Challenge
A major chemical company client wanted to assess an idea for a new-to-the-world green packaging solution. There challenge was to understand what requirements customers might require and if there was opportunity for them to market the packaging solution to fit sustainability desires of packaged products manufacturers. The idea was in early stage and so they wanted to us to quickly determine if the business model or an alternative model would be attractive to pursue further or drop. To best understand market needs, especially in early-stage innovation where there is high uncertainty, we proposed an agile learning approach where we work in short sprints and gather learning quickly and can adjust the concept or business model as we go. The client accepted our engagement method.
Approach
At this early stage, we had limited insight into what the optimal business model would be to extract the most value. Valen’s agile learning goal is always to test as “real world” as possible. The biggest unknowns were: a). if customers valued the solution and b). if our client could meet the requirements. It is very difficult to directly ask a customer if they would buy or have interest so simulating a buying situation is a critical element to collecting valuable insight. The agile method we used was a partnership exploration approach directly to the decision-making executives. We developed an initial proposition in the form a concept which also helped create various business models and hypotheses to test. We immediately began exploring this opportunity with executives of defined industries by leveraging our industry contacts and targeted outreach methods. By talking to potential customers, we could adjust the concept and particularly, in this case, the business model as we went through the process. We discussed value proposition, pricing expectations, execution requirements and other key business model elements to gather insight we needed.
Results
We determined that the feasibility to execute the program as envisioned with premium pricing would be risky. Many of the major branded players would only apply this solution to a small segment of their product portfolio. Niche sustainability players had some issues with the proposition that the client could not overcome with the current technology. However, we were able to identify and present an alternative strategy that would strengthen their relationship with customers and access the C-Suite that was difficult because The client had mainly mid-level R&D relationships. By utilizing an agile method for learning and working directly with potential customers to learn needs, we were able to help the client avoid a costly investment in premium price model and move on to more attractive opportunities at the time. Lastly, we recommended revisiting this business model in the future when market might change or new technology discovered.
