Identify Areas of Opportunity
The third step in the Outcome-Driven Innovation process is to determine which unmet customer needs represent the best opportunities for growth. Innovation theory holds that an opportunity for growth exists when a need is important and not well satisfied. For instance, if circular saw users 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. The more important the need and the less satisfied the customer is, the greater the opportunity exists for value creation.
To discover which needs represent the best growth opportunities, Strategyn devised a simple mathematical formula called the "opportunity algorithm" where
Opportunity = (Importance + (Importance - Satisfaction))
Using this formula, the needs that are most important and least satisfied receive the highest priority. The quantitative inputs are typically collected from a large, statistically valid number of customers using a market survey. For the past 10 years, the opportunity algorithm has enabled the accurate prioritization of unmet customer needs. The degree to which a market is over- or underserved can easily be seen by plotting research data in Strategyn’s opportunity landscape model.
In addition, the opportunity algorithm is used for market segmentation, giving companies the ability to uncover segments of opportunity – that is, segments of a population that have different unmet needs. Our opportunity-based segmentation methodology is particularly useful when looking for opportunities for growth in mature or commodity-like markets.
