Why Strategy Must Come First: The Case for Market Insight Before Development

It may be tempting to think a brilliant product or a strong patent guarantees success. In reality, up to 70–90% of new product launches globally fail, and more than a third of startups crash because they build something nobody wants. The number one cited reason for startup failure is “no market need” – not lack of funding or technology, but solving a non-existent problem. At Vector9, we contend that deep market and customer insight must come before heavy investment in product development, intellectual property (IP), or regulatory compliance. Grant funders, accelerators, and savvy tech founders increasingly recognise that strategy must come first. We present a nine-stage decision framework – Definition, Context, Value, Market, Model, Strategy, Validation, Evidence, Plan – to guide innovators in putting market insight at the forefront. The goal is to blend a policy-aligned perspective with an urgent, provocative message: stop building in a vacuum and start with strategy.

Definition: Solve the Right Problem First

Every successful innovation starts with a clearly defined problem and opportunity. Too often, entrepreneurs fall in love with a solution before pinpointing a real customer need. In fact, 35% of failed startups had “no market need” – they took a product to market that nobody wanted. Definition means articulating what problem you are solving and for whom, in plain terms. This stage forces founders to question assumptions: Is the problem significant and widespread, or a niche concern? Is it an “interesting” technical challenge, or something customers truly care about? As one startup program director put it, “Validate before building – assumptions aren’t enough… solving the right problem is half the startup journey.” Clearly framing the problem upfront focuses the venture on a meaningful goal. It also aligns the team and stakeholders on a common mission from day one. A well-defined problem statement becomes the North Star for all subsequent stages of strategy and development.

Context: Understand the Landscape and Timing

Innovation does not happen in isolation. Context involves analysing the wider environment – industry trends, regulatory climate, competitive landscape, and societal shifts – to ensure your idea is timely and well-positioned. Even brilliant inventions can falter if introduced at the wrong moment or without regard for external factors. As Innovate UK guidance notes, “many exciting technologies don’t realise their potential because the market isn’t ready for them”. Policy and market context are especially crucial for technology-led startups; for example, changes in government strategy or standards can create new opportunities or render certain solutions obsolete. A responsible innovation approach encourages considering broader impacts and adoption barriers early, so that positive benefits can be realised and roadblocks minimised. Tools like the UK’s Horizons scanning framework exist to help founders identify “big trends, issues, risks and opportunities” and to test their strategy against future scenarios. By thoroughly understanding context, startups can align their innovation with real-world conditions – increasing the odds that when their product debuts, the world is ready to embrace it.

Value: Craft a Compelling Value Proposition

At the Value stage, the focus is on the customer – defining exactly how your product or service will create value for users and stakeholders. A value proposition is more than a marketing tagline; it is the core of why anyone would pay attention, adopt, or pay for your solution. This should be formulated early and grounded in evidence. Studies by innovation agencies show that customers’ ideas and experiences are a vital source of innovation, and engaging users early provides “advanced insight… to maximise competitive advantage.” In practice, this means talking to potential customers to learn what they value. What pain point are you addressing, and what benefits (e.g. cost savings, time savings, improved outcomes) will your innovation deliver? As one UK grant consultancy emphasises, an Innovate UK application “needs to describe your target customers along with the value proposition to them (quantify it!)”. A strong value proposition also considers all stakeholders: not just end-users, but partners, payers, or regulators who influence adoption. For example, in health tech, demonstrating value to patients and healthcare providers (e.g. better patient outcomes at lower cost) is critical. By nailing down the unique value early, you ensure the product is built around what the market truly cares about – not just the inventor’s enthusiasm. This stage injects customer-centric discipline, so development efforts stay aligned with delivering tangible benefits that meet real needs.

