From The Idea To The Market Innovating Your Business

Progetto grafico: PRC Roma
PRODUCT AND PROCESS INNOVATION
IMPRESE X INNOVAZIONE
From the Idea to the Market Innovating Your Business

A path to focus and increase know-how and opportunities.
This guide was created thanks to the contribution of the Innovation & New Technologies Commission (CIET) of the Engineers Association of Rome (Ordine degli Ingegneri della Provincia di Roma). Suggestions to improve the utility of these guides and to indicate other topics to be explored are more then welcome: toolkit@confindustria.it
www.confindustriaixi.it
Looking at the market exploiting the opportunities within the company.

(Francesco Vellucci) . 1
The first step: critical analysis of the business idea...... 2

Formalize the idea in a feasibility study..... 4
FROM THE IDEA TO THE MARKET INNOVATING YOUR BUSINESS

LOOKING AT THE MARKET EXPLOITING THE OPPORTUNITIES WITHIN THE COMPANY
To compete effectively on the market we must be able to make use of all available resources, creating the conditions to stimulate development and growth in the meanwhile. There is no doubt that the most valuable assets of the company are those "ideas" that can be properly translated into innovations in processes, products and services. It doesnt matter whether it's products, processes or services aimed at making the company itself more efficient or improving its offerings on the market: the result is the production of added value from which the company will benefit in the continuous challenge imposed by the global competition. To achieve this goal, the company must be able to get from its employees, particularly those focused on the market and new technologies an active collaboration in terms of proposals, exploiting the potential that comes from their experience and their knowledge. This means capitalizing on and valuing internal resources which offer employees the chance to feel even more of an integral part of the strategy and success of the company. It is important to involve people who belong to different professional fields, who have insightful ideas but who are often limited to a specific area and sometimes have difficulty in translating their own innovative ideas into economic terms, in the preparation of a business plan that includes costs, revenues and operating margins. The creation of a program aimed at enhancing these skills in the company is one of the most stimulating challenges for the entrepreneur.
How to transform the idea into opportunity. (Luca Franchi)... 6

Presentation of the business idea into the company..... 6 Getting the most from internal feedback. 7 Guidelines for the development of a Business Plan... 7 How to draw it up.. 8
How to bring the business idea to the market. (Raffaele Vincenti).. 9

Identify the target markets. 11 Defining a sales strategy 12 Create something really innovative.. 14 Focus on the goal... 15 Take action. 15 Define the Business Model... 18 Define an action plan.... 21
Conclusions... 31 The authors 33

English edition project by Raffaele Vincenti General project support & contents integration by Francesco Serra Proofreading by AES Rome Italian version available at: http://www.confindustriaixi.it/it/2108.html http://www.slideshare.net/titoru

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TABLE OF CONTENTS
THE FIRST STEP: CRITICAL ANALYSIS OF THE BUSINESS IDEA

Generally there is no lack of ideas, and often the risk is their abundance: but, unfortunately, there is a shortage of good ideas. It is important to know how to evaluate them, and try to figure out if it's worth investing in them in terms of time and resources. To this end it is appropriate to use a methodology aimed at verifying the feasibility of a sustainable project, highlighting the expected benefits, the technical issues, the target users and potential customers. In practice we need to: 1. self-evaluate the degree of innovation of the business idea; 2. identify points of strength and weakness, opportunities and threats; 3. formalize the idea in a preliminary project. Self-evaluating the degree of innovativeness of the idea means being able to abstract oneself, observe it from the outside, evaluate it. Before focusing on the specific technology or the particular process, try to answer some basic questions:
SWOT Analysis. Borrowed from business, SWOT analysis is a logical process that allows you to highlight weaknesses and strengths of the business idea and make the data obtained immediately usable. In general, we tend to standardize the assessment: if too pessimistic, we are likely to abandon innovative ideas and if too optimistic we risk business adventures with uncertain chances of success. SWOT analysis helps us to make decisions considering the idea from four different points of view. Regarding the business idea the SWOT analysis examines 2 factors: internal factors, which constitute its In order to evaluate the idea, it is useful to submit it to the examination of trusted experts of the company, prompting them to highlight the less convincing aspects of the idea itself. Is it also useful to consider what added value the idea can contribute to the current expectations of the company and its customers, without considering the answer comprehensive, at least at this early stage. It is in fact possible that by deepening this analysis and gathering additional information, opportunities currently not understood could be seized and this fundamental question should be proposed again in the future. It is necessary to do some research! Maybe the idea is good, but it has already been implemented, perhaps in an even more successful way than anyone imagined, and cannot therefore offer the competitive plus that the company expects. Searching patent databases on the Internet, where it is possible to find information on technologies and products already registered, will prevent you from working on existing products or services. Identify strengths and weaknesses. If we arrive at this point, it is because we think the idea is worthy of more attention. It is then the case to submit it to a more detailed in depth and structured analysis, for example, through a process known as
Is the idea itself clear, complete, valid? Is it possible to describe it in operative
terms, i.e. through functionalities and performance achieved? who can benefit?
Does it meets the needs of someone

