Using Lean Innovation in the Product Development and Commercialization Process

In today’s fast-moving business landscape, the ability to commercialize products quickly and efficiently is imperative.

Companies that successfully bring new products to market rapidly, benefit from having a leg up on their competition while diminishing the negative effects of shrinking product life cycles.

However, moving a product from lab to market is a process that in itself could use re-invention.

The fact is, many large companies use anachronistic methods to bring new products to market, resulting in failed product launches. Behaviors like relying on expired market research or using old research techniques introduces the possibility of fundamentally not understanding the market they strive to serve.

But how can an enterprise organization re-invent product commercialization?

Lean Innovation doesn’t begin and end with product development.

Developing customer empathy, validating or invalidating key business model assumptions through rapid experimentation, and leveraging data and insights as market evidence results in greater possibility of successful commercialization.

What is Commercialization?

Commercialization is introducing a new, (typically) fully developed product to various markets and making it available for purchase and use. It is the marketing, selling, distribution and support of the product.

It does not include product development.

Most companies have a product development process that is completely separate from their go to market strategy. Typically companies develop and launch products in 3 phrases:

• Assess market opportunities to the point of product ideation;

• Pass product specifications to the product development organization to fulfill the product vision;

• Pass finished product to commercialization teams to execute the marketing, selling, distribution and customer support plans

A more mature organization may deploy some lean innovation components at various stages in this lifecycle, such as design thinking practices or a flavor of agile methodology. But if deployed at all, they are typically inconsistent and uncoordinated. The journey, by and large, is slow, linear, does not allow for change, and is governed by scheduling resources, versus based upon customer need or value creation.

Inevitably, uncertainty exists throughout the journey from product inception to commercialization.

The most mature organizations deploy integrated lean innovation practices across the product lifecycle. A step in that direction, is to fully develop such practices in each of the phases.

 

Lean Innovation and Commercialization

When applying Lean Innovation techniques to the commercialization process, companies identify areas of uncertainty around any aspects of product launch and commercialization.

This might include, but is not limited to, market segments to address, marketing channels, messaging, branding, packaging, fulfillment, pricing, partnerships, sales model and so on.

Teams use lean innovation — empathy, experimentation and evidence — to determine the plan upon which to execute and scale, in order to maximize the possibility of commercialization success.

Generally, the process begins by documenting what one believes to be true. The goal is to start with what you know.

In other words, you develop a go-to-market plan, based upon the collective knowledge of the organization; its talented and experienced people. The plan, however, just like a modern-day startup business plan is largely a collection of assumptions. The tricky step is to acknowledge what is not truly known, from a market evidence perspective, and what is unknown, perhaps based on desires, biases or out of date (or simply wrong) research.

To take a simple example, if a medical device commercialization division has plans to launch a new product in several countries and eventually around the globe, there may be many questions to be addressed:

• What is the order of launch?

• How does the role of healthcare providers differ by country?

• Who is involved in reimbursement decisions and how is approval achieved?

• What is the right messaging region by region?

• What cultural characteristics effect marketing channels?

The list goes on.

In some countries these are perhaps well-known, in others, not so much. Businesses must learn first, rather than merely executing on the plan.

Most startups and young companies launching new products must start small, measure what works, and figure out how to scale from there. But, if your company is mature and the market is well understood, then you can launch big because there is less uncertainty in the equation.

But, if a company is trying to market their first mobile app, they can’t just follow the same plan they have in the past. There are lot of unknowns, a lot of assumptions that need to tested and validated or invalidated before moving forward with the marketing strategy.

Large enterprises tend to go big, using the same commercialization processes they always have, regardless of level of uncertainty they face. Enterprise companies are optimized for execution, so they tend to always operate in execution mode.

How Lean Innovation Re-Invents Product Commercialization

Production

As discussed above, in most companies, product development is considered “pre-commercialization.” But in an ideal scenario, commercialization and product development are integrated so you create iterative learning loops within loops, where the planning of the commercialization is happening while the product is being developed, so that market input can inform how the product is produced, marketed and sold.

This means incorporating empathy work to figure out what the customers’ needs are and running experiments throughout the process to make sure you are building the right product based on market evidence.

Distribution

When it comes to determining how to distribute a new product, companies often revert back to the channels they’ve used in the past. This may be the right thing to do, but looking at all aspects of a business model from a “clean slate” point of view may allow innovation in distribution that offers an advantage over slower moving competitors.

One of Amazon’s great disruptions in publishing was in book distribution.