Market: Ground Your Strategy in Market Reality

With the problem defined, context understood, and value proposition framed, the next step is to rigorously assess the Market. This involves identifying target market segments, sizing the opportunity, and researching who the competitors and alternatives are. Skipping this homework is perilous – “many projects fall down on the route to market aspect” because teams don’t map out how to reach customers. A market-driven approach is not optional; Innovate UK explicitly warns that proposals “must be market driven, rather than predominantly a research project.” In other words, no matter how advanced the technology, there needs to be clear demand pulling it into the market. Founders should gather current market data (industry reports, customer surveys, public statistics) to avoid wishful thinking. The best plans “use current market data…and describe the wider picture before focusing on expected market share,” instead of relying on wildly optimistic projections. Assess if the market is large and growing, and if timing is right: “Is it a big enough market? … The assessor [investor] wants to be convinced this is the right time for this project.” An often-cited startup post-mortem found that outcompeting rivals and flawed business models were other common failure reasons after lack of market need. Careful market analysis helps uncover these risks early – who else is trying to solve the problem, and how will you differentiate? By the end of this stage, you should have an evidence-based picture of your target market’s size, growth, customer segments, and competitors. This market insight will underpin your go-to-market plans and give investors confidence that a viable opportunity exists.

Model: Design a Sustainable Business Model

A brilliant product with eager customers can still fail if the economics don’t work. The Model stage is about figuring out how you will sustainably deliver value and make money. This includes revenue streams, cost structure, key partners, and distribution channels – essentially your plan for turning an innovative idea into a viable enterprise. It’s crucial to tackle business model questions before pouring resources into full product development or costly IP; a significant 19% of startups fail due to a flawed business model. As one Inc. analysis noted, many founders are “product creators versus business creators, convinced a great product will generate a great business”, but building the business around the product is the harder task. In this stage, you test different models: Is it a one-time product sale, a subscription service, a licensing play, or something else? How will you reach customers – direct online sales, enterprise contracts, or through intermediaries? If regulation is involved (e.g. medical devices, fintech), does your model account for the time and cost to get approvals and who will pay in the interim? Founders should also identify key partners or resources needed (manufacturing, logistics, data, etc.) and how those partnerships will work. Importantly, revisit the value proposition and ensure the business model captures sufficient value for the company. For instance, if your innovation greatly benefits hospitals, can you charge them or insurers accordingly? A well-structured model will demonstrate that once you have a product-market fit, you can actually generate revenue and profit. This is often what grant panels and investors scrutinise: they look for a credible answer to “How will you scale and sustain this innovation commercially?” By designing the business model early, you can iterate on paper (which is cheap) and avoid expensive pivots later.

Strategy: Integrate into a Cohesive Plan (Before You Build)

With market insight and a draft business model in hand, you can formulate an overarching Strategy. This is the synthesis of the prior stages into a cohesive game plan: your competitive positioning, go-to-market approach, and the sequencing of steps to achieve your vision. Strategy is essentially deciding what to do (and what not to do) to maximise your chance of success. Crucially, this strategic planning must precede full-scale development and heavy R&D spending. Recall that a large fraction of patents and technical projects never yield returns – by some estimates, 90–95% of patents are never commercialised because they “don’t create economic value”, remaining ideas that never find a market. A strategy-first mentality avoids this trap by ensuring you have a route to impact and adoption mapped out. Concretely, your strategy should address questions like: which customer segment will you target first and why? What is your pricing and marketing approach? How will you fend off or outmanoeuvre competitors? How will you leverage strengths (e.g. unique IP) while mitigating weaknesses? Many founders overly focus on the product and forget that building a business requires navigating multiple stages – strategy is about planning those stages. It also imposes discipline: as Innovate UK suggests, “outline your strategy to access the market… If you cannot explain how your product will be made, who will sell it, or how you’ll reach customers, the assessor will doubt success.” In short, strategy knits together the definition, market, value, and model into a clear roadmap. A provocative way to put it: strategy is the art of prioritising and sequencing – doing the right things, in the right order. For a startup, that might mean choosing a narrow beachhead market to prove value before scaling, or deciding to partner rather than build certain capabilities in-house. By finalising your strategy before developing the product in full, you ensure that every subsequent investment (whether in technology, IP, or regulatory processes) directly serves the strategic objectives. This up-front work also produces a narrative you can articulate to funders and boards: a story about where you’re going and how you’ll get there, not just what you’re building.

