On average, about 40% of the products launched by organisations are failing to meet their intended objectives. Some quotes put this higher – up to 80 or even 95% – but 40% is what empirical evidence indicates and, even if this is an underestimate, that just makes product failure an even bigger issue for organisations.
Now hold on a minute you might say, isn’t product failure just the inevitable cost of product innovation? To that, I say unequivocally NO! Developing and launching a product only to have it fail is the complete antithesis of the “Fail Fast” innovation motto. You have just invested 1000s of work hours and millions of dollars in developing & launching this product. In no way, shape or form is that fast.
A high volume of failing ideas on the other hand (i.e., ideas killed before they are developed or launched) should instead be thought of as the signpost of strong product innovation. Conversely, however, we are not failing enough ideas.
Even if we took the oft-quoted “95% of products fail” (most commonly attributed to Clayton Christensen) to mean “95% of ideas fail”, we would still be taking far too many ideas through to production & launch. Estimates indicate it takes about 3000 raw ideas to make one commercially successful product and in some industries much more. Most companies are in reality reviewing and failing several orders of magnitude less ideas than this.
So, the punchline is, we are not failing enough ideas and we are launching too many failing products. Something is occurring in the broad spectrum of product development between thought and launch which means we keep making the same mistakes. Below is an attempt to categorise the 5 most common and lethal mistakes seen in product failures with the benefit of hindsight (and maybe a sprinkling of common sense).
Failure Point #1 – A lack of customer benefit
A product or product improvement needs to provide genuine benefits to a customer. These benefits will come from solving a deep problem a customer has. Product Management 101 is “problem before solution”, but it still appears the message is not getting through, as too many products & product improvements are launched without a real benefit to customers. Think of the last time someone said “we’ll put AI/ML into this…” A secondary concern is if these benefits are enough to justify the cost. But, no amount of cost-cutting or even a freemium model will solve the failure point of delivering no benefits to customers.
Juicero is a widely mocked example of a product that provides no benefit. A wifi-enabled juice dispenser that pressed juice from single-serve packets – it is an example of a technology solution in search of a problem. In 2017, when a Bloomberg article came out showing the packets could be more effectively squeezed by hand rather than with the $400 machine, this was the last blow in a 4-year journey that saw investors lose over $200 million dollars to this failure point.
Failure Point #2 – Inadequate customer research
A product or product improvement needs to fulfil an unmet need for a sufficiently large group of people who are willing to pay for it. If PM 101 is problem before solution, this is definitely 102 – “who will pay and why?” This lesson is still frequently forgotten, as evidenced by the most common answer to the question “Who is your product for” still inevitably being “everyone”… Or perhaps some thinly veiled version of “everyone”, my personal favourite being “enterprise”.
“General purpose” products rarely succeed, and product managers need to do the research up front to identify who they are solving a problem for, are there enough customers who want this solved and if they will pay to solve it. A recent survey however estimates that less than half of product development ideas are validated with customers at all, which still doesn’t guarantee the right questions are being asked to identify a suitable target market or willingness to pay.
Segway is a well known example of a “general purpose” product that no one actually needed. The vast majority of peoples transportation needs were already sufficiently solved by current methods of transport – foot, bicycle, motorcycle, car etc – yet Segway touted it would solve all individual transportation needs. In other words, this is a target market equalling “everyone who moves”. In reality, its use was relegated to low volume, niche transportation cases in urban settings like police, postal service or tourists.
Failure Point #3 – No clear differentiation in the market
A product needs to be sufficiently different enough in a buyers mind to sway them to purchase. In a world where your product is never the only solution to a problem, you are asking a customer to choose you over another solution that may provide similar benefits. It may be that even if your product has no direct competitors, the competitor is customers “doing things the way they have always done things”, which offers much less activation energy to change than “doing things with your product”. One final consideration is how your product may differentiate in your own product portfolio.
Coca-Cola C2 was a costly lesson in product differentiation within a portfolio. Marketed as the “same Coke taste, only 50% of the calories” it was targeted at a young male demographic concerned by calories, but not interested in the perceived femininity of Diet Coke. As it turned out, the benefit of fewer calories wasn’t distinctive enough from the current Coke offerings to sway behaviour. Low sales, which were mostly the result of cannibalisation of Coke & Diet Coke sales, lead to discontinuation of the product in less than 12 months. A year later, the more differentiated “zero calorie, full flavour” product – Coke Zero – was launched successfully, making C2 a short but costly lesson in product differentiation.
Failure Point #4 – Poor design & execution
A product or product improvement needs to be ready to meet customer demand & expectation at launch. Untested or faulty products diminish the reputation of the product over the long term and it may never recover. Worse yet, faults may do long term damage to the organisational brand if it goes against a customer perception of brand quality, safety or security. Unlike previous failure points, a successful launch can precede a product failure if a product fails to scale to demand. Performance issues or delivery delays can do similar harm to a products commercial success even if the original product is not faulty.
