified, customers in this enormous and complex industry was the key to success.
In order to find these customers, we had to look at the market in a new and different way. The typical view of the chemical industry looks at sales by segments such as pharma, petrochemicals and polymers, and coatings. Newry took a different approach: we focused on specific chemical reactions that occur in those end industries, sized the market by reaction throughput, and identified which reactions were best suited to our client’s technology. These analyses revealed a list of highly promising target customers that had been excluded from our client’s original marketing strategy, and interviews confirmed their strong interest in our client’s product.
Understanding the real reason why the product was not succeeding – i.e., correcting the initial erroneous assumption and finding the true “dog’s owner” – was the difference from scrapping a $75MM investment to executing a business plan that has resulted in years of profitable sales.