Validation: Test Assumptions Early and Often

Even the best-laid strategy is built on assumptions – about customer behaviour, pricing, technical feasibility, etc. Validation is the stage where you actively test those assumptions in the real world, before committing major resources. This embodies the “lean startup” ethos of “build-measure-learn” and is critical to de-risking innovation. As one guide puts it, “Product idea validation is the process of ensuring there is market demand for a product before investing in…development”, a practice that reduces the risk of “creating something that no one wants to buy.” Practically, validation can take many forms: customer interviews and surveys to confirm the problem and need; landing page or crowdfunding tests to gauge interest; prototypes or minimal viable products (MVPs) to elicit user feedback; or pilot studies that measure outcomes. The key is to get evidence that your solution resonates and delivers value as intended. Very few companies succeed without validating their product first – skipping this step is akin to throwing darts blindfolded. Validation isn’t just for startups; even large firms conduct early-stage trials and market tests (sometimes called proof-of-concept or beta programs) to avoid costly flops. In the UK context, this stage aligns with what grant evaluators look for as well: Innovate UK assessors expect to see that you have talked to customers and refined your idea based on feedback, rather than basing the project on untested hypotheses. Best practices include setting up “gates” where hypotheses are validated or adjusted iteratively, ensuring you “continue to be validated and proved (or adjusted) iteratively” before proceeding. Embracing validation creates an agile mindset – if an assumption is proven false (e.g. customers want a different feature or the price is too high), you can pivot or tweak the strategy now, not after sinking years of work. This stage injects humility into the process: listening to the market and letting data guide your decisions. Ultimately, validation provides the evidence needed to convince others (and yourself) that the venture stands on solid ground.

Evidence: Gather Proof to Support Your Case

By now, you have defined your opportunity, researched the context and market, crafted a strategy, and even validated key elements through testing – all before heavy development. The Evidence stage is about assembling this body of proof into a compelling package for external stakeholders. Whether you are applying for a grant, courting investors, or seeking corporate partners, hard evidence of market insight and traction is your best ally. Grant funders and accelerators in particular demand evidence of a real market gap and customer demand. For example, UK grant applications typically require “supporting evidence” of market size and opportunity, proof of customer interest (letters of intent, pilot results), and a clear rationale backed by data. One funding guide notes that businesses should “use credible data to support your claims…Grant providers look for businesses that address a real market gap and demonstrate strong demand”. Likewise, investors will want to see evidence that de-risks the venture: this could include validated prototype results, patent search outcomes (showing freedom to operate), or even early revenues/users. At this stage, you should compile the market research, user feedback, pilot study metrics, and any other validation results into a coherent story. Treat this evidence as assets: quotes from potential customers, recorded interviews or survey statistics, and letters of support can all be used in pitch decks, grant proposals, or accelerator applications to add credibility. In short, make insight tangible. This not only strengthens your case in the eyes of others but also provides you, the founder, with confidence. You’re not just claiming there’s a need – you can point to real-world proof. Policymakers and innovation agencies encourage this evidence-based approach because it leads to better outcomes; when projects are grounded in reality, public money and private capital alike are more likely to translate into real impact. As a final check, ensure the evidence genuinely supports your plan (no cherry-picking favourable data while ignoring contrary facts). If there are remaining unknowns, acknowledge them and have a plan to gather further evidence. By embracing transparency and rigor here, you build trust that you will carry those values forward.