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strengths (Strength) (Weakness);
and
weaknesses
external factors which indicate opportunities (Opportunities) and threats (Threats). The effectiveness of this method of investigation depends on the ability to perform a cross reading of all the factors identified when defining the business objectives of the relevant product/service. It is necessary to enhance strengths and carefully assess the defects in order to maximize op-
impact of negative factors. If, after the analysis, strengths outweigh weaknesses and it is possible to think of a strategy for maximizing the opportunities and reducing the identified threats, we can go ahead to the next step. Formalize the idea in a feasibility study At this stage it is necessary to identify technical and economic dimensions of the business idea, so as to transform it into a project and develop a structured feasibility study, divided by subject:
POINTS OF STRENGHT POINTS OF WEAKNESS Which benets would introduce in the sphe- re of our own sector? Which are the benets related to its adop What could be improved? Which is the protability for the company? OPPORTUNITIES occasion of changes, such as: changes in technology; changes of market trends; business sector of your idea; social changes regarding the interests and the lifestyle of people. portunities and minimize risks. The characteristics of the SWOT analysis model can be better understood through the above SWOT matrix. According to the points highlighted by the SWOT analysis, we must balance the positive and negative elements so as to give precedence to the first, minimizing the THREATS ging trends and habits.
to be imminent). Clear explanation of the objectives in terms of competitive advantages for the company, including the information regarding, at least qualitatively, the potential market share that we intend to achieve. This important step will be the early stage of the Business Plan which
will be presented to the company. Description of products/services/ processes to be developed, even with the support of a graphic description of the immediate impact of the technology adopted. Description of the proposed architecture for the solution and specification of the technology of the components to be employed. Expected costs analysis (provisional), both in terms of project costs and in terms of budget, in order to evaluate the TCO (Total Cost of Ownership) of the proposed solution. Economic evaluation of the benefits obtained by the process/product/service. Provisional analysis of the risk associated with the project, indicating the necessary actions to minimize its impact. Formulation of the implementation plan, indicating the provisional time, the resources required and the proposed organization of work (Project Planning). Guidelines of the project that will provide some indications about how to implement the previous actions, the most appropriate methodologies to use and
the aspects to consider in the preparation of the project Quality Plan. The most complex part of the feasibility study consists of developing a preliminary design showing, by providing real and measurable data, costs and benefits arising from the transformation of the business idea into a product/service. The feasibility study is a valuable technical tool, necessary - but not sufficient - to allow the company to decide. The next step is the development of a real Business Plan, which, in more strictly economic terms, answers the question: "Does the project really represent an opportunity for the company?
TABLE OF CONTENTS OF A FEASIBILITY STUDY
Introduction Reference scenario (starting situation). Identification of the problem/opportunity (needs

Usage scenarios and benefits offered. Constraints and regulatory framework. Explanation of the project. General characteristics of the process/product/ service offered.
of the potential customer/user that you intend to solve with the process/product/service offered).
The master plan of: Architecture. Indications for technological components. Dimensions. Plan (project Gantt). Risk factors of the project. Definition of the product life cycle. Support to the system in operation. Cost / benefit analysis. Indications for the project execution.

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HOW TO TRANSFORM THE IDEA INTO OPPORTUNITY

At this point we need to go beyond the purely technical aspects, and present the project to the potential funders, even if we intend to fund it ourselves. Presentation of the business idea inside the company. When presenting the idea into the company it is helpful to change the technical point of view, previously adopted. Being confident in the viability of the project we are proposing, we should review it, paying attention to two important aspects: the form and the content. The first step is therefore to make all aspects of the innovation that we want to introduce explicit. After an initial brainstorming session, it is necessary to contextualize the type of
business idea and determine if its content refers to a product/service (product for short) or a business process. Regarding the product we have: realization of a new product; quality improvement of an existing product. Regarding the process: development/improvement of productive/operative activities; creation of a new segment/market; competitive expansion on existing markets. The type of innovation introduced could aim at: Differentiation focused on the needs. The company differs from competitors because it is able to give a prompt and consistent response to new market needs.
Improvement. The company is focused on improving what it already does, since it continues to work with new technologies in the same market context. Differentiation focused on technology The company differs from its competitors through its ability to manage and use technology. Diversification (Break through). The company innovate itself with the introduction of a new product/process or through the "creation" of a new market. The market positioning is critical, because from it comes the choice of parameters and metrics to be used for the evaluation and monitoring. The way the presentation is performed is as important as its content, because it has the important function of communication/ persuasion of management. The best way to proceed is to choose a style of presentation to illustrate all aspects related to the potential of the innovation proposed, then prepare a document describing the idea, and its potential impact on business. Getting the most from internal feedback The first step is to identify the steps followed by colleagues working on similar initiatives in order to act according to internal rules, avoiding problems and effectively reaching the right people. This aspect is very important because it centralizes the evaluations and it prepares the
ground for further proposals. You should also exploit the company's knowledge management system in order to accelerate the study of best practices and assess the internal impact (managerial, technical and financial) of any eventual implementation. Consider that even if the goal of finalizing the proposed innovation is not achieved, the company management will be attentive and will positively evaluate proactive people and the leaders of improvement initiatives. Guidelines for the development of a Business Plan The document should be as short and concise as possible, without compromising a clear description of the idea: a good business plan should not exceed 20 pages. It must be simple: one must bear in mind that management might not have an adequate technological background. If you plan to develop a high-tech product, it should be described simply in order to make it understandable even to non-technical people. Well structured and articulated: it is important to follow the appropriate editorial rules (see next paragraph). In particular, the essential areas are a table of contents, executive summary, chapters arranged in a logical sense and, of course, appendices with possible attachments.

