Testing whether a product really has a market
In 2000, McKinsey’s consultants Mehrdad Baghai, Stephen Coley and David White proposed the "3 Horizon (three levels)" framework.
The first level refers to the company’s core business, with a clear business model, the company’s various departments in a clear way to work together, predictable sales, according to short-term performance to assess.
The second level is the new business of internal incubation. Customers, products that target a certain market, are ready for large-scale promotion and have the potential to become the core business of the company. The third level refers to some research results and prototype products, most of which will fail.
These three dimensions represent the company’s current, short-term and long-term future. It is necessary to provide appropriate resources for these three levels of business and to adopt appropriate measures of performance. It is more common for companies to use the resources currently invested in the first level to drive the second level of business, but it is more difficult to support the third level with the same system.
For example, the focus of the sales team is to sell existing products or products that can be listed in the short-term to familiar customers. According to the sales commission, it is difficult for them to spend time and energy on the sale of products with high probability of failure without measuring the return. Speaking, high risk, there may be no income, no sales are willing to do such a thing. Therefore, in the protection of core business, we must encourage innovation, especially disruptive innovation. The better way is to invest in startups. Start-ups are relatively free to choose from a variety of new technologies, looking for potential customers without the constraints of the company, and their returns are not short-term income, but the long-term equity incentives and other companies can bring Various results.
Testing whether a product really has a market, whether a business model is established requires user feedback, and requires a large number of startups to try. Although the probability of failure is high, there are still some companies that can find new markets. And can be successful.
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