In “The Challenges of Measuring Non-Existent Markets” Scott D. Anthony outlines four principal challenges in measuring non-existent markets:
- Data does not yet exist. When a market doesn’t exist, there are no baseline market research reports or time-series data sets to analyze.
- Lack of comparable products. Without existing data, there is a natural tendency to look for good analogies. However, for truly new markets, there typically are no good historical analogies to look for to estimate uptake rate and penetration. Basing estimates off flawed analogies can lead to dramatically incorrect conclusions.
- Existing consumers provide bad data. When a new product or service has disruptive characteristics – that is, it trades-off some dimensions of performance for new benefits around simplicity, convenience and low prices – trying to estimate the market size by talking to existing consumers in markets that appear to be similar to the new market is very dangerous. The existing consumers will naturally discount and denigrate the innovation because they compare it to products and services they are accustomed to consuming.
- New consumers provide unreliable data. Consumers are notoriously bad at visualizing the uses of products or services they are not yet using or do not exist. Because of this, the predictive value of consumer research into emerging markets is low. Furthermore, new markets often develop in surprising ways with surprising consumers, making it difficult to be sure that you are even gathering data from the right sources. Finally, consumers that are currently not consuming a product or service lack reliable reference points, making their reactions to prices somewhat unreliable.
I am aware of two other “customer development” models that are similar to Steve Blank’s “Four Steps to the Epiphany” that are designed to address early market exploration:
- Mark Leslie’s “Sales Learning Curve”
- See HBR “Sales Learning Curve” article
- See Venchar Blog Feb-4-2005 “Sales Learning Cycle” in particular http://www.venchar.com/files/markLeslieSLCslides.pdf
- See “Who Has Time for This?” Blog Sep-7-2005 “Best Startup Advice I have“
- SyncDev “Sell Design Build”
- See “Sell Design Build” White Paper
Slide 28 defines an Earlyvangelist customer
- Has a Problem
- Know they have a problem
- Has Been Actively Looking for a Solution.
- Has Put Together a Solution out of Piece Parts
- Has, or Can Acquire, Budget
Slide 29 Customer Validation: Four Big Ideas
- The goal is to build a repeatable sales process. Orders are proof the process is working.
- Only earlyvangelists are crazy enough to buy unfinished product.
- No orders? Back to discovery process.
- Early customers help spec version 2.
I am looking for other books, methodologies, tools that address the early market exploration problem. In particular that address Clayton Christensen’s observation in the Innovator’s Dilemma that “markets that don’t exist cannot be analyzed” by offering techniques for exploring emerging markets. In particular any recipes for what Christensen calls a parallel process to development (and what Steve Blank calls customer development):
Only by creating a parallel process for developing and shaping disruptive ideas—one that acknowledges their distinctive features—can companies successfully launch disruption after disruption. Such a process relies more on pattern recognition than on data-driven market analysis. After all, markets that do not exist cannot be analyzed. Even when numbers are available, they are never clear.
from “Six Keys to Building New Markets by Unleashing Disruptive Innovative by Clayton Christensen et. al.