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-market: the evidence of be shown. In the early stages of the busibe avoided; generally no more than one or two lines of product/service.
How to draw it up. Generally, there is more than one way to prepare a business plan. We should always remember that, beyond the format, the primary objective of the document is to have access to funds for an existing business or a startup. During the compilation of a Business Plan we should follow a defined index that also becomes a logical guide for all aspects of the innovation. This will help to give a comprehensive view and a standardization of information.
Business Plan - Proposed table of contents

1. EXECUTIVE SUMMARY 2. BACKGROUND AND PURPOSE A. Background B. Present scenario C. Concept 3. OBJECTIVES A. General objectives B. Specific objectives 4. OWNERSHIP A. Business description 5. MARKET ANALYSIS A. Overall market B. Specific market segment C. Competitive factors 6. MARKETING
Demonstrate the benefits of the product for end customers/users. Be realistic and do not overestimate the potential of the product/service. Make a projection of the Business Plan into the future: try to describe future trends, over a period of not less than three years, and explain the management plan. This period may also vary depending on the size and type of business and is also a key parameter for the calculation of the return on investment. Be realistic in estimating the potential revenue. We have to develop scenarios on the expected demand, which describe the best hypothesis, the worst and the most realistic. We also need to develop the sales forecast based on real market data and not on the potential of the production systems. Highlight present and potential difficulties: management obviously will become aware of them sooner or later. Trying to identify problems in advance will strengthen our credibility. Illustrate, with particular emphasis, the company's return on investment: the period of time must obviously match the projection of the Business Plan.
A. Marketing strategy B. Sales forecast 7. DEVELOPMENT AND PRODUCTION A. Production processes B. Requirements 8. ORGANIZATION AND MANAGEMENT A. Organizational impacts 9. FINANCIAL PLANS A. Financial considerations 10.RISK ANALYSIS A. Potential hazards B. Risks evaluation C. Proposed actions for risk mitigation 11.SUMMARY AND CONCLUSIONS A. Summary B. Proposed scheduling 12.APPENDIX
HOW TO BRING THE BUSINESS IDEA TO THE MARKET

In this chapter we grant ourselves a license. A license for the style and the lexicon adopted, which is quite unusual for this type of publication. An emphatic style and lexicon, suited more to a live event than to an audience of readers. It is a clear and conscious choice, we really wanted to pass by all means available (including style and language) the essence of the message of this chapter:
Business is Emotivation
An improbable and not existing neologism, which synthesizes emotion and motivation; elements quite necessary (but not sufficient) to undertake the business

