Identify Areas of Opportunity
Which customer needs represent the best opportunities for growth? To answer this question, companies must be able to figure out which needs are most important and least satisfied. The opportunity algorithm, shown below, is a simple mathematical formula created by Strategyn that makes it possible for companies to do just that. Using this algorithm, companies can prioritize the most promising opportunities for growth.
The outcome-driven innovation philosophy holds that an opportunity for innovation exists when a need is important and not well satisfied. The more important the need is, and the less satisfied customers are, the greater the opportunity is for value creation. Using this formula, the needs that are most important and least satisfied receive the highest priority.
These underserved outcomes point to where customers want to see improvements made. If circular saw users, for example, feel that minimizing the likelihood of the cut going off track is an important and unsatisfied need, then that need represents an opportunity for improvement.
For the past 10 years, the opportunity algorithm has enabled the accurate prioritization of unmet customer needs. In addition, this algorithm has been useful in market segmentation, giving companies the ability to uncover segments of opportunity – that is, segments of a population that have different unmet needs. The degree to which a market is over- or underserved can easily be seen by plotting research data in the opportunity landscape model.