Windows Vista is a well known punchline for how not to design & develop a software product. A host of compatibility & performance problems lead to revolt in even their most loyal customer base. This discontent even gave an opportunity for their competitor Apple to monopolise, making the situation appear even worse with their advertising campaign “I’m a Mac… and I’m a PC”. While some issues with Vista were able to be solved, the Vista product never recovered its reputation and arguably cost Microsoft some of their reputation too.
Failure Point #5 – Ineffective product marketing
A product or product improvement needs to create positive sentiment & awareness in the customer’s mind at launch. There are about 30,000 products launched every year, so getting mindshare at the critical time of launch is imperative. The most common issue here is a lacklustre launch due to a lack of forward planning and support. A poorly planned launch is unlikely to make the news (in fact that is the point), but worse yet are product marketing launches that make the news for all the wrong reasons. Launching products at the wrong time or with the wrong message may cause repetitional damage. The saying “no publicity is bad publicity” doesn’t hold if significant customer loyalty, positive sentiment or goodwill is lost.
Airbnb’s campaign for “floating world” stays launched in the midst of hurricane Harvey which flooded large swathes of the USA – an example of poor timing. Sony launched the PSP white console with a print advertisement featuring an angry-looking woman dressed in all white grabbing the face of a terrified black woman alongside the words “White is coming” – never a good message.
The most lethal failure points occur early in product discovery
It is important to note that of the five failure points above, some are more lethal to the future of a product than others. If you inherently have a product that solves a deep problem for a defined target market to deliver true benefits, it may be able to outlast some hiccups with execution or product marketing to grow over time. This is of course given those issues don’t fundamentally debase the customer perception of the product or organisations brand. The converse is not true, however.
There is no amount of flawless technical execution or product marketing that will save a product that solves no problems, provides no benefits and has no customers.
This means the single most important thing that can be done to avoid the most lethal product failure points is to cover off the “product thinking” basics every time:
- Who is the product for?
- What problem does it solve for them?
- What benefit does it provide to them?
- What benefit does it provide to us (e.g., will they pay)?
Validating these basics with real customers rather than assuming “we know what the customers want” avoids stacking the case with false data. Finding and talking to customers will help to validate if you in fact have the right target market and if the problem is one they want to be solved and would pay for.
Your product process should focus on checking for failure points
So if most product failures could be avoided by sticking to the product thinking basics – why do we still launch so many failing products and fail too few ideas?
The most likely culprit is the lack of a repeatable & structured product process that emphasises the basics of product thinking and embeds checks for product failure points along the way. A successful product management process should:
- Test for each of the product failure points during the process.
- Provide structured decision points at which time an idea will be killed or continued.
- Provide a common language for stakeholders to understand how decisions are made.
Dividing your product management process into phases or stages can help to identify failure points and provide a common language for where an idea is in the process. Ensuring the most lethal failure points are tested for early also helps more ideas to be assessed and reduces any sunk cost or anchoring bias.
Take for example the Brainmates product management process which occurs over three phases:
A structured process for innovation & discovery that focuses on testing many ideas fast. This phase is key to avoiding the most lethal failure points. Structuring product thinking – for who, what problem, what benefits and positioning – into this phase and testing with customer research will help to remove bad ideas early. The majority of ideas should be removed in this phase. Remember for every successful product, there are about 2999 failed ideas – we need to fail more ideas earlier in our product management process.
A phase focused on deep “as is” current state customer understanding. The aim is to identify real problems for real people as well as guardrails to guide solution design & development. Guardrails should be focused on the customer and market needs required to solve the problem rather than on what can be delivered by a date. Prioritisation of these guardrails can reduce scope creep in the final phase.
A phase to focus on preparing for product launch and testing solution readiness against the design phase guardrails. A common understanding of customer and market guardrails across the solutions team means solutions are tested throughout development and avoid poor customer outcomes on release. Product managers spend the majority of their time in this phase preparing for a successful launch in collaboration with their marketing colleagues.
In summary – fail more ideas to launch less failing products
Failure will happen, but failing where others have failed before doesn’t have to! Having a process in place that focuses on avoiding the most common failure points is the best way to avoid making the same mistakes and minimise the cost of failure to your organisation.
Weed out the most lethal failure points early with a process focused on the basic elements of product thinking – who is our customer, what problem are we solving and for what benefit (for us & them). Most ideas will fail the test, and that is to be expected with strong product innovation.
The final failure points can then be avoided with strong customer and market-centric guardrails for solution design and development and increased focus across product and marketing on preparing early for launch because you can never be too prepared.
Want to learn more?
Brainmates Essentials of Product Management takes product managers through the details of a product management process built to avoid the 5 most common failure points.