Olivier Chateau is the co-founder and CEO of health union†
There is a common misconception that a successful startup equals a great idea well executed or sold. However, countless companies based on excellent ideas have failed because they lack one important characteristic: deep knowledge and expertise about their market.
You see this in media companies that don’t fully understand how or why people consume content, healthcare startups that focus more on streamlined technology offerings rather than actual needs, and consumer goods companies that overvalue what customers are willing to pay.
While it may seem simple, I’ve been surprised by the number of startups I’ve come across over the years that have jumped into an idea—in many cases, really excellent ideas—without having lived and understood their market first. As a result, many of these companies are eventually forced to restructure, sell or terminate their business.
Here are five reasons why I think immersive market experience should ultimately dictate the idea and framework.
Experience drives content.
To truly understand the unmet needs of your audience or customer, your idea must meet their demands and expectations. First-hand experience in the market for which you designed the product or service will help you do it more effectively. If your idea is just a shiny object, you might be able to sell it well, but the shine will fade quickly, revealing little content or relevance to your audience.
An idea not backed by significant market knowledge may be considered too cumbersome or confusing depending on the market (think: too many bells and whistles). On the other hand, your solution may be too light or ineffective, missing a few or maybe a large part to make it really useful and relevant.
Time is everything.
Your idea may be excellent and innovative, but the market may not be ready for it yet. If you’ve worked in the marketplace, you’ll have a better idea of the drivers and barriers to adoption.
For example, an idea that uses an emerging technology or platform that isn’t yet relevant or accessible to your audience’s needs might miss the mark. In some cases, your idea may be too late. Being more familiar with the factors that drive consideration, which sometimes means seeing how others have done it before adopting them, can help you make decisions more effectively.
You can anticipate changes in needs and preferences.
A thorough understanding of your market also means being aware of when and how the tides change; more specifically, you recognize the factors that influence change.
With this knowledge, you can design solutions that are flexible and willing to adapt to changing needs as needed. Your immersive experience and ability to pivot can position you as a trusted and strategic partner who can become an essential part of the market rather than an invader.
You can navigate the legal and regulatory environments effectively.
There are a few reasons why some industries have long been immune to disruptive solutions. The need to adhere to a complex set of rules and regulations is often the most important of these.
With the experience and knowledge of the regulations, why they exist and what they are designed for, a startup can be better equipped to understand how to be creative within the confines of the regulations, rather than trying to find unrealistic or expensive and impractical to find solutions. For example, a technical platform made for the heavily regulated pharmaceutical industry can meet certain standards of privacy, functionality, and aesthetics, but it must be equally diligent in addressing the regulatory and regulatory constraints to be successful. If you are aware of the requirements and expectations, you can respond immediately.
Growth and expansion depend on it.
Leaders and entrepreneurs are better equipped to plan, accurately predict and build a good growth roadmap from scratch if they understand the market, especially emerging trends and where and how customers are likely to focus their investments and resources.
In the case of healthcare and pharmaceuticals, this may mean understanding the pipeline focus, clinical development, or trends in chronic health conditions that will lead to a greater need for therapeutic focus.
It goes without saying that significant disruptions, such as the Covid-19 pandemic, can shake up a market or industry, regardless of deep knowledge and experience. However, if you understand the industry inside out and create an idea that truly fills an unmet need, you can turn an innovative idea into a radiant success.