Guaranteeing the commercial success of an innovation is a key challenge across industries. In fact, a surprisingly high percentage of companies initiating a radical innovation – i.e. an innovation which consists of a novel technology bringing novelty to the market - fail to convert them into commercial success. In this presentation, I look at some examples of successful and unsuccessful launches across various industries to explore and uncover what it takes to take innovation all the way. Although different industries require different approaches to innovation commercialization, we observe that the barrier to success often is not a failure in technology but the reliance on a commercialization strategy that is not sufficiently innovative. To fuse both the technology/science side and the innovative market perspective, a grassroots innovation process – in which innovation is generated bottom-up with support, however, of top management – is a good approach. Following such a process allows companies to find the “sweet spot” which is a combination of matching an unmet customer need with a great solution and a profit generating strategy. Successful companies have in common that they identified the right commercialization strategy for their innovations. To achieve this, three steps in successful commercialization are essential. First, developing a solid hypothesis on the market through observation of customers: Customer intimacy -instead of customer surveys- is the key to success here. Dropbox, PatientsLikeMe, and Tesco are good examples of how a market hypothesis through observing the customer led to a successful innovation. Second, experimentation (on a limited scale) to validate that hypothesis early on. Experiments are the best way to find out whether your solution could be effective for your customers. Third, finding a matching business model: pricing and costing is an essential part of the innovation process and not just the job of specialists. Throughout these 3 steps, learning and adapting are key in becoming successful as you can be sure that you will not execute according to the plan. You thus need to prepare for failure in innovation because otherwise, you are probably not innovative enough.

1. Commercial Success From Innovation
Prof.dr. Stefan Stremersch
Erasmus University Rotterdam IESE Business School
Rotterdam, the Netherlands Barcelona, Spain
Stremersch@ese.eur.nl Sstremersch@iese.edu
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2. In Search for Commercial Success…
A Great Solution
$trategy Unmet
Generating Customer
Profit$ Needs
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3. … From a Structure Perspective…
Science Market
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4. 1. The Visionary Leader
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5. 2. Delegate Responsibility to Functions
R&D has the responsibility to
come up with innovative ideas
and solutions
Marketing has the
responsibility to understand
customer needs
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6. “Highway to Hell”
Degree of
Involvement
in the job
R&D/ Engineering
Marketing
Discovery Development Launch Growth
(Idea  Concept) (Prototyping  Manufacturing)
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7. 3. Grassroots Innovation
Grassroots Innovation – emerges from the grassroots.
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8. Grassroots Innovation:
Cases
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9. Grassroots Innovation at
Alcatel-Lucent
N. Camacho, I. Verniers, C. García-Pont and S. Stremersch
(2012), Alcatel-Lucent: Marketing the Cell Phone as a Mobile
Wallet, IESE Business School, Case M-1279-E. Link:
http://www.iesep.com/es/alcatel-lucent-marketing-the-cell-
phone-as-a-mobile-wallet-83845.html
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10. iTREK: Open Innovation with Students
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11. Symbiosis Between Science and Market
Degree of
Responsibility
and Passion
R&D/ Engineering
Marketing
“Stairway to heaven”
Discovery Development Launch Growth
(Idea  Concept) (Prototyping  Manufacturing)
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12. … From a Process Perspective…
Science: Market:
Discover new technology and hypothesize Discover unmet customer needs and
how it can be used to solve user needs hypothesize how they can be solved
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13. The Shortest Distance From Lab to Market
Market Early Business
Hypothesis Validation Model
Learn and Adapt Learn and Adapt
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14. When you make a business plan, the only thing you know
for certain is you will not execute according to the plan
“Everybody has a plan until they get punched in the face.”
Mike Tyson

15. Developing Your Market Hypothesis
Market Early Business
Hypothesis Validation Model
Learn and Adapt Learn and Adapt
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16. How Do You Find What’s In the Horizon?
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17. “Prediction is very difficult…”
“…especially if it's about the future.”
Niels Bohr
Nobel laureate in Physics (1922)
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18. Hypotheses from Observation
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19. “We found Koreans are the
second hardest working
people in the world. So we
devised a way to have the
store come to the people.”
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20. Hypotheses from Observation
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21. Hypotheses from Observation
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22. Customer Intimacy,
Not Customer Surveys.
Few
Many
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23. Early Validation
of Your Market Hypothesis
Market Early Business
Hypothesis Validation Model
Learn and Adapt Learn and Adapt
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24. Early Validation:
Can Only Be Done by Doing It!
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25. “If you shipped your product and you’re not ashamed of it,
you’ve probably shipped too late.”
Reid Hoffman
Executive Chairman and co-Founder of LinkedIn
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26. Validation from Experimentation...
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27. Validation from Experimentation...
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28. Validation from Experimentation...
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29. Validation from Experimentation…
“Blockbuster” Roll-Out “Controlled” Roll-Out
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30. Business Model
Market Early Business
Hypothesis Validation Model
Learn and Adapt Learn and Adapt
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31. Business Model for Mobile Payment
Consumer’s Bank Payment Card Merchant’s
(Card Issuer) Network Bank
Consumer Merchant
N. Camacho and S. Stremersch (2012), Rabobank Corporate Netherlands: Turning the
Smartphone into an Engine of Bottom-Line Growth, IESE Business School, Case M-
1286E. Available from: http://www.iesep.com/
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© Property of Stefan Stremersch©

32. Business Model for Mobile Payment
App-based A Full Solution Software-as-
Model for Merchants Service
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33. How Can Ryanair Fly You So Cheap?
Avgerage Fare (EUR)
324
267
235
94 106.6
44 65
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34. Ryanair Economics:
London-Barcelona
90
1
80 5.5 Advertising revenue per
Profit passenger
6
70 4 Subsidies
2 Cost = EUR 70
60 Credit card handling fee
50 30 Priority boarding
40
One bottle of water
30
Checking-in bagagge
20
35 Ticket price
10
0
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© Property of Stefan Stremersch©

35. In Summary:
The Hot Spot of Commercial Success
Market Early Business
Hypothesis Validation Model
Learn and Adapt Learn and Adapt
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36. In Summary:
The Hot Spot of Commercial Success
A Great Solution
No-Customer
No Profit
Failure
Failure
$trategy Unmet
Generating Competitive
Failure
Customer
Profit$ Needs
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© Property of Stefan Stremersch©

37. In Summary:
Conclusions
• Grassroots innovation: essential in a firm’s innovation
strategy to fuse market and science
• Formalize functional co-operation: Avoid highway to hell
• The only thing you know for certain is you will not
Market Early Business execute according to the plan
•
Hypothesis Validation Model
In innovation, prepare for failure. Otherwise, you are
Learn and Learn and
Adapt Adapt not innovative enough
• Learn & ADAPT!
A Great
Solution
• Customer Intimacy, not customer surveys
• Validate quickly by doing it on limited scale
$trategy Unmet
• Pricing and costing is an integral part of the innovation
Generating Customer process not the job of specialists
Profit$ Needs
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38. Prof. Dr. Stefan Stremersch
Follow me on Twitter: @StStremersch
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