…And The Top-10 Reasons Why It Will Fail
Introducing new products and services successfully requires: a) sufficient expertise and resources, b) a defined process and c) leadership resolve.
But talking about expertise, process and resolve is boring to everyone except engineers (and people who introduce new products successfully). So, with apologies to David Letterman, here’s my list of the top 10 reasons why your next new launch will fail.
10. Science Run Amok. Companies use their research and development capabilities to come up with unique products, instead of making customer needs their starting point. They begin with what they are good at, as opposed to what customers want. I will readily admit that there are many examples of revolutionary innovation that started as a novel technology, but this isn’t repeatable. For you to create an innovation machine, you must start with the notion that new products aren’t bloodhounds that go find markets. They must address an unmet need.
9. The Lemming Effect. “The competition has just introduced an X, so we need to have an X, too.” If all you are offering is a me-too product, you can only gain market share by cutting price, and who wants to go that route? Find an unmet need and go after it.
8. “Team ACME.” See if this sounds familiar. Someone comes up with an idea and it gets implemented by an ad hoc team with money found in a slush fund. It’s a daring approach. It’s innovative. And it almost never works because it isn’t sufficiently thought out. If you have ever watched a Wile E. Coyote cartoon, you understand the problem. The Coyote’s ad hoc solutions to the problem of catching the Road Runner seem on the surface to make sense, but they always contain a fatal flaw that causes them to blow up in the end. If you substitute your company for Wile E. and “a nagging consumer challenge” for the Road Runner, you’ll see why there are better ways to go. Meep Meep.
7. It’s Scary Out There. There are thousands of reasons not to be bold. The economy is weak; the market is unsettled. Somebody needs a hug. Fine, go get yourself one. Then buck up and get aggressive.
6. The Market Is Too Small. For a new product to be successful, you need sufficient sales. It sounds ridiculously obvious, doesn’t it? But you would be amazed at the number of companies that design a product for too small a market. Say your new product is targeted at households with at least $55,000 in annual income. Well, that’s only 50 percent of the 105 million U.S. households. But it’s really just for the 18-65 age groups—that eliminates another third. And this mythical product will only appeal to those with an active lifestyle: one-third of the remaining 35 million homes—some 12 million. Say you get 33 percent to try it, and of those four million households, only 50 percent say they would buy it again. Your potential market is about two million households, and sales at that level won’t cover the developmental costs, advertising, etc. Instead of acknowledging this, we redefine the market as “for everyone 18 and over”—and then wonder why a product designed for a narrow target didn’t sell well.
Related to the size of the market is the size of your innovation budget. Revolutionary innovation creates disruption in the market and within your company. Changing the way your company works is expensive, and a typical innovation budget does not consider this cost. Leaders must consider the holistic benefits of change and budget accordingly.
5. Dartboard Product Design. There is almost never sufficient thought given to what the total product should look like. Let’s say there are four key components—price, packaging, size and usability—that could affect how well it sells. And each one of them has four options. So there are 256 different ways you could manufacture that product. What’s the predominant technique used to choose among them? People sit around a conference table with some pizza and soft drinks and say, about a new paper towel, for example, “Let’s go with 500 sheets, super-high absorbency, middle-of-the-road packaging and priced 10 percent above the market leader.” What’s the probability they’ve chosen right? By definition, it is 1 out of 256. Maybe they have some expertise. That boosts the odds to 1:128. Better, but still not great.
4. Death By Consensus. If everyone has to agree on the key characteristics of a new product, you are going to end up introducing really bland products. The higher the number of people who have to agree, the worse this gets. Create a small task force of new product experts and empower them. Let them live (or die) by how often they are right. You will get more compelling ideas to market faster.
3. No One Told The Higher Ups. You have a great idea. But because your process did not identify key stakeholders and influencers, it is your idea, not everyone’s. Want to see your boss kill an awesome idea? Fail to include him early and often.
2. Leadership Churn. You have a great idea, but you turn it over to others who don’t care as much as you do. As we have said throughout, the people who come up with the idea need to see it through to the marketplace. Ideas need parents.
1. Ready, Fire, Aim. Speed to market is a killer concept in the negative sense. It kills new products. You don’t want to make your mistakes in public. To launch a product before it is ready with a $40 million campaign is just idiotic. The problem is, it isn’t seen as idiotic. It’s seen as one of the costs of doing business. That’s sad. Repeatedly test your product in limited markets and refine after each test.
About the authors
G. Michael Maddock
CEO, Founding Partner, Maddock Douglas, Inc.
Mike Maddock is an entrepreneur, an inventor, a writer and a keynote speaker. G. Michael Maddock is the founding partner and CEO of Maddock Douglas, the leading Innovation Agency, which has helped more than 25 percent of the Fortune 100® invent, brand and launch new products, services and business models successfully. A serial entrepreneur, Mike has launched three successful businesses and cochairs the Gathering of Titans Entrepreneurial Conclave at MIT. Learn more here.