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it will be used. 2. Innovative products or services are not simply bought by customers but are "sold" to them. The context in which companies operate of course is not favorable and not many customers will be willing to take a chance by adopting an innovative product or service. Most customers are reluctant to take a chance on something new and risk unpleasant surprises and, before making a purchase, they should always see a long list of high-sounding references and success stories. We therefore need to work intelligently to overcome this resistance. The company investing in the purchase of a new product or service is like a talent scout who bets on human resources recognizes their great potential, partly unexpressed, and assumes a certain degree of risk. If we think about it, every one of us is sometimes called to evaluate new products or services for the benefit of the company we work for.
activity. Nowadays, as never before, we understand the need to move towards a knowledge-based economy, moving away from an economic model based on the mere transformation of rough materials and assembling that emerging countries have adopted and with which we compete weakly. In this chapter we will deal with a complex aspect, the shift from the business idea and its evaluation to the proposition on the market, even identified as "implementation". Bringing out, using and developing knowledge within the company allows us to create new business opportunities through innovation. Innovation is seen as an effective way to change tactics in the global competition, characterized mostly - but not exclusively
- by the competition of emerging countries. Innovation in any company means designing and implementing a business project. Driving the business idea on the market - and the related vision - requires the ability to understand the context in which we are acting and to take actions that originate from mechanisms deduced from practice. The observation of the business and the careful reading of the history of many companies, allows us to define two problems that make the result of the introduction of an innovation on the market uncertain: 1. The entrepreneur cannot predict how the market will react to the introduction of its product, who will buy it and how
Identify the target markets The market reacts to innovation in a completely unpredictable way and it is not always appropriate to focus efforts on a specific area. So how can we move? With flexibility and enhanced market orientation, trying to promptly identify ongoing changes and new consumer demands; in fact many companies are pleasantly surprised when they realize that positive results come from unexpected "areas". The matrix below provides an interesting approach to think about the relationship between the target market and the use of the product or service, and highlights the "reaction" of the company to the result. Almost all companies want to position themselves in the top box on the left, but the real opportunities are in the box below on the right; we must be flexible and willing to exploit customers and unexpected uses. This phenomenon shows that companies cannot have a complete and comprehen-
EXPECTED CLIENT
UNEXPECTED CLIENT
EXPECTED USE
AS EXPECTED
POSITIVE REACTION
UNEXPECTED USE
POSITIVE REACTION
GREAT SURPRISE
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sive view of the market; all focus on expected customers and expected uses of the products and are not always ready to exploit opportunities that arise unexpectedly. Defining a sales strategy Sales success is achieved when the entrepreneur is able to create credibility and develop a direct and personalized relationship with the customers. Traditional methods, such as advertising or telemarketing, are excellent ways to maintain business contacts with existing clients. But how can we create new contacts with potential customers? One effective way is through the organization of meetings on a smaller scale, conferences and seminars, appearing in the media of one particular sector and proactively use your network of contacts taking part in industry initiatives. Choose the right customers The customer more willing to accept our proposal is someone who sees in our innovative product an opportunity for his company. An opportunity able, for example, to improve his position, to increase its market share or reach new target customers. This is the type of customer that we should "engage" to promote our innovation. Identify the decision-maker Great care must be taken to identify those who decide on the purchase of our pro-
Disadvantages: high costs to make the message widespread. Innovative method: allowing potential customers to test the product or service. Advantages: targeted promotion of the product/service conveyed by its benefits. Disadvantages: higher initial diffusion time, compensated by the positive feedback about benefits on the field that activates a virtuous promoting process. The innovative method frees the customer to verify the validity of the product on the field with a very limited engagement. In implementing the innovative method, the most appropriate strategy is the gradual approach to your product, avoiding any risk or liability for your client. The market is the stage for a performance orchestrated by actors that determine the life of a product and the company that proposes it; actors who do not have a constant behavior, but variable depending on factors determined by the particular historical moment, the current economy trend and other socioeconomic aspects. All this makes the work of doing business challenging, sometimes risky but, above all, exiting. The information resulting from the experiences of those who were bold enough to try - with success and perhaps after some failures - can be summarized in a few important points: create something really innovative; focus on the goal; define the business model;
duct or service to our potential customers. We have to identify the exact "decisionmakers" who can influence the purchase of our products. In general, management uses specialists and consultants to evaluate innovations and make decisions about them, so no matter how important and influential the manager might be, the one who will decide your fate might just be the specialist. Let customers test your product Have you ever wondered why the market is so cautious in adopting innovative products or services?
People often believe that there are good quality products and services on the market able to meet the main needs they have. Thats not always true. The difficult task of the innovator is to break down the traditional barrier, try to engage and influence potential customers who have more or less latent needs. How can this objective be achieved? Traditional method: by advertising. Advantages: Rapid spreading of the brand and information related to the product/service.
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define the action plan; define and/or verify the positioning of the company; explore the possibility of a partnership; build and promote the brand; reach the goal. Lets explore all of the points one by one. Create something really innovative The determination needed to face a path of innovation originates from the purpose: it is essential for its realization. Whether we speak of the creation of an innovative product or a new innovative business, we should aim at the creation of something meaningful, bringing a concrete improvement to society, which will improve the quality of peoples lives. Committing to accomplish something like this is a highly motivating end and gives
us the momentum that makes us much more effective in achieving what we want. Of course, motivation is not a guarantee of success, but enables us to get access to our strongest resources during the process. Errors are generally considered as the events that break down the entrepreneur but, in reality, they are important moments of learning and growth. Learning from our own errors, and those of others, enriches us and make us stronger and more effective. Winston Churchill said: Success consists of going from failure to failure without loss of enthusiasm. Paradoxically, failures give the entrepreneur knowledge and distinctions and allow him to get closer to his goals, simply because they allow him to refine the process he follows.
vation or to reach a challenging goal, two essential elements are needed: Consistent focus Consistent action Thomas Edison was a leading pioneer of this philosophy. A century ago Edison was strongly committed to create the light bulb and performed more than ten thousand failed attempts before achieving success! Even though his business seemed absurd, he was firmly convinced that it was feasible and finally succeeded. Focus on the goal "What product or service could your company create?" The answer to this question outlines the organization's mission. The company's mission statement has become almost fashionable. Browsing the Internet you can read dozens of business missions until you become bored. In fact, the words used are almost always the same: excellence, satisfaction, leader, quality, best, customer. It is advisable to postpone this initiative until the time when we have achieved success and we will be more credible thanks to a more consolidated offer and positioning. To achieve this condition is important to first define a formula which, although public, is particularly useful within the organization. From the best schools in the development of individual performance we learn that to make a big change, to introduce an innoTake action On the basis of the above indications, the second of the two necessary elements to achieve a defined goal is the action: consistent action (constant and effective action). It is necessary to get from the "theoretical" to the "practical" plan; at this stage meditating, planning, writing business plans and presentation documents is not very helpful: thinking about an innovation is stimulating; beginning to define an implementation plan makes it possible; planning concrete actions to achieve it makes it real ... as long as we face the challenge with the right mindset! We must work on the product, on a prototype, on a simulation or a test by a group of experts, partners or customers. At this stage we shouldnt be obsessed by perfection. One of the most common mis-
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takes at this stage is too many trials to achieve perfection, "excessive reflections" on the questions that we have (and to which we cannot give an answer) and the fear of embarrassment about the inadequate quality of the product the potential customers could perceive. The goal should be to produce a product or service that is "good enough" and not keep it in the pipeline until it is perfect. Over time we will have the opportunity to refine it. Here are some helpful tips at this "activation" stage: Think big. Aim high and try to create something innovative, different, going beyond what already exists. Dont be alone on the journey. It is important to rely on the support of a capable staff. This is essential for success, whether you are starting a new business or want to introduce an innovative product in your offering portfolio. The success or failure of a venture is determined by management. Management will determine the efficiency with which the project will be implemented and the effectiveness with which the inevitable problems will be solved. It is essential to identify people who have proven over the their career that they are able to achieve challenging goals, to learn from their mistakes and to face and reverse a situation in the most critical moments.
a business plan is much more important than the idea to be realized. Attract public attention. Through the new product we will receive feedback from the public: consensus and criticism. It is normal to receive criticism: do not worry about it. Worry about indifference instead. Choose the logic of design. The logic behind the creation of a product may be of different types:
final users is not absolutely defined and the attention is focused on the product we are creating.
Intuitive. In this case the customers, the

competitors and supply sources are known and contacts have been developed in the industry. The product hasnt been created yet, but a substantial part of the work has been done in another area.
Experimental. There are no points of

reference in cases where the innovative idea introduces new paradigms and cannot be verified with existing tools. Explore the market with prototypes. Unfortunately it isnt always true that by introducing a new product on the market which is cheaper, faster, lighter, more elegant or more durable clients will adopt it instead of existing ones. In the first period of the lifecycle of a product/ service - or a business - there is considerable uncertainty about what should be created or the exact needs of the customers. In the conception stage of the product it is necessary to test the market by contacting the greatest number possible of potential customers, analyzing their impressions following the description of the product/service that is in your mind. You may have had the most original idea and organized an efficient group of managers, but not have any customers interested in your product or service. If there is any positive feedback we can move to the implementation
Creative. The creative process is aimed

