There seems to be widespread agreement that innovation is the path to profitable growth and competitive advantage. If that is true (I think it is true), then why aren’t more people doing it? And why do so many new products fail. I know of no “hard statistic” other than the generalized one “that over 90% of new products fail.” But again, I ask, why?
There are too many reasons to list in this brief article, so I’ll just try to hit some of the most common ones. The largest reason new products fail, by far, is “falling in love with your own ideas.” Companies are simply assemblages of people, and people, by nature favor their own ideas. Embed that natural characteristic in a setting where there is a lot of reinforcement of those ideas and there you have it.
Before someone thinks I disapprove of passionate believers who create new things from their ideas—nothing is further from the truth. These innovators are the life blood of our economy. However, there are some precautions they can take to make sure their great idea doesn’t fall prey to myopia or blindness—on their part. You see, it’s easy to fall in love with your idea. It’s YOURS!
Here are a few proven methods to make your idea more successful and prevent its premature failure:
First and Foremost - Focus Outside, Not Inside
Companies make the error of being inward focused instead of outward focused. That simply reinforces the innovator’s myopia and biases. A little success makes it worse, reinforcing self-delusion. Usually, failures result in rapid and intense denial, and finger pointing. Failures are always “somebody else’s mistakes.”
If such common and deep-seated beliefs that lead to new product failures, (and they aren’t limited to products—it could be new processes, new acquisitions, new…whatever), what can you do to guard against this? How about getting some independent outside opinions?. Here are a half-dozen more “safeguard tests” that can be used to enhance the likelihood of success and reduce the chance of innovation failures.
1) Market Research, objectively designed and done statistically well, against the proper target market, this is a time-tested approach to validate a product innovation. Done correctly, this will expose many failures before they happen. This presumes, of course, that management will read the research finding—and believe them. I have seen first hand the kind of denial that can negate the finest, most unbiased research. Ignoring the research avoids the need for denial. Simply file it way and do what you want to do. And suffer the consequences.
2) Focus Groups work differently, providing insights and qualitative reasons why a product might or might not be successful. But focus groups are small and thus have little quantitative validity. One person or a weak moderator can distort results. If results come out badly, the results can be questioned, due to the small size of the group and the potential for biases. When a focus group gives an answer you don’t want to hear, the worst thing you can do is say, “they are probably not representative of the larger target market.” The fact is, they could be right. Only after the product succeeds or fails will the truth be known.
3) Surveys can provide a wealth of information, IF someone analyzes the results. Even big public “surveys” like the US Census provide a wealth of demographic information. Surveys such as those done by
BIGresearch can be cross-tabbed to determine the makeup of different types of respondents and what their opinions and actions have been—and might be in the future. A thorough analysis of this kind of information will expose flaws in product features, pricing, market targets and promotional campaigns. Again, that is only if someone tries to learn from it. New tools like Survey Monkey allow users to customize surveys and little or no cost and gain very useful insights.
4) Consumer Panels take time and effort to establish but provide continuity and more/better qualitative feedback than focus groups. Panels can be formed for different market targets and inputs can be incorporated in the design and development stages, improving product/service success significantly. Like everything else, however, it takes tine, money and expertise to develop and use consumer panels. Once in place they can be invaluable, especially for adding good ideas to products, programs, etc. and “shooting down” bad ideas.
5) Test Markets are one of my favorite methods of assessing probability of success before large-scale product launches. The largest economic risk in product launches (and one of the largest costs in failures) is the inventory commitment and the disposal of leftover, unsold inventory. While advertising campaigns and physical distribution are both costly, those costs usually pale in comparison to the markdown and disposal cost of failed products.
Find a cooperative customer/retailer in the market area and try selling a limited quantity of the item is a real-world setting. Nothing beats the votes of consumers using credit cards or hard-earned cash. If a product fails in a test market, stop everything and analyze it—honestly. What happened and why? Few warnings are so directionally accurate. Something is wrong. Figure out what it is before committing any more resources.
6) “Truth Tellers” are a valuable and under-used tool. These are people who are close enough to have valid opinions and bold enough (and honest enough) to speak up when a product is a “dud” or when a plan just doesn’t make sense. Sometimes these are “old-timers.” At other times family members fill this role. Whoever your “truth-tellers” are, “listen hard.” Few forms of input are so well intended and brutally honest.
Trust, but Verify is a term used in delegation and management. When a group of New Product, Marketing or Sales people is exuberantly proclaiming the greatness of a product, investigate more deeply. If these proclamations are coming in the face of lackluster performance in any of the above six “safeguard tests” dig deeper, and fast. Verify that this is not a group who has “fallen in love with their own ideas.”
Don’t give up too easily or quickly—but don’t be afraid to “cut your losses” and move on. Innovation is wonderful, powerful, intoxicating and exciting. Failure is devastating. Use every means you can to prevent failure and improve the chance of success. Often, a small change, a minor difference in pricing, promotion, features, packaging, or placement is all it takes to transform a potential loser into a winner.