Prioritizing Concepts and
Creating Business Plans
From idea development to prioritization
• Before prioritizing concepts, idea development
should have yielded a detailed list of innovative
offerings to further develop
• Prioritization screens for the most feasible ideas
to advance to later stages of development
Source: New Markets analysis
Copyright 2013 New Markets Advisors
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Concept prioritization and business plan
creation – an overview
Prioritization
Developing
Ideas
1
2
3
4
Initial Screen
Organizing &
Developing
Ideas
Managing Risk
& Uncertainty
Decision to
Build Business
Plan
Using organized
methods to
systematically
reduce the
number of ideas
flowing through
the innovation
funnel
Using consistent
frameworks to
build out and
keep track of
ideas
Using a uniform
approach for
identifying big
risks and
preparing to
manage them in
the right order
Using clear tools
to fairly
evaluate ideas
Developing
a Business
Plan
Source: New Markets analysis
Copyright 2013 New Markets Advisors
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Prioritization step 1 – initial screen
1
2
3
4
• Practical guidelines
– Group concepts into strategic buckets – eliminate redundant ideas and allow
those with similar ideas to collaborate
– Start lenient, but become strict – potentially promising ideas can be refined as
they flow through the process
– Do what works for you – pay close attention to what fits the business’s culture
and objectives
• Avoid being weighed down by too many ideas
- Avoid devoting disproportionate resources to screening ideas at the expense
of building out and testing ideas
- Use a range of tools (e.g., employee voting, idea stock markets, grading
rubrics) to make early screening decisions more quickly
• Be open to finding a great idea, from anyone
– Worthwhile ideas should be given a fair shot at gaining support
– However, keep in mind your mandate as well as the company’s brand image,
core values, and capabilities
Source: New Markets analysis; Karl T. Ulrich and Christian Terwiesch. Innovation Tournaments:
Creating and Selecting Exceptional Opportunities, 2009
Copyright 2013 New Markets Advisors
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Prioritization step 2 – organizing
and developing ideas
• Ideas should be submitted and
classified with consistent tags, such
as in this abridged sample (right)
– This allows the organization to
solicit and focus on ideas that
align with a particular strategic
initiative
– It also allows employees to seek
out project teams working on
similar initiatives, or to learn from
teams who have succeeded in a
given area
• Build out ideas with an audience in
mind – rather than focusing on every
benefit an idea might bring, focus on
those that are most important to
target customers or stakeholders
1
2
3
4
Headline:
Brief description:
Additional comments:
Problem it solves:
-- Select One -Enable growth
Reduce costs
Better customer
experience
Who it is for:
-- Select One --
Project team
External customer
Organization
(corporate level)
Source: New Markets analysis
Copyright 2013 New Markets Advisors
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Prioritization step 3 – managing risk
and uncertainty
•
•
1
2
3
4
Choose an approach for determining affected areas of the business
-
Organizational approach – impact on different: departments, business processes, customer groups, groups of people
-
McKinsey’s “7 S’s” approach – strategy, structure, systems, shared values, skills, styles, staff
-
Tools-based approach – related tools such as risk analysis, risk-impact probability charts, or stakeholder analyses
Prepare to tackle the right risks first
–
Risk and value are inversely proportional – removing risk increases value
–
Not all risks are created equal, so the sequence for removing risk matters
–
Categories of risk may overlap. The goal is to identify the most important uncertainty, and address it early
–
Types of risk:
Deal-killer risks
Path-dependent
risks
Value
Easy-win, high-ROI risks
Sources: New Markets analysis; Clark G. Gilbert and Matthew J. Eyring. “Beating the Odds When You
Launch a New Venture.” Harvard Business Review, 2010;
http://www.mindtools.com/pages/article/newTED_96.htm
Copyright 2013 New Markets Advisors
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Prioritization step 4 – decision to
build a business plan
•
At this stage, a more rigorous screen will need to be applied to
fleshed-out ideas to determine whether they should advance
•
For example, 3M adopted the Real-Win-Worth It (R-W-W) screen to
evaluate the 1,500 projects in its development portfolio.
Companies such as GE and Honeywell have followed suit
•
–
Is there a real market and a real product or service (that
someone could make or provide)?
–
Can we win? Can our product or service be competitive? Can
our company be competitive?
–
Is it worth doing? Is the return adequate, at an acceptable
risk? Are there other strategic considerations?