Plan: Plot the Roadmap from Idea to Impact

The final stage is to develop a concrete Plan that ties everything together and lays out the path forward. With a validated strategy and supporting evidence in hand, you can now confidently plan product development, IP filings, regulatory steps, and market launch – in that order. In essence, you are now ready to do the “hard build” knowing it’s built on solid strategy. The Plan should include a timeline, milestones, and resource allocation for executing the product and business development. This might resemble a detailed project plan or “roadmap” covering: R&D activities (e.g. building a prototype, conducting trials), securing IP (patents, trademarks as needed, timed appropriately), meeting regulatory requirements (e.g. certifications, approvals – with their lead times), and commercial milestones (beta launch, partnerships, scale-up). The key difference now is that these execution steps are driven by prior insight. You are not filing patents blindly – you know which inventions are core to customer value and worth protecting. You are not embarking on expensive regulatory processes without confidence – you have evidence the target market exists and that meeting compliance will unlock it. As one innovation advisor put it, “timeliness is important; many technologies fail because the market isn’t ready, so convince assessors this is the right time”. Your plan should demonstrate why now is optimal, leveraging the context analysis. It should also address risks (technical, market, financial) with contingency plans, showing that you’ve anticipated challenges. Essentially, this stage is about operationalising the strategy: turning the strategic blueprint into actionable steps. By explicitly planning after doing the strategic groundwork, you avoid the common startup mistake of improvising as you go. Instead, you proceed with a clear map. Of course, no plan survives contact with reality perfectly – but having one means you can measure progress and pivot deliberately if needed. Policymakers and funding bodies appreciate well-structured plans; for instance, Innovate UK assessors check that there is a “defined route to market” and that applicants “acknowledge the further steps required to achieve commercialisation”. A strong plan thus not only guides your team but also signals professionalism to those supporting you. In summary, the Plan stage finalises the “why, what, who, when, and how” of the venture – all informed by prior insight – ensuring that as you move into execution, you do so with strategy at the helm.

Conclusion

In the high-stakes world of innovation, strategy must precede execution. Too many ventures have learned the hard way that coding a product or filing a patent is no guarantee of success – without a market, those efforts are wasted. By investing early in market and customer insight, startups and innovators drastically improve their odds of building something that matters. This approach aligns with the growing emphasis from policymakers and funders on evidence-based innovation and “fail-fast” learning. It might feel slower at first to do nine stages of homework – Definition through Plan – before developing the product in full. But this upfront diligence prevents far costlier mistakes down the road. As the data shows, “no market need” is a startup killer, and conversely, even a little research and early insight can sharply increase effectiveness in later execution. The message to technology-led startups is urgent and clear: stop building blindly. First, ensure you’re solving a meaningful problem in a viable way; then – and only then – double down on product development, IP, and regulatory investments. By following a strategy-first process, innovators turn great ideas into outcomes that deliver value, attract funding, and stand the test of time. In the end, strategy isn’t a luxury or a paperwork exercise – it’s the very foundation upon which sustainable innovation is built, and it must come first.

References

A4G LLP (2020). The importance of research when launching a new product or service. Quote: “Anywhere between 70% – 90% of new product launches (globally) fail” a4g-llp.co.uk.
Nesta (2010). Demand and Innovation Report. Finding: “Customers’ ideas and experiences are a vital source of innovation… organisations are missing out on opportunities to involve users early… to gain advanced insight” media.nesta.org.uk media.nesta.org.uk.
Innovate UK (2024). Good Application Guide. Guidance: Emphasises being market-driven: “It must be market driven, rather than predominantly a research project”; warns that many projects fail on route-to-market and timing iuk-business-connect.org.uk.
Lloyd-Davies Associates (2025). Startup Failure Reasons (citing CB Insights). Statistic: 35% of entrepreneurs cited “no market need” – they built a product nobody wanted lloyd-daviesassociates.com.
Moneyzine (2025). UK Startup Statistics. Data: 35% of startups fail due to no market need; 19% due to flawed business model moneyzine.com.
Shai Albaranes (2025). LinkedIn post on innovation vs invention. Insight: “90–95% of patents are never commercialised… because they don’t create economic value” – only solving real needs turns an invention into an innovation linkedin.com.
Grantify (2025). Top Reasons Startups Fail. Highlights the need for market research: targeting the wrong market and lack of customer research are major failure causes; advises thorough research to prove market demand to grant providers grantify.io grantify.io.
DevSquad (2025). Product Validation Guide. Definition: “Product idea validation is… ensuring there is market demand… before investing in development… to avoid creating something no one wants.” devsquad.com.
Inc. Magazine (2020). The 9 Critical Stages of Building a Business. Observation: “Startup founders focus on their product, but often forget that building a business around it requires many stages.” inc.com.
UKRI (2025). Responsible Innovation Framework. Emphasis on adoption: innovation is better when societal benefits are realised and barriers to adoption are addressed early ukri.org ukri.org.