By JANA PAULECH
New products fail all the time. On average, about 40% of the products launched by organisations fail to meet their intended objectives.
Some quotes put this higher – even up to 95% – but 40% is what empirical evidence indicates (see Castellion & Markham 2013). Even if this is an underestimate, that 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 unequivocally say 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 thousands of work hours and millions of dollars in developing and launching this product. In no way, shape or form is that fast.
On the other hand, a high volume of failing ideas (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”, then that means we’re still taking far too many ideas through to production and launch.
Estimates indicate it takes about 3000 raw ideas to make one commercially successful product (Stevens & Burley, 1997), and in some industries much more. In reality, most companies are reviewing and failing ideas several orders of magnitude less than this.
Something is occurring in the broad spectrum of product development between thought and launch, leading us to keep making the same mistakes.
Below is an attempt to categorise the five most common mistakes seen in product failures with the benefit of hindsight (and maybe a sprinkling of common sense).
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 and 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 whether 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 Wi-Fi-enabled juice dispenser that presses juice from single-serve packets is an example of a technology solution searching for a problem.
In 2017, when a Bloomberg article showed 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 to this failure point.
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’, then PM 102 must be ‘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”.
General purpose products rarely succeed, and product managers need to do the research upfront to identify whom they are solving a problem for, whether are there enough customers who want this solved, and if they will pay to have it solved.
A recent survey estimates that less than half of product development ideas are validated with customers at all, which still doesn’t guarantee that 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. Most people’s transportation needs were already sufficiently solved by the 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 services and tourists.
A product needs to be sufficiently different enough in a buyer’s 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 will differentiate within your own product portfolio.
Coca-Cola C2 was a costly lesson in product differentiation within a portfolio. It was marketed as having the same Coke taste but with only 50% of the calories, and 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 – primarily the result of the cannibalisation of Coke & Diet Coke sales – led to the discontinuation of the product in less than 12 months.
A year later, the more differentiated “zero calories, full flavour” product, Coke Zero, was launched successfully, making C2 a short but costly lesson in product differentiation.
A product or product improvement needs to be ready to meet customer demand & expectations at launch.
Untested or faulty products diminish the product’s reputation 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 harm a product’s commercial success even if the original product is not faulty.
Windows Vista is a well-known punchline for how not to design and develop a software product. A host of compatibility and performance problems lead to a revolt in even their most loyal customer base.
This discontent even allowed their competitor, Apple, to monopolise – making the situation appear even worse with their advertising campaign featuring “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 its reputation too.
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 is 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 reputational 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 amid Hurricane Harvey, which flooded large swathes of the USA. This is a great 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.
So, now that you’re aware of the five most common mistakes made in product development, how do you avoid making these mistakes?
It all comes down to having a process that focuses on addressing these failure points before they can derail your product development.
We’ll cover this in more detail in our companion piece on How to Prevent Common Mistakes In Product Development.