AN ARTICLE BY John Mariotti that was published in CEA (Consumer Electronics Association) Briefs points out that there is widespread agreement that innovation is the path to profitable growth and competitive advantage. If that is true (I think it is), 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.” Following is a shortened version of Mariotti's article.
There are too many reasons, 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.
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!
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.” Half-dozen more “safeguard tests” can be used to enhance the likelihood of success and reduce the chance of innovation failures.
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.
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.
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.
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.
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.
“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.” Whoever your “truth-tellers” are, “listen hard.” Few forms of input are so well intended and brutally honest.
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.
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. Use every means you can to prevent failure and improve the chance of success.