How to successfully value the market potential of a new blue-sky invention.

When an innovation creates a new need and establishes a new paradigm in terms of a product or solution, the challenge is to visualize the potential of such a blue-sky invention and an even bigger challenge becomes how to value the market potential for such an invention. Conventional forecasting analysis usually relies on looking at established customer behaviors to arrive at forecasting models for most products. However, this approach fails when customer behavior has not gone through a paradigm shift “before” the new need is created by the blue-sky invention. Instead, new techniques and parallel analogies (benchmarks) are used for forecasting the potential.

Creating a form & figure for an abstract innovation

Henry Ford is credited with the famous quote, ”If I had asked my customers what they wanted, they would have said a faster horse!”

In this case, creating a demand forecasting model would have factored in the number of households, the population of horses and the ability of those households to keep the horses. However, it would have failed miserably to estimate the demand for cars. Essentially, in a case like this example, a new need is created and therefore you need to first understand some qualitative aspects of the invention in order to create an algorithm for forecasting the demand. The vision to see the perceived benefits of this new need is essential to quantify the potential intake of the invention over time.

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Using the proxies to model the unknown

Basically, human understanding works by linking new stimuli to known experiences or stimuli. Using proxies to model the demand for a new need or product uses a very intuitive process by putting it into an analytical framework. Therefore, it is a good starting point to deconstruct the newly created needs and link the perceived benefits of the new invention to some historical precedents. These links could be made within the same context (or industry), a related context or sometimes even an unrelated industry. For example, to model the demand forecast for a new prosthetic dental tissue that can replace lost teeth, cataract lenses for eyes or even hair follicle replacement demand curves can be used as proxies.

Seeing the future through the kaleidoscope of the past

The key skill lies in the visualization of the benefits and the impact of the invention on the customer. Once the benefits can be articulated, the next step is to select a case study from the past that had a similar impact on customers when the new technology or invention was introduced. This basically guarantees that key drivers can be gleaned from the case study and applied to the newly perceived benefits of the new invention.

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Numbers are meaningless until linked to benefits a customer can see…

The rest follows after targeting the right pool of respondents and developing a series of short questions that can articulate inputs to and from customers using the right proxies and benefit statements. Some suitable analytics puts the final icing on the cake!

Sounds complicated? It is actually much simpler than most conventional techniques that miss the mark completely when it comes to forecasting new product concepts.

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