at bringing to the market something "innovative", different from what is already available. The target in terms of
"What to do" is less important than "how to do it." There are many examples of companies that have achieved excellent results in various fields: food, furniture, footwear, infrastructure, information technology, etc. There are also countless other examples of failures in these fields. Remember that the success of the business project is not only related to the originality of the idea, but also and above all, how it is implemented and proposed. And this depends on management; the choice of an appropriate group of managers to implement
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Almost certainly it won't be perfect, but we dont have to modify it; we will modify it if necessary when it is already known and appreciated. This is a logic that has been successful for many innovative companies. Define the Business Model For start-up companies
cannot be described in few steps is probably not of immediate feasibility. The description should be possible with a few sentences, using words with clear and understandable terms, avoiding "trendy" management-terms (mission critical, strategic, synergistic, globally, excellence, etc..). The rules to follow are: brevity and clarity. Take inspiration from success stories. It is very difficult to create a brand new business model. The new economy has introduced more innovative ideas than we can imagine in this context, and today the most advanced business models have been designed and put into practice. It will therefore be crucial to adopt an existing and tested model, as much as possible suited to our business project. For existing companies The introduction of an innovative product or service to the market by an existing company, makes it similar to a start-up. For this reason the above advice (in the previous section) remains valid. However, we want to make further considerations related to the perspective of change with respect to the past, a past in which a start-up has obviously not occurred. In these years of continuous change business models and ways to create wealth adopted from existing companies are becoming obsolete faster than in the past. No sector or type of business, large
The next step is to define a business model and for this we need to find clear answers to the following questions: what is the origin of the necessary capital? how can we obtain it (if it is not owned by the company)? The first question will help us understand who the customers are and identify their needs. The second focuses on defining the most effective sales system which would provide revenues greater than the costs. Follow three simple, but valuable guidelines: stage. It is recommended to build a sufficiently evolved prototype, put it on the market and carefully analyze the opinions of the customers. We must not wait to get all of the information we need before starting; this is almost impossible and will delay the launch of the product, which will impact negatively on our market presence. The purpose of "starting up" is to achieve a timely first version of the product/service. Be specific. Having the ability to "define" the customer segment is a big advantage. In this case, the danger is to relegate the scope to a narrow niche; starting from this consideration it is important to highlight how many successful companies started focusing on very specific markets and became big sometimes unexpectedly and expanded in the next stage. Aim for simplicity. If the business model
or small, is safe from obsolescence: from the regional distributor of auto parts to the giant multinational internet services company. Here's an example: The American internet services giant of the Time Warner group, America Online (AOL), dominated as the undisputed number one worldwide until a few years ago, when it was surpassed by Yahoo, which became the number one search engine. Now Yahoo has lost its leadership in favor of Google, a company created in 1998 by two university students with a fund of $
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100,000, and has become the undisputed ruler of the market, with a present value of over $ 190 billion. What is the secret of this success? The ability to grow profits through advertising, resulting in the capability to measure its effectiveness better than anyone else. Now the leaders of AOL and Yahoo will definitely have to use their imaginations to figure out how to reposition their businesses and create profits in the new context. This repositioning comes from a set of knowledge - so-called know-how - and imagination. We are not talking about philosophy, but a work of high responsibility, with no references and certainty, that the leaders who are entrusted with these decisions must undertake to make a business successful. The best correlation between vision, knowledge and experience catalyzed by the right psychology is the magic formula to success. Always running a business in the same way, as if the context of reference where it operates is always the same, can be fatal. Lets consider our current situation and look at the origin of our product and how it enters the market; in a few words the value chain of our company. Lets analyze the costs, quality, service levels, the margins and our competitors. What we can do to grow and be more competitive? A detailed and realistic analysis of the situation in which we operate is more than
labor costs) which does not guarantee either survival nor competitiveness of the companies. It is often the case to avoid frontal competition with emerging countries - that are facing us by using our most traditional models - but it is advisable to reposition ourselves into the new environment by identifying our own role and valuing skills, capabilities, culture and creativity, going toward the development of a knowledge economy. In other words, in order to better compete on the market we must enhance the game to a level not viable by companies operating in emerging countries. Define an action plan necessary to realize the scenario in which we compete and figure out which way the company should go to stay on the market. Postponing this analysis could be a serious mistake: remaining motionless in a context of apparent stasis is not a guarantee of survival. It is important to bring into question strategies and assumptions that were successful in the past and in the context of nonglobalized market; it is essential to understand the current trends in our sector, in our country and abroad, keeping contacts with the industry associations. We have to pay attention to the time variable: each choice can be effective in a given moment, so it is not enough to decide what is appropriate to do, but even when to do it. Staying on the market could mean being ready to revolutionize the organizational model, outsourcing some processes, focusing on some activities, creating synergies with our competitors, looking for supplies in emerging countries or partnerships with foreign distributors. In this process, the entrepreneur must be able to identify the "distinctive" elements of his business, try to develop them as much as possible, and leave out those aspects that can no longer create value in the new environment. Unfortunately many Italian SMEs continue to operate in the "traditional" economy of transformation; an old strategy (winning mainly in emerging countries with low The creation of an innovative business project is similar to a journey to an unknown land. In order to not get lost on this trip a roadmap is needed which outlines the route to follow to achieve the objective of the business project. This map is the action plan. The action plan not only defines the activities to be undertaken, but also the assumptions upon which our initiatives and milestones are based. The purpose of the definition of the content of the map is to understand the scope of the business project we want to achieve, assess the conditions and set a method to identify and overcome the most significant limitations of the process to be implemented.
