Saturday, September 09, 2017

Problem penetration as an efficient metric ..

Most of the time new enterprises are evaluated on the metric of market penetration. How much of customers are using the product or service is a measure of the acceptance of the product/service presently in the market and is also an indicator of how more customers will get attracted to the product/service in future.

If we slightly change our thinking process from meeting our needs (less affirmative) to solving problems (more affirmative and pro-active), besides helping solve problems it can motivate innovative thinking and new applications and processes. How ?

Problem penetration as a metric addresses the core issue of the problems/challenges addressed by new product or service introduction. What are the problems/challenges faced by the market presently and how far does the 'new' product/service address this market problem is a great way to address the issue. Other than addressing the immediate problem in the society and satisfying an unmet need, this metric also motivates innovative thinking in the organisation. 

The products/services developed by this metric specific thinking process is likely to bring in more innovative thinking and innovative products and services to the market.

We know, Market penetration ratio is the ratio of the amount of sales to the total theoritical market for the product or service.

Problem penetration ratio could thus be more accurately defined as the ratio of problems directly addressed or satisfied by the solution to the sum total of all current problems faced by the industry sector trying to find solutions.

It would also be a good idea to keep track of the innovations that accrue as a fallout from the introduction of this metric.  Hitting two birds with one stone !!


Ref : Yoon, Eddie, Tesla shows how traditional business metrics are outdated, HBR, August, 2017.

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