Market Opportunity Navigator

Last updated

The Market Opportunity Navigator(MON) is a methodology in strategic management that aims to help innovators and entrepreneurs identify and select the most valuable market opportunity to pursue current and future resources and capabilities. It was added as the fourth tool [1] [2] [3] [4] in the lean startup toolset and can be used with the Business Model Canvas developed by Alexander Osterwalder and Yves Pigneur and the Minimum Viable Product. [5] [6]

Contents

MON was developed by German management researcher Marc Gruber and Israeli entrepreneurship specialist Sharon Tal [7] as a strategic framework to help firms identify and capitalize on promising market opportunities based on their studies of hundreds of startups. [8] [9] [10] It consists of three steps: generating the Market Opportunity Set, evaluating Market Opportunity Attractiveness, and designing the Agile Focus Strategy. Through these steps, the MON assists in understanding a firm's core abilities, assessing the attractiveness of potential market opportunities, and strategically planning for growth while remaining agile in a dynamic market environment. MON guides decision-making processes, fosters a shared language within organizations, and offers ongoing guidance for pursuing valuable market domains.

Overview and background

The idea that the resources and capabilities of a new firm can be applied to create different offerings and address the needs of different market segments was first spelled out in Edith Penrose’s influential "Theory of the Growth of the Firm," [11] and since then has become a cornerstone of the resource-based view in strategic management. Contemporary writings seek to forge a link between the lean startup and academic research, including MON. [12]

MON was developed based on insights from several research studies as well as practical work with startups and established firms. Most closely related to the origins of the method are four academic studies. [9] [8] [10] [7] For instance, a research study of over 80 startups found that experienced entrepreneurs tend to generate a set of market opportunities before deciding which market to pursue initially, deriving key performance benefits from doing so. [8] A study of 500 technology ventures showed that the number of identified market opportunities and the variance (distance) among them have a lasting impact on the growth potential of the firm over time and its likelihood of subsequent diversification. [9]

Where to Play: 3 steps for discovering your most valuable market opportunities
Where to Play 3 Steps for Discovering your Most Valuable Market Opportunities.jpg
Cover
Author Marc Gruber and Sharon Tal
LanguageEnglish
SubjectEntrepreneurship, market strategy
GenreNon-fiction
PublisherFT Publishing International
Publication date
September 21, 2017
Pages240
ISBN 978-1-292-17892-9 ISBN-13
The book was also published in German, French, Chinese, and Korean.

Gruber and Tal worked on the concept for years before bundling and presenting it in their book "Where T Play: 3 Steps For Discovering Your Most Valuable Market Opportunities" (Pearson, 2007). In the book, Gruber and Tal present MON as a template and a framework tailored for entrepreneurs, technology transfer offices (TTOs), startups, established organizations, and educators. MON was developed to help decision-makers overcome the challenge of commercializing innovative ideas. The authors argue that for innovators the concept of speed or running fast is critical to successful product development and marketing and that the biggest mistake is to run fast in the wrong direction (i.e., not pursuing the most valuable market opportunity). The set of unique resources and skills of an innovator creates multiple potential paths of different products that can solve different problems, addressing different needs for a wide variety of customers. And opportunities with bigger value-generating potential would generate more sales and maximize the chances of success in a given market. [7]

In Entrepreneurial Strategy: Starting, Managing, and Scaling New Ventures (Shepherd & Patzelt, 2021), MON is described as a critical tool for helping entrepreneurs identify and evaluate market opportunities during the startup process. It is positioned as a complement to the Lean Startup framework, specifically addressing the gap left by tools like the Business Model Canvas and Minimum Viable Product. [13]

Stevenson et al. (2024) mention MON as one of the core tools within the lean start-up framework, alongside others like the Business Model Canvas and iterative customer development procedures. These tools facilitate entrepreneurial progress by helping innovators test and explore market opportunities. Specifically, MOP is recognized for its role in identifying and evaluating potential market opportunities, which aligns with the framework's goal of guiding entrepreneurs in the iterative process of developing and testing a venture. [14]

