October 31, 2021

New Business Architects: Bridging the Gap Between Innovation and Commercialization

Commercialization Entrepreneur Innovation

7 minute read

What will it take to turn your innovative idea into a successful new product, service or business?

Many companies struggle to bridge the gap between innovation and commercialization, as demonstrated by the high failure rate of new products, services and startup companies. According to Nielsen, 80% of consumer goods fail, and an even larger percentage of startups do the same, with Startup Genome reporting that only 8% of startups will achieve sustainable growth.

This begs the question – are the vast majority of new product, service and/or business launches actually bad ideas — or is there something else going on?

We believe it’s the latter.

And, with our experience as New Business Architects, we believe we can help you be the one that succeeds rather than the 4 in 5 who fail.

The bridge from innovation to commercialization fails due to ineffective architecting

Many companies struggle to architect an effective bridge between innovation (i.e. something new) and commercialization (i.e. making money). And, not surprisingly, as the complexity of assembling the interconnected and evolving building blocks of a new business is challenging , and all it takes is one weak link for a new business to fail.

For example, a new business is launched with the target buyer, concept, product, price, distribution, production and operations building blocks all optimized and working in concert. However, once in market, the new business realizes the cost to make a target buyer aware is $2/person rather than $1/person. With a defined marketing budget, this halves the number of consumers that will be aware and leads to half the number of first-time buyers and, in turn, half the number of repeat buyers. This halving of revenue causes retailers to cut facings, merchandising support, and eventually listings — ultimately leading to a failed new business. Despite getting every other building block right, this new business failed due to one weak link.

So, the question remains: How can teams effectively architect a plan that gets all building blocks optimized to successfully build and launch a new business?

Processes can help, but they don’t always solve ineffective architecting

Big Companies and Entrepreneurs have attempted to create processes that enable them to architect a new business successfully. However, both approaches have their shortcomings.

Big Companies have evolved by creating a disciplined innovation process. The Stage-Gate approach minimizes risk by focusing the development team on architecting one cross-functionally aligned plan at a time. Then, the company creates a robustly quantified dataset that validates the plan. Although this system helps to reduce the risk of failure, this disciplined process is inflexible and slow, leading teams to launch with the first aligned plan that meets the minimum hurdles rather than the best plan.

Meanwhile, Entrepreneurs have evolved to take a different approach.

They launch and sequentially architect different plans (often called pivots) in a chaotic search for the plan that justifies investment to scale. Although this allows them to quickly get to market with a “learn and adapt” mindset, Entrepreneurs often run out of money due to the cost of pivoting when already in the market.

The best process can’t overcome the reality that architecting a business requires different skills than operating a business

Even with the best processes the fact remains: Architecting a business requires different skills than operating a business.

Operating a business is challenging because you’re using a complex and robust data environment to create incremental business gains while minimizing risk. These operational challenges require skills in effectively executing direction, maximizing productivity, and reducing risk with a robust amount of data.

In contrast, when architecting, there’s a limited amount of data available as you attempt to assemble interconnected and evolving building blocks into a plan that delivers disruptive gains — a delicate balance of risk versus reward. These architectural challenges require skills in exploring options, learning and adapting, and balancing risk and reward with a limited amount of data.

The New Business Architect: Bridging the gap between innovation and commercialization

By combining robust yet flexible processes and proven capabilities, the New Business Architect is able to effectively bridge the gap between innovation and commercialization.

The New Business Architect process relies on blueprinting, prototyping and simulating multiple plans pre-market, avoiding the cost and risks of pivoting once in the market. These processes are supported by the ability to:

Creatively explore a range of options.
Think at a strategic and practical level so the future business builds competitive advantage and works operationally and financially.
Learn and adapt as new information becomes available.
Balance risk and reward with limited data.

All of this allows the New Business Architect to assemble the many interconnected and evolving building blocks into a cohesive plan to guide the building of a big and successful business.

By rapidly designing and optimizing multiple plans to find the best one pre-market, a New Business Architect can minimize cost and risk while leveraging specialized skills to overcome the traditional challenges of rapidly designing and launching a new business.

So, how much architecting is required for a new product, service or business launch? Simple innovations — such as a new flavor line extension — require less architectural work because most often only a single building block (product) is changing. Disruptive innovations (e.g. a new product, brand or category), however, require more architecting work because multiple building blocks are changing (e.g. target, product, sales channels, etc.)

Moreover, the more disruptive your innovation the more that is at stake, making it that much more important to get to the best plan, fastest with the help of a New Business Architect.

Frehner-Jens: Architecting your new business success

Although operators have tried to address the process and capability challenges inherent to new business architecting, Big Companies and Startups alike still struggle when it comes to designing the best plan to turn an innovation into a successful product, service or business.

While the Big Company’s disciplined Stage-Gate process minimizes risk, it also limits flexibility resulting in teams launching with the first aligned plan, rather than the best plan. For the Entrepreneur, their “learn and adapt” mindset often leads them to run out of money, as what they’re learning isn’t guided by what matters most to create a big business.

The next time you need to turn an innovation into a successful new business, be sure you have an experienced New Business Architect to get your team focused on the best plan, faster.

If you feel you don’t have this capability internally, Frenher-Jens can help. As New Business Architects, Frehner-Jens brings together the strengths of the Big Company and the Entrepreneur, enabling your team to rapidly design and optimize multiple plans to determine the best plan, pre-market.

To learn more, contact us with your availability and we’ll find a time to connect to explore how we can bring our proven success as New Business Architects to your team.

Key Points:

High innovation failure rates are more often driven by ineffective architecting than by launching too many inherently bad ideas.
Big companies try to lower failure rates with a disciplined, comprehensive process to build and qualify their plan, pre-market (e.g. Stage Gate).
Entrepreneurs focus on pivoting, learning and quickly adapting in-market until they find a scalable plan… or run out of money.
New business architects combine the approaches by injecting rapid design and optimization of multiple plans early into a disciplined process, getting the entrepreneur’s insights pre-market when they can complement the disciplined process, identify insights to unlock upside, and reduce launch risk.