Chapter 3: Opportunity Identification

1. What is an Opportunity?

• In the context of product development, an opportunity is an idea for a new

product.
• An opportunity is a product description in embryonic form, a newly sensed need, a
newly discovered technology, or a rough match between a need and a possible
solution.
• Some opportunities ultimately become new products while others never warrant
substantial further development.
• An opportunity for a new product is usually articulated with less than one page of
information, often including a descriptive title, a narrative explaining the idea, and
sometimes including a sketch of a possible product concept.

2. Types of Opportunities

Because of the need to launch a product within about a year, the FroliCat team
explicitly avoided Horizon 3 opportunities. The team wished to build on its initial
success with the Bolt cat toy, and so focused on its existing customers and the existing
needs it already addressed. It sought a next-generation solution for the existing need
to entertain cats, and thus focused on Horizon 2 opportunities.
2. Tournament Structure of Opportunity Identification

• Opportunities vary widely in value; however, that value is plagued by uncertainty.

• It is therefore very useful to identify a set of opportunities and then to select a subset for further
development, with just a few coming to fruition.
• In opportunity identification, the goal is to generate a large number of opportunities and efficiently kill
those that are not worthy of further investment.
• Although opportunity identification and product development can be thought of as separate activities, there
is clearly some overior between them. For example, in a consumer product business like FroliCat,
preliminary product concepts are almost always generated and explored with prototypes during the
opportunity identification process, before a formal product development process begins.
EXHIBIT 3-4 The tournament structure of the opportunity identification process. The opportunity tournament
feeds the product development process with exceptional opportunities.

3. Effecure Opportunity Tournaments

1. Generate a large number of opportunities.

If you produce more opportunities, you'll see more exceptional ones.

2. Seek high quality of the opportunities generated

Adopting better methods for generating opportunities and mining better sources of opportunities can increase
the average quality of the opportunities under consideration, which will also increase the quality of i the best
ideas resulting from the tournament.

3. Create high variance in the quality of opportunities.

This is a direct, though not immediately obvious, implication of statistics.
Holding the average quality and number of opportunities constant, you'll generate more exceptional ones
from a process that exhibits greater variability; that is, if it's less consistent in the quality of its output. The
quest for variability contradicts normal approaches to process improvement, but it's exactly what you want in
opportunity creation.
Generating wacky ideas and wild notions increases the chance that at least one of the opportunities will be
exceptionally good.

4. Opportunity Identification Process

We divide the opportunity identification process into six steps as follows:

1. Establish a charter.
2. Generate and sense many opportunities.
3. Screen opportunities.
4. Develop promising opportunities.
5. Select exceptional opportunities.
6. Reflect on the results and the process.

Step 1: Establish a Charter (mission statement)

• Organizations create new products to achieve goals such as , growing revenues from existing customers,
filling a hole in a product line, or entering new market segments.
• The innovation charter articulates these goals and establishes the boundary conditions for an innovation
effort.
• Charters are closely analogous to (although somewhat broader than) the mission statement for a new
product.
• FroliCat's charter: Create a physical product in the cat toy category that we can launch to the market within
about a year through our existing retail sales channel.

FroliCat's charter:
• Create a physical product in the cat toy category that we can launch to the market within about a year
through our exisung retail sales channel.
• The main restrictions in this charter were the emphasis on physical , goods instead of software or services,
a focus on the cat toy category, a , preference for opportunities that would not require enormous
investments of calendar time, and a desire to take advantage of the company's existing relationships with
retailers.
• The charter requires resolving a tension between leaving the innovation problem unconstrained, and
specifying a direction that is likely to meet the goals of the team and organization. By specifying a narrow
charter, the team avoids wasting effort generating opportunities in areas that are unlikely to be pursued. On
the other hand, sometimes deciding which opportunities are worthy of pursuit in advance and in the
abstract is difficult.

Step 2: Generate and Sense Manv Opportunities

• Bwased on a survey of companies across many industries, about half of innovation opportunities are
generated internally to an organization and about half are recognized from customers and other external
sources
Techniques for Generating Opportunities :
• Follow a Personal Passion
• Compile bug lists ( biên soạn ra các vấn đề c n tồn tại )
• Pull opportunities from capabilities.
• Study customers.
• Consider implications of trends
• Imitate, but better.
• Mine your sources.

Follow a Personal Passion

• List your passions- endeavors that keep you awake with excitement— and then consider how emerging
technologies, trends, and business models might influence them.
• Or identify unmet needs that you have in connection with a persona interest.

Compile bug list

• Successful innovators are often chronically dissatisfied with the world around them. They notice unmet
needs of users, including themselves.
• List (or photograph) every annoyance or frustration you encounter over a period of days or weeks and then
pick the most universal and rexing ones and dream up solutions. Any problem is an opportunity.

Pull opportunities from Capabilities

• Theories of competitive advantage abound, but most spring from the idea that firms achieve above-average
profits by exploiting unique resources, including capabilities, core competencies, and competitive
advantage. To provide advantage, a resource must be: valuable, rare, inimitable, nonsubstitutable
• Apple Inc. VRIN resources, for example, might include excellence in industrial design, a leading brand,
and a loyal customer base.

Study customers
• What customers say to researchers and what they really do can differ substantially.
• Consider the bicycle industry. Shimano, a maker of bike components like pedals and brakes, recently
commissioned a user anthropology study to understand why more people in the United States don't ride
bikes.

Consider Implications of Trends

• Changes in technology, demography, or social norms often create innovation opportunities. Ubiquitous
mobile telephone service, for example, enables a wide variety of information delivery services
• An increasing Spanish-speaking population in the United States, for example, enables new sorts of
Spanish-language media.

Imitate, but better

• When another firm innovates successfully, it in effect publishes the location of a gold mine. You can
exploit this information by either considering alternative solutions that could address the same need or
alternative needs that could be addressed with the same solution.

Mine your sources

• Recall that about half of product opportunities arise from sources inside an organization and about half
come from outside sources.
• Lead users, representation in social networks, universities and government laboratories, online ideas
submission

Step 3: Screen Opportunities

• The goal of screening is simply to eliminate opportunities that are / highly unlikely to result in the creation
of value and to focus attention on , the opportunities worthy of further investigation.
• Two methods are effective approaches to screening: web-based surveys and workshops with "multi
voting."
• The FroliCat team had developed 50 raw opportunities as the result of the efforts of six individuals
working independently and in brainstorming sessions. The i team members identified seven opportunities
they felt were worthy of further development

Step 4: Develop Promising Opportunities

• After screening opportunities, the team should invest modest levels of resources in developing a few of
them.
• In developing promising opportunities, the goal is to resolve the i greatest uncertainty surrounding each
one at the lowest cost in time and money.

Step 5: Select Exceptional Opportunities

One specific approach used within established companies is the Real-Win-Worth-it (RWW) method. The
name, Real-Win-, Worth-it, summarizes the three questions :
• Is the opportunity real? Is there a real market that you can serve with the product?
• Can you win with this opportunity?
• Is the opportunity worth it financially?