Saras D. Sarasvathy (2024) described MON as an essential addition to lean startup methods. MON, she said, addresses a key gap in lean startup by offering a broad framework that helps entrepreneurs generate and evaluate a portfolio of market opportunities. Sarasvathy wrote:

MON offers a wide lens perspective for entrepreneurs to come up with a portfolio of market ideas, and then helps them to choose the one with highest potential as the starting point for applying lean startup. [15]

Principles

The resources and capabilities of a (new) firm can be applied to create different offerings and address the needs of different market segments. The choice of which markets to focus on is critical for firm growth [8] [16] and has an important imprinting effect on the business. [17] [18] MON proposes a structured process to support managers, entrepreneurs, and innovators in discovering their most valuable market opportunities and set their strategic focus. It is based on three steps:

The three steps of MON Navigator.png
The three steps of MON

Generate your Market Opportunity Set using Worksheet 1

Using Worksheet 1, managers learn how to describe the core abilities of their firm, independent of any envisioned product, [16] and how to identify different applications that can be developed with these abilities, along with potential customers that may need these applications. The desired outcome is the Market Opportunity Set.

Evaluate Market Opportunity Attractiveness using Worksheet 2

Using Worksheet 2, managers learn how to evaluate the attractiveness of each market opportunity based on two dimensions: the potential of the opportunity and the challenge of capturing its value. The result of this scoring process is depicted in the Attractiveness Map (AM).

Design your Agile Focus Strategy using Worksheet 3

Using Worksheet 3, managers learn how to assess potential backup and growth options. Once the Primary Market Opportunity is chosen, they decide which opportunities to pursue now, which ones will be kept open for later, and which ones will be placed in storage. The resulting strategy (the "Agile Focus Strategy") is depicted on the Agile Focus Dartboard.

Case studies and application

The MON has been applied in companies worldwide. For instance, MyoTecSci (MTS), a South Korean biotech startup. Its founder, Hyeson Soo Kimmm, utilized MON to focus and prioritize its five market opportunities in the life sciences sector, particularly in the field of muscle health. The startup utilized the tool to cull and prioritize its options, aiding in minimizing risk and optimizing resource allocation for its pre-clinical stage endeavors in tackling sarcopenia and muscle-wasting diseases. Through this strategic approach, MTS's management team streamlined their choice process, enhancing their chances of success in their selected market segments. [19]

MON was used in conjunction with Roger's Diffusion of Innovations Theory and Porter's Diamond Model to analyze the market opportunities for a connected cardiotocography (CTG) telemonitoring solution. MON was utilized within the research framework to assess the potential market for a proposed CTG telemonitoring solution for antenatal care, focusing on a promising market within the OECD. Through a combination of survey analysis, screening of potential markets, qualitative interviews with industry stakeholders and medical professionals, and a literature review, MON helped evaluate the viability and attractiveness of the market opportunity. This approach allowed for a comprehensive examination of various factors influencing adoption, such as industry readiness, regulatory considerations, and customer acceptance, eventually guiding strategic decision-making for market entry and product development. [20]

MON was also used to assess the market opportunities for reusable packaging solutions in e-commerce for retail companies in Austria. [21]

The Market Opportunity Navigator is applied in various programs across the globe. For example, at Cornell Tech’s Runway Program, [22] NJIT’s new venture management course, [23] and in EU programs. [24]

York et al. (2022) utilized MON as a tool to guide the strategic development and market entry for Bioneedle™ technology, a novel needle-free vaccine delivery platform. MON was applied in three key steps: first, by identifying potential market opportunities where the technology’s strengths could meet demand; second, by evaluating these opportunities using an attractiveness map to compare potential benefits and challenges; and finally, by creating an agile focus dartboard to prioritize short- and long-term opportunities. This process helped Bioneedle™ identify high-potential market entry points, such as targeting COVID-19 vaccine delivery while weighing risks and challenges. [25]