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the sales targets for each vendor; the conversion rate of prospects into clients; the duration of the sales cycle; the return on investment for the customer; the technical assistance interventions per installed unit; the active and passive cycle; the price of components and supplies; the return on investment on the client. We have to continuously check the assumptions and, when not satisfied, we must take corrective actions. We should also link them to one of the milestones listed above, in this way, once a milestone is reached, we can test a starting hypothesis. Tasks Another suggestion is to create a list of principal tasks to perform in order to design, produce, sell and maintain our product efficiently. For example: rental of offices and plants (if not already available); the recruitment of sales agents; the preparation and consolidation of accounting systems and payroll (if not already available); the execution of legal requirements; the stipulation of insurance policies; etc.
They are well known by long-time entrepreneurs and are an indispensable reference for new entrepreneurs. This list of tasks is useful to understand and evaluate the totality of what we have to put in place - especially when launching a new venture - to prevent overlooking important details. Define and verify the positioning of the company Positioning is the way in which the company wants customers to perceive its product compared to other goods that satisfy the same needs, both with respect to its offer and to products offered by competitors. Besides giving the company the right perspective, correct positioning provides a support for the development of the company. It is a practical tool that pursues strategic and tactical aims, which are under the watchful eyes of customers, suppliers, employees, partners and reporters. If properly analyzed, positioning represents the profound essence of an organization, because it clearly says: why that organization was started; why customers should prefer it; why talented people should go to work in it. Companies should position themselves clearly explaining exactly what they do. Positioning is outlined by the response to this simple question: what do we do?
Milestones These are the objectives identifying the significant progress along the road to success. There are some important steps on which the entrepreneur must be focused: check the validity of the project idea; complete the project specifications; build a prototype of the product; get the capital; give customers an experimental version of the product; place the final version of the product on the market; quickly identify and achieve the breakeven point (i.e. balance the budget, beyond which you will see the profits).
There are other important tasks for the survival of the organization, but none of them is more important. The timing of achievement of these milestones will condition all of the other activities, so it is recommended that we spend the majority of our time on them. Assumptions The second thing to do at this stage is to create a complete list of key assumptions, i.e. the assumptions on which our initiative is based. These assumptions include factors such as: the performance parameters of the product or service; the size of the market; the gross operating margin;
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Answering this question in a comprehensive way means adopting the right perspective and explaining precisely how we differ from the mass of competitors. The next step is to communicate this message to the market. Here are some features that the positioning of our company should have: Be positive. Do not put ourselves in contrast to competitors with whom we want to compete. Our potential customers are mostly interested in the benefits they could get from our product/service. Be customer-centric. Focus on what we do for our customers, not on who we
want to become. Declaring ourselves to be the "leader", besides being difficult to prove, is a statement not centered on the customer. Other companies may declare the same thing. Be motivational for employees. Employees need to share our positioning and must be convinced of the positive contribution of our company. This context motivates them and drives them to give their best. Targeted. Identifies the target customer. For example, "cars that meet the emission limits for the environment" is a mediocre and generic value proposition compared to "green cars with zero emissions and low energy consumption". Specific. The base of an effective positioning should include the core competences of our company and not the products. A big mistake would be to express positioning based on external aspects or at most bordering with our core business. Relevant. The set of specific competences of an organization is functional to meet the needs of the customers. If our competencies and their needs are not fully correlated, our organization and positioning will not be attractive to customers. Durable. Look for a stable position which can last for many years. Differentiated. It is not recommended to imitate the positioning of a competitor. Unfortunately, many companies are positioned as if the competition wouldn't exist or as if the competitors were not able to compete. Segmenting and being able to choose Whether it is a start-up or an established company that wants to innovate its products or its business model, in order to explore the market in an intelligent way the gradual approach through more accurate segmentation and a subsequent choice of
FIGURE 1 - NICHE MARKETING
Capability to offer a unic product or service
Companies with inappropriate positioning
Companies with appropriate positioning
Companies with low added value
Companies based on a high competition on prices
Value of the product/service for the client
areas in which to compete is more appropriate. Figure 1 attempts to illustrate the concept of niche marketing. The vertical axis represents the ability of our company to offer a unique product or service. The higher we are positioned on this axis, the more we are able to provide our customers something that is different from everything that is already on the market. The horizontal axis represents the importance of our product or service to the customer. The more we are placed to the right on this axis, the most valuable our product or service is. Let us analyze the four quadrants of the matrix: Left upper quadrant. It is the position occupied by companies that adopt a positioning that could be defined as inappropriate. They provide unique products or services that are not relevant to anyone or almost anyone.
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Lower left quadrant. Making a reference to the New Economy, this is the area that many "dotcoms" have occupied. These companies offered products and services that practically no one cares about. Right lower quadrant. The problem of this area is the high competition on prices. Many of these companies provide goods and services similar to those we offer. Maintaining a position in this context is very difficult. Right upper quadrant. It is an ideal area in which to position the company. Customers appreciate our company and margins are significant because we provide something unique that fulfills their needs. What parameters can we use to place us in the right upper quadrant? The value perceived by the customers and the ability to provide a unique product or service. Customizing the message The more the positioning is personalized the more it is effective because potential customers do not have to "strive" to imagine how our product or service could meet their needs. Table 1 shows examples of positioning. Speak clearly Allen Kay, an expert in advertising, regarding the elements necessary for an ef-
fective press release says "Always ask yourself: has it captured my attention? has it generated my interest? Has it "left its mark"? has it spoken in my language? Is it addressed to me? Did it tell me something special? " It may happen that the representatives of a company respond to the question "What are you doing?" by expressing the positioning in this way: using MESH networks we manage a dynamic allocation of optical data and reconfiguration resources in case of changes in traffic. This phrase can only be understood by experts in data transmission, a small minority. To everyone else this message is incomprehensible. By changing the positioning statement to "we provide flexible
