29/08/2022

TREVOR HOLMES

INNOVATION MONEYBALL EVENT KEY LEARNINGS

WHAT DOES BASEBALL HAVE TO DO WITH INNOVATION SUCCESS?

In 2002 the Oakland A’s Baseball General Manager, Billy Beane, had a very limited budget to recruit the best players he could. With innovative thinking and the use of data, Billy set about analysing the performance of hundreds of players. But instead of focusing on those with high commercial values and a reputation of hitting home runs, he performed data mining focusing on “undervalued players” with high on-base averages. In short, his strategy led the Oakland A’s ability to capture four American West titles and make five playoff appearances over the next six years. 

The Innovation Moneyball event held live in Brisbane on 27 June 2022 with Silicon Valley Venture Capitalist and data scientist keynote speaker, Thomas Thurston, focused on the research of Thomas’ data science career and how he applies the use of his Mese® Computing system to identify undervalued companies to invest in, often producing returns of 6X the WR Hambrecht Fund’s investment. 

Here at Advivo ICP, in conjunction with our data science partner Linda Ginger’s Attractor Network, we use the learnings from Thomas’s research and the Mese® Computing system to mine data for our clients that enables us to understand the markets that our clients are contemplating to enter with innovative products.  

While Thomas uses data science to find undervalued high performing companies in markets, we reverse engineer these principles to plot market entry strategies that increase the probability of success of entering markets with innovative solutions.

What were the key learnings that ALL innovators can take from this event?

Here are a few learnings that every business, large or small, must adhere to that creates predictable outcomes in applying The Launch Formula to innovations. 

Learning 1 – Do NOT enter the market on the basis of “Better Performance” 

This was a message that Thomas drilled home time and time again and is naturally counter-intuitive to most of us. The research shows that new market entrants who attempt to compete head to head with competitors, on the basis that their innovative idea performs BETTER than the powerful incumbents… will lose!  

You see, just because your innovation may have a “feature” that does a job better than competitors does not result in high end users just vacating the relationships, trust and dependency that has been built between them and powerful incumbents. But then also consider the expected responses you will experience from the powerful competitors. Do you expect that they will step aside and allow you to steal their profitable clients? No way; they will respond and the response is likely to be aggressive and protectionist and they will aim to kill off any threat from you. They have the market power to deploy many strategies to protect their turf. 

However, what the research shows is that a new entrant that can enter the market without threatening the incumbent (see next learning below) can fly under the radar, gain adaption of users, and progressively improve their product while become strong and building critical mass BEFORE coming to the attention of the competitors. By this time, you are in a stronger position to resist their responses. 

Learning 2 – Which market segment you enter will determine your ability to WIN!

So many times we find companies come to us that have attempted to steal competitors most profitable clients only to discover that they struggle to gain adoption. The research clearly demonstrates that where you pivot your strategy to enter the market into the “Low-End” or “New Market Creation” market segments your probability of success increases 5-fold. 

Using the data science tools allows us to research the market segments and coupled with qualitative research (literally talking to the market), we can define the market segments to enter. Low end users of a competitor’s solutions are often “over serviced”. That is, they are paying a premium for a solution that gives them far more features than what they need; and they know they are paying for it. Targeting these users with a very niche solution that just does the job that they want done, and nothing more and at a lower cost less complicated user experience, results in adoption. And how do the competitors respond? They don’t! In fact, they may love you for taking away their less profitable customers allowing them to focus on what they perceive as their “High End” customers. So, they ignore you believing that you won’t last and that you are no threat to them. 

The secret in building your market is to understand adoption is the most critical market entry objective.  

Over time, you progressively improve your product, learning from the early adopters who are loving your solution and step by step move upstream attracting higher end clients. By this stage, momentum is in your favour and responses from competitors are often too late to kill you. 

In the Innovation Moneyball event Panel Discussions, Mark Portbury, Founder and CEO of Hiro Software, explains that their original thoughts were that the market entry point was companies similar to where the product was built and used. That being multi-disciplined Town Planners, Surveyors and Environmental Consultants with employee numbers around 100. However, our data science analysis identified that the greatest need for a simple solution was in fact businesses with only 5 – 20 employees. Mark’s platform had many features so in fact, some Hiro features were “turned off” to ensure the targeted market segment had a simple, low cost solution, that handles project management extremely well, but doesn’t confuse the target market with features that they are not ready for or need. 

Over time, Hiro will learn from this market, tailor these turned off features to do jobs that they need in a simple integrated way, turn them back on and progressively move upstream to businesses with 20 – 50 employees, then 50 – 100 and so on. 

Learning 3 – Validate your innovative solution by stepping through a predictable Launch Formula process

Our Managing Director at Advivo ICP, Trevor Holmes, spoke about the need to understand the journey you are about to embark on in launching innovative ideas. The Launch Formula is a step by step process that allows you to mitigate risk and investment in your innovative idea that requires you to reach validation points along that journey.  

Coming up with what you “assume” is a brilliant innovative idea that everyone will love; launching into building it at often substantial cost, effort and shear blood sweat and tears, and then launching it to an undefined market, is a recipe for disaster. 

The Launch Formula allows you to 1) conceptualise the opportunity first; who do you think the target market is; why do you think the market will want, need and value your innovative idea?; what will it cost to get it to market; what revenues could you expect and much more. If you can validate that the opportunity stacks up sufficiently to then invest in the nest step of the Launch Formula, then 2) Build a business case. Take the assumptions you have made in the conceptualisation phase and prove them to be correct. This is where we are using Thomas and Linda’s Mese® computing system to rapidly develop market intelligence, talk to the market and define the minimum viable product that will allow us to launch into the low end or new market creation markets. 

For all the other steps involved in the Launch Formula, click here to download the Launch Formula interactive pdf or simply go to The Launch Formula Page to play with the interactive Launch Formula online and see the validation questions you need to answer within each phase. 

Want to learn more?

The recording of Innovation Moneyball event featuring Silicon Valley VC and data scientist Thomas Thurston, Attractor Network’s Linda Ginger, Trevor Holmes from Advivo ICP and Hiro Software’s CEO Mark Portbury can be found here 

The real key learning across the entire Innovation Moneyball event is simply this; 

There is a formula to launching new innovative ideas that increases your probability of success dramatically. Data science is now more accessible to mid-size businesses looking to scale and distribute innovative solutions with global aspirations than ever before. 

No longer do you have to rely on “gut feel” and risky, costly exercises of building solutions only to find the market doesn’t value them enough to purchase. 

Become early innovators in embracing this new and exciting way to gather market intelligence rapidly (we are talking about 48 hours to map the entire global market of industries identifying all your competitors, market segment opportunities, collaboration, distribution opportunities and truly understanding how that markets work), to then inform you how to construct market entry strategies with far greater predictable outcomes. 

And now that you know this is available… go out and do it!