Bacq and Wang (2024) applied MON to impact startups by adapting its principles to tackle societal grand challenges. The framework expands on the conventional lean startup model by integrating a multi-stakeholder approach, which is essential for addressing complex social and environmental issues. MON plays a key role in the first phase, known as "value search," where impact entrepreneurs use the tool to identify and map out a wide array of stakeholders, including those affected by the societal challenge. This broader, and more inclusive, stakeholder mapping is crucial for understanding diverse needs and prioritizing market opportunities based on potential social and environmental impact. By doing so, the tool helps impact startups systematically explore where to focus their efforts, ensuring that their initiatives align with stakeholder needs and contribute meaningfully to solving grand challenges. [26]

Related Research Articles

A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship includes all new businesses including self-employment and businesses that do not intend to go public, startups are new businesses that intend to grow large beyond the solo-founder. During the beginning, startups face high uncertainty and have high rates of failure, but a minority of them do go on to become successful and influential, such as unicorns.

<span class="mw-page-title-main">Business model</span> Rationale of how an organization operates

A business model describes how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts. The model describes the specific way in which the business conducts itself, spends, and earns money in a way that generates profit. The process of business model construction and modification is also called business model innovation and forms a part of business strategy.

<span class="mw-page-title-main">Career</span> Individuals journey through learning, work, and other aspects of life

A career is an individual's metaphorical "journey" through learning, work and other aspects of life. There are a number of ways to define career and the term is used in a variety of ways.

The reputation or prestige of a social entity is an opinion about that entity – typically developed as a result of social evaluation on a set of criteria, such as behavior or performance.

<span class="mw-page-title-main">Strategic management</span> Planning for a companys responses to external issues

In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of resources and an assessment of the internal and external environments in which the organization operates. Strategic management provides overall direction to an enterprise and involves specifying the organization's objectives, developing policies and plans to achieve those objectives, and then allocating resources to implement the plans. Academics and practicing managers have developed numerous models and frameworks to assist in strategic decision-making in the context of complex environments and competitive dynamics. Strategic management is not static in nature; the models can include a feedback loop to monitor execution and to inform the next round of planning.

<span class="mw-page-title-main">Porter's five forces analysis</span> Framework to analyse level of competition within an industry

Porter's Five Forces Framework is a method of analysing the competitive environment of a business. It draws from industrial organization (IO) economics to derive five forces that determine the competitive intensity and, therefore, the attractiveness of an industry in terms of its profitability. An "unattractive" industry is one in which the effect of these five forces reduces overall profitability. The most unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven to normal profit levels. The five-forces perspective is associated with its originator, Michael E. Porter of Harvard University. This framework was first published in Harvard Business Review in 1979.

<span class="mw-page-title-main">SWOT analysis</span> Business planning and analysis technique

In strategic planning and strategic management, SWOT analysis is a decision-making technique that identifies the strengths, weaknesses, opportunities, and threats of an organization or project.

Marketing strategy refers to efforts undertaken by an organization to increase its sales and achieve competitive advantage. In other words, it is the method of advertising a company's products to the public through an established plan through the meticulous planning and organization of ideas, data, and information.

<span class="mw-page-title-main">Business performance management</span> Processes to bring output into alignment with goals

Business performance management (BPM) is a management approach which encompasses a set of processes and analytical tools to ensure that an organization's activities and output are aligned with its goals. BPM is associated with business process management, a larger framework managing organizational processes.

The Best Practicable Environmental Option (BPEO) is the idea that there is a unique, supremely beneficial—or least environmentally damaging—method of disposing wastes in a cost-effective manner, in both the short- and long-term.

A business incubator is an organization that helps startup companies and individual entrepreneurs to develop their businesses by providing a fullscale range of services, starting with management training and office space, and ending with venture capital financing. The National Business Incubation Association (NBIA) defines business incubators as a catalyst tool for either regional or national economic development. NBIA categorizes its members' incubators by the following five incubator types: academic institutions; non-profit development corporations; for-profit property development ventures; venture capital firms, and a combination of the above.

