Commercial Success from Innovation

Commercial Success From Innovation

Prof.dr. Stefan Stremersch

Erasmus University Rotterdam IESE Business School
Rotterdam, the Netherlands Barcelona, Spain
Stremersch@ese.eur.nl Sstremersch@iese.edu

© Property of Stefan Stremersch©

In Search for Commercial Success…

A Great Solution

$trategy Unmet
Generating Customer
Profit$ Needs

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… From a Structure Perspective…

Science Market

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1. The Visionary Leader

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2. Delegate Responsibility to Functions

R&D has the responsibility to
come up with innovative ideas
and solutions

Marketing has the
responsibility to understand
customer needs

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“Highway to Hell”
Degree of
Involvement
in the job
R&D/ Engineering

Marketing

Discovery Development Launch Growth
(Idea  Concept) (Prototyping  Manufacturing)
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3. Grassroots Innovation

Grassroots Innovation – emerges from the grassroots.
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Grassroots Innovation:
Cases

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Grassroots Innovation at
Alcatel-Lucent

N. Camacho, I. Verniers, C. García-Pont and S. Stremersch
(2012), Alcatel-Lucent: Marketing the Cell Phone as a Mobile
Wallet, IESE Business School, Case M-1279-E. Link:
http://www.iesep.com/es/alcatel-lucent-marketing-the-cell-
phone-as-a-mobile-wallet-83845.html
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iTREK: Open Innovation with Students

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Symbiosis Between Science and Market
Degree of
Responsibility
and Passion
R&D/ Engineering

Marketing

“Stairway to heaven”

Discovery Development Launch Growth
(Idea  Concept) (Prototyping  Manufacturing)
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… From a Process Perspective…

Science: Market:
Discover new technology and hypothesize Discover unmet customer needs and
how it can be used to solve user needs hypothesize how they can be solved
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The Shortest Distance From Lab to Market

Market Early Business
Hypothesis Validation Model

Learn and Adapt Learn and Adapt

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When you make a business plan, the only thing you know
for certain is you will not execute according to the plan

“Everybody has a plan until they get punched in the face.”
Mike Tyson

Developing Your Market Hypothesis



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How Do You Find What’s In the Horizon?

© Property of Stefan Stremersch© 16

“Prediction is very difficult…”

“…especially if it's about the future.”
Niels Bohr
Nobel laureate in Physics (1922)


Hypotheses from Observation

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“We found Koreans are the
second hardest working
people in the world. So we
devised a way to have the
store come to the people.”

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Customer Intimacy,
Not Customer Surveys.
Few

Many

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Early Validation
of Your Market Hypothesis



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Early Validation:
Can Only Be Done by Doing It!

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“If you shipped your product and you’re not ashamed of it,
you’ve probably shipped too late.”
Reid Hoffman
Executive Chairman and co-Founder of LinkedIn


Validation from Experimentation...

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27


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Validation from Experimentation…

“Blockbuster” Roll-Out “Controlled” Roll-Out

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Business Model



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Business Model for Mobile Payment

Consumer’s Bank Payment Card Merchant’s
(Card Issuer) Network Bank

Consumer Merchant

N. Camacho and S. Stremersch (2012), Rabobank Corporate Netherlands: Turning the
Smartphone into an Engine of Bottom-Line Growth, IESE Business School, Case M-
1286E. Available from: http://www.iesep.com/
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Business Model for Mobile Payment

App-based A Full Solution Software-as-
Model for Merchants Service

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How Can Ryanair Fly You So Cheap?

Avgerage Fare (EUR)
324
267
235

94 106.6
44 65

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Ryanair Economics:
London-Barcelona
90
1
80 5.5 Advertising revenue per
Profit passenger
6
70 4 Subsidies
2 Cost = EUR 70
60 Credit card handling fee

50 30 Priority boarding
40
One bottle of water
30
Checking-in bagagge
20
35 Ticket price
10

0
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In Summary:
The Hot Spot of Commercial Success



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In Summary:
The Hot Spot of Commercial Success

A Great Solution

No-Customer
No Profit
Failure
Failure

$trategy Unmet
Generating Competitive
Failure
Customer
Profit$ Needs

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In Summary:
Conclusions
• Grassroots innovation: essential in a firm’s innovation
strategy to fuse market and science
• Formalize functional co-operation: Avoid highway to hell

• The only thing you know for certain is you will not
Market Early Business execute according to the plan
•
In innovation, prepare for failure. Otherwise, you are
Learn and Learn and
Adapt Adapt not innovative enough
• Learn & ADAPT!

A Great
Solution
• Customer Intimacy, not customer surveys
• Validate quickly by doing it on limited scale
$trategy Unmet
• Pricing and costing is an integral part of the innovation
Generating Customer process not the job of specialists
Profit$ Needs

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Prof. Dr. Stefan Stremersch
Follow me on Twitter: @StStremersch

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Commercial Success from Innovation

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