Go-Kill decisions will ultimately need to be made to narrow down
the overwhelming number of potential projects
–
The decision to kill a project should be made if a negative on
one of the R-W-W branches cannot be neutralized
–
That decision should be made only after avenues for
improvement have been explored
Source: George S. Day. “Closing the Growth Gap: Balancing BIG I and small i Innovation.”
Knowledge@Wharton, 2006
Copyright 2013 New Markets Advisors
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2
3
4
REAL
WIN
WORTH IT
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Criteria screen must meld with
firm’s strategic and financial goals
1
2
3
4
Agree on the right evaluation criteria, and create a uniform tool for evaluating ideas
Provide clear
definitions to ensure
alignment on key
criteria
Use color-coded
grading systems to
reduce the importance
placed on artificial
numeric grades
Be wary of red zones.
While they might just
indicate a need for
further exploration,
they can be deal killers
if they fall in important
categories
Source: New Markets analysis
Copyright 2013 New Markets Advisors
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Building business plans for ideas that make it
through the criteria screen
• In order to tailor screened ideas to new markets,
it is necessary to first consider a different set of
dynamics compared to established markets
Established markets
New markets
Competitor intellectual property and patents
Emerging platform technologies
New sales channels
New business systems
Changing pricing
Changing customer capabilities
Changing market share
Changing customer behavior
Changing sales channel margins
Changing business partner incentives
Regulations’ downside
Regulations’ upside
Source: Wunker, 2011
Copyright 2013 New Markets Advisors
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Building business plans – company activities
should support delivery of the offering
Strategy
Target customers and why the
company will win vs.
competitors
Partners
The Offering
Competencies
Suppliers, channels, and
other key members of the
ecosystem
What customers are buying,
including any “free” add-ons
and intangibles
What the business must do
well to succeed, overtly and
culturally
Financials
Structure of P&L, balance
sheet, and cash flows
produced by the model
Source: Wunker, 2011
Copyright 2013 New Markets Advisors
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Example – new business success due to a
comprehensive plan
• Riaan Stassen, a banking expert in South Africa, created
new banking institution Capitec to capitalize on the
sector’s poor service to workers of low to lower-middle
economic status (households earning between $1,500
and $10,000)
• Stassen built the business plan from a blank slate,
careful not to draw from mainstream banks’ business
models
Source: Wunker, 2011
Copyright 2013 New Markets Advisors
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Comparing business plans
Traditional South African Bank
Capitec
The Offering
•
High-end transaction experience with
first-world infrastructure for elite
customers
•
High interest rates on small savings
deposits and low fees on cash
withdrawals and debit-card use
Strategy
•
Lower volume of high-cost, complex
transactions that cater to the wealthy
consumer
•
High volume of quick, easy, low-cost
transactions for the average consumer
Competency
•
Levels of involvement higher in the
back-office than on the front lines of
customer engagement
Employees have specified roles
Ability to organize and handle
complexity
•
Great customer service – employees
explain services to target customers
Small hub of employees to handle backoffice functions, the rest to the front line
All employees in a branch qualified to sell
every service
Must handle more credit transactions
and fewer small transactions than
Capitec
Must handle higher amounts of cash
daily
•
•
Focus on cash – most small transactions
are in cash in South Africa
Nearly eliminates cash handling –
deposits dropped immediately into safes,
accessible to staff in armored vehicles
Other retail banks worldwide
•
Retailers – to enable easy withdrawals
•
•
Financials
•
•
Partners
•
•
•
Source: Wunker, 2011; New Markets analysis
Copyright 2013 New Markets Advisors
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Relevant services from New Markets
Light-touch counsel on strategy-shaping process
Deeper involvement in strategy and solution
creation
Structuring of primary research and
interpretation of results
Organization and/or facilitation of idea
development and prioritization processes
Business plan creation
Copyright 2013 New Markets Advisors
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Who is New Markets?
• Experts in
reframing
market space
and generating
growth
• Senior
experience
• Creative and
pragmatic
• First-class
consultants,
thought
leaders, and
entrepreneurs
Copyright 2013 New Markets Advisors
Recent Clients
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Our team’s publications have appeared in:
Copyright 2013 New Markets Advisors
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Contact
Stephen Wunker
Managing Director
New Markets Advisors
245 First Street, 18th Floor
Cambridge, MA 02142 USA
Tel. +1 617 337 3060
Fax +1 617 337 3070
swunker@newmarketsadvisors.com
Copyright 2013 New Markets Advisors
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