Speak differently As most companies use the same words to describe their product or their service, the message will be more effective if it is distinguished from that of your competitors. SIMPLE
The graphical user interface will guide you in the choice of the commands Has been continously improved to avoid user injuries The test proved that it improved the productivity by five times Youll save 50% of the cost in the management of archives You can add new functions by simply updating the internal memory
communication channels, on demand and in a short time" we get a message immediPERSONALIZED APPROACH ately understandable to all. Synthesizing in "communication channels on demand" furtherly enhances its effectiveness. Whatever we sell, and whoever we propose it to, we have to use simple words to describe what we do. Whatever the jargon of our industry is we have to remember that, besides the experts, there are other people potentially interested in our business that need to understand what services we offer.
TABLE 1 - POSITIONING EXAMPLES
SAFE
IMPERSONAL APPROACH
Our software will improve the documents workflow in Our Document Management software will simplify your company. your work making your company more productive. We teach Chinese to the tomorrows leaders. Ecologic vehicles for personal trasportation. Our bank offers advanced services for private persons and for business. The certainty that your boys will learn Chinese. Sustainable mobility saving your money and your environment. A bank built around you.
FAST
ECONOMIC
FLEXIBLE
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For example it would be appropriate to define our product as "simple, safe, fast and flexible" if our competitors would define their product as "difficult to use, vulnerable, slow and hard", but unfortunately they do not use these negative terms. One possible way to differentiate the product is to describe it making indirect references, so that the people can deduce the benefits. The difficulty in this case is related to the limited number of words available. We must strive to find a specific language going beyond the usual adjectives such as: simple, safe, fast, cheap and flexible, by which we characterize a product. See the example in the table below. Spread a cascading message The definition of the positioning of a company is a complex process, but crucial: we have to make sure that the description of our positioning is "alive" and gives an idea of what we do! A critical issue is to ensure that all staff, from marketing to top management, from employees to partners, understand the positioning. Managers should ensure that the positioning adopted by the company is spread "in cascade" involving all the staff. The communication of the positioning of a company is not an exclusive task of marketing and management, but of all employees.
must include the rules by which the partnership itself may cease. How to create and promote a brand The most proven marketing theories state that to promote a brand we have to apply the four Ps": Product, Positioning, Price, Promotion.
Adapt to the market If we cannot allow the market to determine our positioning, it is also true that we are not absolute actors; the market has a strange reaction, powerful, sometimes frustrating, but often also extraordinary: it decides on its own. This can happen because unexpected customers use your product or service in a completely unexpected way. Sometimes it is better to follow a current trend rather than trying to keep an incorrect positioning alive at all costs. How and why to build a partnership. Partnerships between companies originate from the complementary expertise of organizations with respect to a common business project. Many partnerships, built with little logical purpose, did not produce the expected
"incremental effect" of skills. The "dotcom companies of the nineties are the evidence of these "failures" resulting from partnerships, in most cases, without proper planning. The purpose of an effective partnership is to increase cash flows, reduce costs and increase revenues. Partnerships built on careful and detailed planning have a high probability of success. Once we understand this concept and identify the partner by the type of skills searched for, the partnership simply becomes a matter of implementation: must be shared by employees, must have internal supporters, need to focus on the points of strength, need to establish win-win agreements,
"Proselytization", or the doctrine with which to retrieve the support of the supporters of our own cause should be added to this list. Proselytization is essential for the promotion of the brand in an innovative entrepreneurial project, in a world where competitiveness reigns and where information is free, ubiquitous and available in real time. Brand promotion (branding) is aimed at arousing enthusiasm among potential customers, to induce them to try the product and give rise through their contribution to a virtuous word of mouth. It is important to realize that a great brand is the result of the creation of a great product or service and is not designed in a way unrelated to the product/service. Create a contagion We must start in the right way creating something truly innovative that creates a sense of contagion.
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When we see or try a new product we have an emotional experience to which we associate more or less positive feelings. These feelings lead us to classify the product in our mind with the adjectives that, properly listed, return a sort of report of this experience: Cool. A beautiful product, trendy and particularly attractive. Although no one would want to make bad products, in reality we often see unsightly creations. Effective. It is not possible to build a brand around a poor product that does not work properly. Distinctive. A product that easily attracts public attention advertises itself and differentiates it from the products of the competition. It is not possible, for example, to confuse a Ferrari with any other car. Astonishing. Contagious products can overturn the most profound convictions.
Emotive. A contagious product goes beyond the expectations giving great satisfaction. Indulgent. The purchase of a contagious product allows us to forgive ourselves for a cost which is higher than the alternatives and that could go beyond our needs. Supported. The availability of exemplary customer care can make a product or a service contagious. Make the fruition of the product accessible Geoffrey Nickelson, historical leader of 3M, said that "Research is the transformation of money into knowledge. Innovation is the transformation of knowledge into money. " By this simple statement we realize that innovation takes place in the market and not in research laboratories. It is therefore projected outside the company and not
inside it, even if the innovation involves the processes within the company itself. Innovation is driven by customers according to their changing needs; the real needs drive the success of the product or service. It is essential to think about all the possible aspects which could prevent or make the adoption of the product or service difficult. In this way the product will be spread on the market more easily and enhance the chances of success of our company and our brand. The main barriers to the spread of the product are: the complexity, the price, the cost required for the customer to abandon an existing product. Complexity discourages and keeps customers away. Make it easy to understand and use the products by designing effective manuals; before giving a manual to the press let ordinary people read it, possibly those not expert in the use of technology. The manual is perfect when everyone is able to understand it without particular difficulties, with a learning period as short as possible. If it is not perfect listen carefully to their comments to improve it. The entrepreneurial experience in various industries seems to indicate that it is not a good idea to launch innovative products with high purchase prices. The high price often becomes an obstacle to the spread of the product. Consider the possibility of applying more reasonable prices in order