Open innovation is a term used to promote an Information Age mindset toward innovation that runs counter to the secrecy and silo mentality of traditional corporate research labs. The benefits and driving forces behind increased openness have been noted and discussed as far back as the 1960s, especially as it pertains to interfirm cooperation in R&D. Use of the term 'open innovation' in reference to the increasing embrace of external cooperation in a complex world has been promoted in particular by Henry Chesbrough, adjunct professor and faculty director of the Center for Open Innovation of the Haas School of Business at the University of California, and Maire Tecnimont Chair of Open Innovation at Luiss.

Business development entails tasks and processes to develop and implement growth opportunities within and between organizations. It is a subset of the fields of business, commerce and organizational theory. Business development is the creation of long-term value for an organization from customers, markets, and relationships. Business development can be taken to mean any activity by either a small or large organization, non-profit or for-profit enterprise which serves the purpose of 'developing' the business in some way. In addition, business development activities can be done internally or externally by a business development consultant. External business development can be facilitated through Planning Systems, which are put in place by governments to help small businesses. In addition, reputation building has also proven to help facilitate business development.

Talent management (TM) is the anticipation of required human capital for an organization and the planning to meet those needs. The field has been growing in significance and gaining interest among practitioners as well as in the scholarly debate over the past 10 years, particularly after McKinsey's 1997 research and the 2001 book on The War for Talent. Although much of the previous research focused on private companies and organizations, TM is now also found in public organizations.

<span class="mw-page-title-main">Entrepreneurship</span> Taking financial risks in the hope of profit

Entrepreneurship is the creation or extraction of economic value in ways that generally entail beyond the minimal amount of risk, and potentially involving values besides simply economic ones.

Corporate venture capital (CVC) is the investment of corporate funds directly in external startup companies. CVC is defined by the Business Dictionary as the "practice where a large firm takes an equity stake in a small but innovative or specialist firm, to which it may also provide management and marketing expertise; the objective is to gain a specific competitive advantage." Examples of CVCs include GV and Intel Capital.

Lean startup is a methodology for developing businesses and products that aims to shorten product development cycles and rapidly discover if a proposed business model is viable; this is achieved by adopting a combination of business-hypothesis-driven experimentation, iterative product releases, and validated learning. Lean startup emphasizes customer feedback over intuition and flexibility over planning. This methodology enables recovery from failures more often than traditional ways of product development.

Digital transformation (DT) is the process of adoption and implementation of digital technology by an organization in order to create new or modify existing products, services and operations by the means of translating business processes into a digital format.

<span class="mw-page-title-main">Marc Gruber</span> German management researcher

Marc Gruber is a management scholar and researcher specializing in technology commercialization. He is a professor at EPFL, and holds the Chair of Entrepreneurship and Technology Commercialization at EPFL's College of Management of Technology. In 2022, he was made Chief Editor of the Academy of Management Journal. In 2016, he has been named among the five most influential researchers worldwide in entrepreneurship research.

