"It’s a solution looking for a problem."

Too often, we hear this phrase when we conduct research to understand why innovative products or services struggle with market adoption.

New products fail when they don't solve a problem the market recognizes or address a customer need or pain point. Innovation is regularly driven by either customer requests or emerging technology, both valuable starting points. However, without incorporating broader market needs, companies risk launching products that fail to resonate.

New products account for over 25% of company profits, according to McKinsey. But here's the thing: launching successfully requires more than innovation. CB Insights found that market research can increase launch success by up to 30%. The key is understanding your target market and competition well enough to know if your product actually solves a real problem for customers. Identifying both recognized and latent needs, combined with leading-edge technology and customer input, yields solutions with significantly higher success rates.

How to Build Market-Driven Innovation

To ensure innovation aligns with market demand, companies should rely on structured market research and ongoing market monitoring, rather than assumptions, and not solely on internally generated or single customer ideas.

Five actionable research strategies that help companies build innovation rooted in real-world insight

1- Analyze Industry Trends to Anticipate Change

Companies that monitor regulatory changes, economic trends, and emerging industry shifts can stay ahead of customer needs and position themselves as leaders.

Example: A traditional petroleum-based lubricant manufacturer faced restrictions due to new environmental regulations. By proactively tracking regulatory trends, the company began developing bio-based lubricants and environmentally friendly oils. These early moves helped them become a market leader in environmentally friendly lubricants.

2- Observe End Users to Discover Hidden Needs

Sometimes, the most revealing insights come not from surveys or data, but from direct observation in the field. Observational research, what lean practitioners call “going to gemba," allows companies to spot pain points that users themselves may not articulate. For new or adjacent market innovations, direct observation can uncover friction points or inefficiencies that signal opportunity.

While “gemba” is often used to improve existing operations, it is equally powerful when applied to inform new product development. Observing how end users work, adapt, and overcome challenges in real-world environments can spark ideas for offerings that extend beyond incremental enhancements.

Example: In the field, researchers observed that landfill operators routinely covered the working area with six inches of dirt daily to control windblown debris. While effective in the short term, this practice significantly reduced the landfill’s usable capacity, increased labor demands, and shortened the overall life of the site. Over time, these operational practices resulted in millions of dollars in lost dumping fees. This observation led to the development of a thin, degradable plastic tarp that could replace the daily soil cover, extending the life of the landfill, reducing labor costs, and increasing revenue through preserved capacity.

3- Interview Experts to Gain Industry Insight

In addition to customer feedback, engaging with industry experts, suppliers, distributors, and even competitors can reveal trends, bottlenecks, and opportunities for innovation.

Example: A heavy equipment manufacturer discovered through interviews that labor shortages were delaying major mining and construction projects. In response, the company began developing autonomous machinery and small vehicles – solutions that addressed the root cause of project delays.

4- Benchmark Competitors to Identify Gaps

Studying what competitors offer (and what they don’t) can highlight unmet needs and innovation opportunities.

Example: A construction logistics firm discovered through customer and market surveys that none of its competitors offered predictive order tracking with real-time visibility tools. Additional research revealed that “real-time” order tracking would be extremely valuable, as late deliveries often resulted in idle construction crews. The firm quickly developed and launched this capability, winning market share and setting a new industry standard.

5- Explore Adjacent Markets for New Applications

Breakthrough innovations do not always originate within an industry; sometimes, the most innovative solutions emerge from cross-industry applications.

Example: A manufacturer of industrial sensors realized their technology could be adapted for data center monitoring, helping prevent costly system failures. This adjacent market opportunity was discovered through a new market fit and attractiveness study.

By applying these market research methods, companies de-risk innovation and increase adoption success.

Insight Before Innovation

Market-driven innovation reduces risk and accelerates adoption. While internal ideas and new technology can spark innovation, success comes from aligning those ideas with validated market demand.

By applying research methods such as trend analysis, field observation, expert interviews, competitive benchmarking, and market adjacency studies, companies can ensure that their innovations address real-world problems.

The question isn’t, "What can we build?" The real question is, "What does the market truly need?"