Season 3 - Episode 7: Innovating To Create A New Market
In the innovation space, one of the most challenging things to accomplish is to create a new market. You’ll need to do something completely differently that challenges established trends. For us, this was AppArmor; it was one of the first ever mobile safety apps. Nobody had ever heard of a “safety app” and it challenged the established ways of providing public safety on university and college campuses. In our third episode of the Innovation Station series, we’ll unpack what it takes to innovate and create an entirely new market.
Background Story
Chris here. Our Dad was the person that sold (one of) the first fax machines. I mean, how does that really work? You need two fax machines as a minimum, so how do you sell one? This was a dilemma early in that market - how do you create and seed a market for your new product? It’s an important question. It was eventually overcome when folks started to see the benefit of fax telecommunications. (Side note: we know we’re old. What year is it again?!)
Dave here. For AppArmor, it was similar. When we started selling our safety app product it was very difficult because nobody had ever heard (or thought of) of a safety app. Prospective clients were asking themselves “Should we get a safety app?”. Many years later things got easier when other competitors entered the market. This was counter intuitive because you’d think more competition would make it tougher to sell our product. But the opposite was true because prospective clients were now asking themselves “Which safety app should we get?”. The market developed once the value of the product had been proven; we’d convinced the early adopters (along with our competitors) that this was worth it for the masses.
Outline
Porter’s five forces are kinda broken in new markets
How Toddlers can teach us about new markets
Innovate but borrow ideas from others
Busted Myths
Myth: Starting a product in a new market is easy because there aren’t any competitors. False. Since there are no competitors, you’ll need to educate the market on your product. They’ll also be asking themselves “Do we need this product?” instead of “Which vendor should we get this product from?”
Myth: Creating a new market is all about innovating new technology. Also false. Technology is just a means to an end. Don’t get over excited about the technology, focus on the outcomes that you’re trying to drive.
Learnings
Porter’s Five Forces and Toddlers
What is challenging about a new market is that it breaks Porter’s five forces, because there are no existing rival competitors.
Akin to how toddlers play… They play in isolation but near each other (called “Parallel Play”, they don’t really interact with each other, although they may “borrow” (steal) toys from other toddlers. They figure out what “works” while they push to the idea they have in mind.
Going back to the AppArmor story, Chris talks about how we looked at how people interact with a campus policy or security department (“Parallel Play”).
Person calls. Dispatcher asks “What is the problem” then “Where are you”.
At AppArmor we took a look at the available capabilities on a smartphone e.g.: Calling, GPS / Location, Camera, Microphone, etc.
We tried to answer the second dispatch question automatically while the caller explained the problem. This allowed dispatch to send help quicker.
Innovation Borrowing
At this early stage, differentiation didn’t matter because there weren’t any competitors. So we focused on borrowing ideas from other spaces. (e.g.: Location information)
We also had to be patient. Our early customers started having success stories, and word started spreading. Most of our early sales were referrals. Early adopters were joining slowly but surely.
We were incubating other product ideas at the same time because it was taking a long time to gain traction.
Technology was just a means to an end: For us, it wasn’t about mobile apps, it was about making people safer. That was highly aligned with our customers, the campus policy and security departments. We added capabilities that didn’t require an app (SMS messaging, desktop notifications, etc) all with the goal of making people safer.
Summary
Innovating in a new market is tough because it breaks Porter’s five forces, no rivals.
You’ll be innovating in isolation, but borrow ideas from elsewhere, like the parallel play that toddlers do.
Be patient, you’ll need to educate the market and find early adopters willing to take a chance.
Focus on the outcomes, not the technology.
When new competitors arrive in your market, things will get easier!
Data And References
The New Market Conundrum, May 2020
https://hbr.org/2020/05/the-new-market-conundrum
What Innovators Who Create New Markets Do Differently, December 2023
https://hbr.org/2023/12/what-innovators-who-create-new-markets-do-differently