References

  1. ↑ Sadeghiani, Ayoob; Shokouhyar, Sajjad; Ahmadi, Sadra (2022-01-01). "How digital startups use competitive intelligence to pivot". Digital Business. 2 (2): 100034. doi: 10.1016/j.digbus.2022.100034 . ISSN   2666-9544. For example, recently Shepherd and Gruber (2021) introduced the Market Opportunity Navigator as a module of the Lean Startup which had previously been introduced for opportunity navigation and competitive positioning independent of the Lean Startup (Gruber & Tal, 2017).
  2. ↑ Cassens, Nathalie; FH Wedel, Wedel. "The Lean Startup – A Systematic Literature Review" (PDF). Another term introduced by Shepherd and Gruber (2021) is the "Lean Startup Framework" which adds concepts like the Market Opportunity Navigator, Business Model Canvas, Customer Development and Agile Development to the Lean Startup. So, it should be paid attention to the use of terms that are related to the Lean Startup.
  3. ↑ "Steve Blank How to Stop Playing "Target Market Roulette": A new addition to the Lean toolset". Steve Blank. 2019-05-07.
  4. ↑ Bruton, Garry D.; Pryor, Christopher; Cerecedo Lopez, Jose A. (2023-10-24). "Lean Start-Up in Settings of Impoverishment: The Implications of the Context for Theory". Journal of Management . doi: 10.1177/01492063231204869 . ISSN   0149-2063. The Market Opportunity Navigator is a tool in lean start-up that enables entrepreneurs to evaluate a range of potential opportunities based on the desirability and difficulty of exploitation (Gruber & Tal, 2017). Opportunities emerge from specific markets, industries, technologies, and resource providers, and entrepreneurs who target infeasible opportunities experience reduced performance or costly adaptations if they target new opportunities (Blank, 2019; Gruber, MacMillan, & Thompson, 2013). Alternatively, entrepreneurs who can uncover and evaluate a range of opportunities before dedicating resources to building a start-up might be able to mitigate uncertainty, learn about customer needs more fully and more quickly, and adjust their resource deployments more effectively (Shepherd & Gruber, 2021). Entrepreneurs can also use the Market Opportunity Navigator to evaluate the potential of opportunities they uncover during the start-up process and whether they need to make adjustments or pivots (Gruber & Tal, 2017).
  5. ↑ Blank, Steve; Eckhardt, Jonathan T. (2023-04-18). "The Lean Startup as an Actionable Theory of Entrepreneurship". Journal of Management : 014920632311680. doi:10.1177/01492063231168095. ISSN   0149-2063.
  6. ↑ Dimov, Dimo; Maula, Markku; Romme, A. Georges L. (September 2023). "Crafting and Assessing Design Science Research for Entrepreneurship". Entrepreneurship Theory and Practice. 47 (5): 1543–1567. doi:10.1177/10422587221128271. ISSN   1042-2587.
  7. 1 2 3 Gruber, Marc; Tal, Sharon (2017). Where to play: 3 steps for discovering your most valuable market opportunities. Harlow London New York Boston San Francisco Toronto Sydney Dubai Singapore Hong Kong Tokyo Seoul Taipei New Delhi Cape Town São Paulo Mexico City Madrid Amsterdam Munich Paris Milan: Pearson. ISBN   978-1-292-17892-9.
  8. 1 2 3 4 Gruber, Marc; MacMillan, Ian C.; Thompson, James D. (September 2008). "Look Before You Leap: Market Opportunity Identification in Emerging Technology Firms". Management Science. 54 (9): 1652–1665. doi:10.1287/mnsc.1080.0877. ISSN   0025-1909.
  9. 1 2 3 Gruber, Marc; MacMillan, Ian C.; Thompson, James D. (February 2013). "Escaping the Prior Knowledge Corridor: What Shapes the Number and Variety of Market Opportunities Identified Before Market Entry of Technology Start-ups?". Organization Science. 24 (1): 280–300. doi:10.1287/orsc.1110.0721. ISSN   1047-7039.
  10. 1 2 Gruber, Marc; MacMillan, Ian C.; Thompson, James D. (September 2012). "From Minds to Markets: How Human Capital Endowments Shape Market Opportunity Identification of Technology Start-Ups". Journal of Management . 38 (5): 1421–1449. doi:10.1177/0149206310386228. ISSN   0149-2063.
  11. ↑ Penrose, Edith Tilton (2013). The theory of the growth of the firm. Mansfield Centre, CT: Martino Publishing. ISBN   978-1-61427-536-7.
  12. ↑ Shepherd, Dean A.; Gruber, Marc (September 2021). "The Lean Startup Framework: Closing the Academic–Practitioner Divide". Entrepreneurship Theory and Practice. 45 (5): 967–998. doi: 10.1177/1042258719899415 . ISSN   1042-2587.