to consolidate the brand and achieve greater return in the long term. The last barrier to adoption is the cost required to abandon the use of an existing product in favor of ours (switching). If the choice of our product requires high costs, even if we have applied a good price and it is easy to use, branding is hampered. If it is recommended to minimize the cost required to switch to your product, it is equally important not to create barriers to the transition from our product to others. That would be a good reason for customers not to choose our brand. Advertising and Communication: the boosters of branding Advertising on various media (press, radio, TV, Web) is a key element for the spread of a brand. For the maximum effectiveness of advertising we must attract the interest of the media. To do this, we should consider the following tips: Make our customers happy. Do not think that the effectiveness of advertising is generated by the echo of an article in a famous newspaper; the process is exactly the opposite! First we have to create something innovative, then make our product accessible to customers. If the product is really good our customers will spread the word. At this point the media will begin to show interest in us. Select the media. We dont have to send brochures and distribute products indis-
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Master of Science in Electronic Engineering, is a member of the CIET Commission at the Engineers Association of Rome. Director for Reaserch and Innovation at GEPIN, with responsibility for the development of projects of technological innovation, production of feasibility studies and technology & market monitoring. Deals with scientific and research institutions. He is Technical Director of the Crisalide laboratory accounted by the Italian Minstry of Education and Research (MIUR). He is a Technical Reference for the ABILab Consortium. At present he deals with VoIP communication and Mobile applications. He was responsible for numerous projects regarding Imaging and Clinical Tele-diagnosis and author of scientific publications. He dealt with applied research in the biomedical sector in the Phisics Department of the University of Rome and then in Esaote Biomedica. He was in the group in charge of the development of the first device for Computerized Tomography in Italy. Email: francesco.vellucci@gmail.com Master of Science in Mechanical Engineering in the year 2000, presenting an experimental printing system for the coins at the Istituto Poligrafico e Zecca dello Stato. MBA in 2007 at IRI Management School. Since July 2004 works for Selex Communications (Finmeccanica Group), dealing with products industrialization and development. From February 2001 to July 2004 was Project & Risk Manager at Yale Security Products S.p.A. (Assa Abloy Group). Nel 1998 was consultant at S&Q Consulting S.p.A. in the field of Security (DLG. 626/94) and quality certification ISO9001. Author of various publications (national and international), he is a member of the CIET Commission at the Engineers Association of Rome since September 2006. Email: franchi_l@libero.it Master of Science in Electronics Engineering, is Vice President of the CIET Commission at the Engineers Association of Rome. At present he deals with Change Mangement at Enel ICT, the ICT Systems Integration company belonging to the Enel group. Enel ICT took over Enel.it, the ICT company in which he worked as Accont Manager selling solutions and services in the Industry, Trade and Tertiary markets. The selling activity started at Intersistemi Italia as Business Development Manager in charge of the development of new clients in the Finance, Industry and Tertiary markets. Before that he was Regional Manager at Rover Group Ltd., working in Oxford as responsible for the Italian market for Multimedia Information Systems and Vehicles Diagnostic Services, following the first period working as Systems Specialist. Before that he worked for two years as Freelance Consultant after an experience in Agusta OMI as System Engineer in the R&D department, member of the team that developed the first coherent Laser-Radar for helicopters in Europe. Before beginning the working activity and getting the MSEE, he made a stage in Alenia making a research over the Laser-Radar technologies and, after the MSEE, got a specialization in Marketing Management at the University of Rome. At present is exploring new trends in Innovation, Business Performance, New Media and Sustainable Energy/Mobility. He is also Editor and Publisher for an international Blog focused on the automotive sector: www.automotivespace.it Email: raffaele.vincenti2@gmail.com Master of Science in Mechanical Engineering, member of the CIET Commission at the Engineers Association of Rome. Freelance Consultant supporting at present a primary mechanical construction company in Rome as After Sales Manager, dealing with Customer Satisfaction, Service and Technical Support. He has got an experience in the field of the new generation of metallic materials (alloys and shape memory superelastic materials) and their applications that led to the submission of a patent in Italy, Europe and USA, which he owns together with the company itself. He studied the issues related to the heat dissipation in the brakes of high speed trains, with an emphasis on alternative braking systems (elettromagnetic, Foucault currents, etc..), He is currently working on the technological innovations in hydronic systems for airconditioning. Member of SIAE since 1994, is the author of about thirty musical compositions. Email: info@francescoserra.it
criminately. Before contacting a newspaper or magazine we have to verify that our product is akin to that publication. Be polite and available. When dealing with reporters - of large and small newspapers and other media - we should show kindness and availability to provide information and support. A good relationship with the press will help us sooner or later, even if we havent found the space for our article yet. Communication is the way to inform the market of our innovative project, embodied in a product or a service. A fundamental rule in communication is walk the talk (put into practice what you say). This will add credibility to our customers and within the market where we operate. It is important to carefully prepare the message to be spread in order to effectively promote the product we are launching or innovating. We have to clearly describe the project and make sure that our employees and contractors are able to do the same. Be careful not only about "what to say," but also "how to say it"!
CONCLUSIONS
The process to follow to put an innovation on the market is certainly not simple and standardized, it is important to try and improve it continuously. We have to inspire our employees involved in the project we are doing, making them understand the importance of synergy. The most effective way to get their cooperation is through the convergence of objectives. Even if it might seem useless, we should jot down some notes about every stage of interaction with every customer and keep the timing and the results under control: We have to identify reference indicators such as the number of customers visited, the sales forecast and the sales closed periodically; collect and make good use of ideas and insights that will allow us to improve our product and our promotion. Compiling statistics on this data will give a measure of the effectiveness of our work, making us deduct any corrective actions. We must recognize and reward real success. For further details on the topics discussed in the guide, refer to the Innovation & New Technologies Commission of the Engineers Association of Rome: http://www.ording.roma.it/commissioni/ Email: ciet@ording.roma.it
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From The Idea To The Market Innovating Your Business - Confindustria

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PRODUCT AND PROCESS INNOVATION

PRODUCT AND PROCESS INNOVATION

Looking at the market exploiting the opportunities within the company.

The first step: critical analysis of the business idea...... 2