Alternatively, it could be that distribution is a known entity.

Perhaps you’re building a mobile app for the first time and you’ve hired expertise or can look to similar products already in the market and learn from them. There simply aren’t very many channels for mobile app distribution. On the other hand, there are a lot of apps that are never downloaded!

Insurance companies might wish to challenge whether their agent distribution model is still the correct medium versus direct to consumer versus going through agents. Medical device companies may choose to classify a product as “non-medical” and go direct to consumer.

The answers to these distribution-related questions can be addressed in the commercialization plan, but only if companies take the time to learn the answers will they discover whether pursuing new channels and tactics might be better than adhering to what has been done in the past.

Marketing

When addressing the marketing component of the commercialization strategy, companies should test acquisition channels and messaging for the particular market segment they are looking to appeal to.

What is the right messaging that will make the market segment intrigued?

How do potential customers desire or aspire to?

What might make them passionate about the product or company?

We discuss this in our Value Stream Discovery Board article: in order to uncover the metrics that drive the most impact, you need to have a deep understanding of the customer journey.

Fundamentally, the questions might be, “how can I invent a new acquisition channel to discover new growth?” or “what messaging framework can I use to speak to our customers’ deep-seated aspirations?”

Again, enterprises tend to rely on “the way things have always been done” when it comes to marketing, and again, that may be the best answer. But instead of falling back on what worked in the past out of habit, organizations should test whether bigger outcomes can be achieved through re-invention.

Sales

A big flaw in many product launch attempts is the compulsion to automate elements of the sales process right off the bat and go too big, too fast. Again, this may be fine, if the sales plan is based on the known. But attempting to scale on the unknown will not only result in failure, it will deprive you from learning what went wrong.

Instead of trying to take the human element out of the sales process in the beginning, it is best to do go through the selling in person, human to human. In this way, you learn from your customers how they prefer to buy, what their objections are that you must overcome, who influences their purchases, or even what other products might be necessary to complete the value you are creating.

Automating what you learn (as much as possible), is what creates the ability to scale profitably.

As with the other areas in the commercialization plan, if it’s known, it doesn’t need to be tested. But disrupting the way it’s “always been done” might provide the company with a market advantage.

Customer Support

The last piece of the product commercialization puzzle is related to customer success and support.

Customer support employees often have the closest view of what is going on with the customers — the good, the bad, and the ugly.

Instead of incentivizing shorter interactions with customers (a shortsighted element of scaling) support personnel should be encouraged to seek new insights and report their learnings back to product owners and marketers.

In an ideal cycle, customer support people are the first in line with new opportunity areas for product investment.

How one provides customer support is not a huge mystery, but there are different methods for providing support, and if there is uncertainty around how the market segment prefers to receive this support, organizations can use the 3 E’s (empathy, experiments, and evidence) to determine the best methods to implement.

Lean Innovation in Commercialization Example

Helping large organizations understand where their product lifecycle bottlenecks exist requires thinking in a new way. A global medical device company used our “entrepreneurial spirit” methodologies to help commercialize five products into markets around the world.

The products, all of which are relatively knew, were in different phases in different countries. The team in Germany, for example, successfully launched a new smartphone app, but had seen active user utilization decline. Other countries were just preparing for launch.

To help them get to the bottom of this particular situation, we helped them build their 3E’s capabilities. Quickly they found that the value proposition for this particular product needed help.

The company has deployed 12 agile teams, each of which is taking a specific product to a specific market in a different phase of commercialization. While the objectives and milestones for each are different, the process is the same and includes developing empathy for key commercial stakeholders, including patients, health care providers, and payers, (eg, insurance).

The teams need to understand not only the desired outcomes and aspirations of the humans involved, but also what obstacles need to be overcome. These obstacles could be purely marketing or selling tactics, but also could be regulatory, product issues, service or support needs. It might mean exploring whether other services are necessary to promote product usage, or if the new products need to be bundled with other products, or whether it makes sense to involve partners for distribution or marketing.

Understanding how each segment responds to the product helps uncover the unknowns. The teams are more than capable of creating new ideas to solve for the unknowns.

Just as with startups, the reason why enterprise product launches fail is that they don’t take the time to learn before they execute.

Premature scaling kills products.

While taking the time look hard at commercialization assumptions may feel like you’re slowing down, you’re actually moving faster toward success. Continuous learning and agility is the way to reduce the risk of failure. Customer insights and the ability to capitalize on them are your true competitive advantage.