  13. ↑ Shepherd, Dean A.; Patzelt, Holger (2021), Shepherd, Dean A.; Patzelt, Holger (eds.), "A Lean Framework for Starting a New Venture", Entrepreneurial Strategy: Starting, Managing, and Scaling New Ventures, Cham: Springer International Publishing, pp. 51–71, doi:10.1007/978-3-030-78935-0_3, ISBN   978-3-030-78935-0 , retrieved 2024-09-26
  14. ↑ Stevenson, Regan; Burnell, Devin; Fisher, Greg (2024-03-18). "The Minimum Viable Product (MVP): Theory and Practice". Journal of Management . doi:10.1177/01492063241227154. ISSN   0149-2063.
  15. ↑ Sarasvathy, Saras D. (2024-03-26). "Lean Hypotheses and Effectual Commitments: An Integrative Framework Delineating the Methods of Science and Entrepreneurship". Journal of Management . doi:10.1177/01492063241236445. ISSN   0149-2063.
  16. 1 2 Danneels, Erwin (May 2007). "The process of technological competence leveraging". Strategic Management Journal. 28 (5): 511–533. doi:10.1002/smj.598. ISSN   0143-2095.
  17. ↑ Abell, Derek F. (1980). Defining the business: the starting point of strategic planning. Englewood Cliffs, N.J: Prentice Hall. ISBN   978-0-13-197814-0.
  18. ↑ Geroski, P. A (1998-11-01). "Thinking creatively about markets". International Journal of Industrial Organization. 16 (6): 677–695. doi:10.1016/S0167-7187(98)00012-5. ISSN   0167-7187.
  19. ↑ York, John M.; Pradhan, Vineet; Luo, Polly; Toscani, Michael (2022-04-29). "Market Selection for MyoTecSci: How to Decide "Where to Play" from Multiple Options". Journal of Commercial Biotechnology. 27 (1). doi:10.5912/jcb1010. ISSN   1478-565X.
  20. ↑ KANGEFJÄRD, SARA; EMANUELSSON, LISA. "An Investigation of the Market Potential for Connected CTG Telemonitoring Solutions in Health Care Systems: The Case of Antenatal Care Setting". The information gathered was then analysed using a framework built up by Roger's diffusion of innovations theory, Porter's Diamond Model and the Market Opportunity Navigator, to enable examination of the data from a different point of views. The analysis shows that several factors influence the adoption of a CTG telemonitoring solution. The main barrier to the adoption of connected medical technologies involves acceptance by both healthcare systems and individual healthcare professionals.
  21. ↑ Pfoser, Sarah; Massimiani, Andrea; Coreth, Augustin. "Market opportunities for circular e-commerce packaging: The case of Austria" (PDF). p. 223. What are the market opportunities for circular e-commerce packaging in Austria? To evaluate the market opportunities of reusable packaging solutions in e-commerce for retail companies, the attractiveness map by Gruber and Tal (Gruber et al., 2018) is used. The attractiveness map constitutes the core of the market opportunity navigator, a corroborated framework helping companies to identify, evaluate, and prioritize market opportunities for their business (Escursell et al., 2021). An attractive market opportunity will likely produce significant potential for value creation and pose relatively few challenges in capturing that value.
  22. ↑ de Haan, Uzi; Shwartz, Shuli C.; Gómez-Baquero, Fernando (December 2020). "A startup postdoc program as a channel for university technology transfer: the case of the Runway Startup Postdoc Program at the Jacobs Technion–Cornell Institute at Cornell Tech". The Journal of Technology Transfer. 45 (6): 1611–1633. doi:10.1007/s10961-019-09764-7. ISSN   0892-9912.
  23. ↑ Roy, Raja. "ENTR 410-001: New Venture Management".
  24. ↑ "Backing visionary entrepreneurs: Realising the Deep-Tech Entrepreneurial Talent of Europe" (PDF). eic.ec.europa.eu. April 2022.
  25. ↑ Alexis Mingey; Alexa Molinari; Michael Toscani; John M. York (2022-07-01). "Exploring the Use of the World Health Organization Total System Effectiveness Approach and Market Opportunity Navigator to Identify Initial Positioning and Targeting of a New Bio needle™ Delivery Technology for Vaccine Administration". Journal of Commercial Biotechnology. 27 (2): 37–45. doi:10.5912/jcb1270. ISSN   1478-565X.
  26. ↑ Bacq, Sophie; Wang, Stephanie (2024-04-05). "The Lean Impact Start-Up Framework: Fueling Innovation for Positive Societal Change". Journal of Management . doi:10.1177/01492063241240713. ISSN   0149-2063.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.