Customer Understanding and the Lean Startup Approach in New Business Commercialization: Case Study of a De Alio Multinational Commercializing a New Product to an Unfamiliar Market

Abstract

As the entry barriers to many industries are decreasing – mainly due to globalization, radical technological developments and overlapping industry boundaries – it is easier for new players to enter markets that they previously did not consider. Consequently, sustaining a competitive advantage has become increasingly more challenging in both low- and high technology industries. This has caused a significant impact on the international business environment where no organization is safe to operate as is without continuous development of their current as well as new businesses.

This study aims to provide organizations with a case example regarding the use of the lean startup approach in a new business commercialization initiative into an unfamiliar market by a de alio multinational. The main research question of this study is, “How to develop customer understanding during the commercialization process of a new offering to an unfamiliar market?” As the lean startup approach relies on experimentation and close collaboration with customers in order to develop a product or service, it was chosen as the main approach to be studied in order to develop this understanding. In addition, commercializing a new product to an unfamiliar market can be used as a probe for learning the market and therefore, this can be seen as a complementary method to be used with the lean startup approach in new business commercialization initiatives.

The literature review covers new business development with a focus on learning, followed by literature on customer and end user understanding, as well as the lean startup approach. This literature is used to create the theoretical framework to guide this research. The study is conducted using a qualitative research method utilizing data collected from 24 interviews. The interviewees consisted of various individuals within the case company, along with researchers, suppliers, startups, network founders, product and service providers, and professors.

The empirical findings emphasize the importance of accounting for the learning curve when entering a new and unfamiliar market, along with beginning to establish presence in the market early on. Furthermore, the findings suggest that as the customer or end user is the source that determines the true value of an offering, understanding the customer’s business becomes crucial in new business commercialization initiatives, especially when these are targeted at unfamiliar markets. Lastly, commercializing a product using the lean startup approach enables an organization to both develop the offering itself, along with learning about the customer’s and end user’s needs, which in turn create understanding about the customer’s overall business.

The case product team has been operating fairly well according to the ‘best practices’ of the lean startup approach, but several recommendations are made to the organization with regards to their commercialization process. These recommendations include: understanding the customer’s business in depth, forming a clear value proposition, determining key purchase decision makers within customer companies, eliminating the issues that arise when using the product for the first time, attracting researchers that are in the early stages of their career, and starting to think about the product within the larger context of the organization’s potential entrance into the life science industry.