Searching for the next big idea
There is a whole conceptual paradigm about entrepreneurship bubbling away beneath the surface of our mainstream cultural thinking. We are surrounded by cliché-laden cultural images to stick to a crazy idea even when bosses, investors, and customers say NO at first. Steve Jobs (RIP) and Elon Musk are the ultimate poster children of this mindset.
This kind of mental image is even trundling on into our own age and our own perceptions of feared futures. Many are worried about the potential impact of digital disruption. The global competition is intensifying as the business world turns online. The rules of the game are being turned upside down. Small and invisible companies now have the power to outcompete global enterprises. New ideas turn into profitable products in days. New business models flip industries upside down…
The only thing right to stay relevant with customers is to keep launching new and better products… because if you don't, then another company will seize the opportunity.
80% of new products fail when they hit the market. Why?
One of the biggest challenges in innovation is not coming up with ground-breaking new ideas – usually considered the Holy Grail of innovative enterprise. In fact, there are loads of those that we do not hear about. Many business ideas and innovative technologies fail, especially when they collide messily with the harsh realities of quirky customer preferences and real-life market demands.
The crux of it all lies in determining which ideas are most likely to succeed in the marketplace. Also, which ideas are right in the perceptions of the people (potential customers) you want to use these ideas and most importantly, buy them. However, companies are restricted by limited innovation resources. With a staggering 80% failure rate for all new products introduced to the market, companies can no longer just waste resources on ideas that do not have commercial potential.
There are loads of reasons why new products fail. Here, we have compiled some of the most common causes.
1. The best ideas do not always win
Let’s be honest – the odds are stacked against innovators. Most new products and services fail, regardless of how good they may be or how brilliantly they are executed.
Your ideas can run into multiple whammies. Fierce global competition, geopolitical nastiness, and exponential technological development threaten the business environment. Consumers are also becoming more critical and demanding, which shrinks product life cycles.
2. The silo thinking
Groups working on new ideas tend to be self-reinforcing in their conviction that what they’re working on is incredible. Silo thinking and the nerd herd can quickly build an apparent consensus that a new idea is probably the best thing since the wheel – or sliced bread, at least.
It is frighteningly easy to get bewitched by what seems a good idea. Unfortunately, good ideas are not necessarily good business ideas. In fact, the road to entrepreneurial nirvana is highly paved with better technologies and great ideas that did not make it in the harsh glare of commercial realities.
The sticking point lies in the word "probably". When you’re toiling away in your corporate cubicle on what you and your partners are convinced is a “great” idea, how do you get an unbiased, bankable opinion?
3. Misreading what your customers need
Without a practical, structured way to validate your new products, your commercial venture or business idea remains stuck. All your efforts are based on a huge – and worryingly unmanaged – element of uncertainty.
Your business partners, bean counters, or your staff are not in any way neutral – neither is your spouse or your proud (or skeptical) parents.
Data beats opinions. Opinions are not skin-in-the-game. Potential customers would tend to tell you what they think they would do, but not what they would ACTUALLY do. So you end up putting a product on the market that nobody wants to buy. People pressing “purchase” buttons are what counts – not market surveys or enthusiastic praise and encouragement from family, friends, and business cronies. Their opinions are hardly impartial and not worth betting your savings or the future of your organization on.
Combating the beast of market failure
The overall landscape for doing business is currently in the turbulent, often painful process of being seriously upended. Marginal tweaks and practical adjustments rooted in traditional execution strategies can really only ever be quick-fix plasters on an untreated – potentially terminal – wound. Your innovation will not improve if you keep innovating the same way.
Understanding the problem is half the solution. Understanding is the most cost-effective driver for action and commercial success. Understanding the full impact and strategic implications of a technology-driven exponential change enables you to discover new growth opportunities, to learn how to establish an innovation edge, and to mold commercial futures – before someone else does it for you!
1. Get out of Thought-land
As your idea comes to light, you somewhat build an early-stage concept. It is easy to get carried away within your own team or organization and start developing a product based on assumptions. Market research is vital, but it should never be the sole basis of your development.
2. Avoid opinions
Market research, focus groups, and suchlike can never give you any bankable degree of certainty. It is hard to ask solid, relevant questions when your product or service is not presented in an authentic environment. However, it is easy for focus groups or survey participants to say, "I like your idea, I'd buy it". But when given the chance to actually make a purchase, you get a lot of rejections.
Without an effective tool to validate a business idea against the inevitable quirkiness of customer reactions and market unpredictability, the development of that idea can only really be a roll of the dice.
To significantly boost the effectiveness of developing and deploying new business ideas, you need to create a test environment that garners genuine customer reaction.
3. Small experiments before large investments
Failure is valuable information. If you are afraid of failure, this is not for you. Small experiments rev the rate of failure and dramatically increase the number of failures. But they are all structured failures. This provides you with meaningful data about customers' reactions to your new idea. Hence, you can avoid wasting time on developmental black holes and focus your efforts on what real-world customers consider the right “it”.
For example, it helps you make better selections of what you put into existing development processes like the stage-gate model, well before the big funding starts kicking in.
Benefits of small experiments
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Avoid developmental dead-ends and nice-to-have vanity projects
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Speed up the whole “ideation-to-execution” process
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Learn from the market and apply it in your next iteration
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Make sound business decisions using actionable insights and data from real potential customers
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Zoom in on where your resources can best be applied and reduce the risk of committing time/effort/ manpower to ideas and projects that customers don’t actually want
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Apply well-structured practical measures that give you actionable customer-centric information on which to base further development and decisions
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Achieve better results-per-dollar at every stage.
4. Think wilder, fail faster, succeed sooner!
This method results in faster failures. But these fast failures help you preserve limited innovation resources so that the small number of “likely to succeed” ideas can be identified and supported sooner.
The more ideas you test, the higher the number of failures. But the failures no longer weigh on the negative side of the scales because you have harvested important, well-structured data that can save you from all kinds of possible development pitfalls.
Pretotyping
Pretotyping is a fast, practical take on developing, testing, and implementing new business ideas, via real-world customer-centric validation. It is a lean method commonly used in innovation departments to achieve authentic feedback from potential customers and gauge initial market demand before going all in developing the product.
The method is highly versatile with different techniques for different needs. Read more about the different pretotyping techniques here, to understand how it can improve your innovation and product development process.
License to deceive
Some people feel a little bit uncomfortable with the idea of “faking” things via experimental setups. Big, established organizations might be concerned about the impact on their good name and brand reputation. And some legal eagles might get a bit bothered about issues they choose to construe as misrepresentation – seen from hidebound traditional perspectives.
This is where carefully designed scenarios again kick in. Be transparent to your potential customers and present why you are conducting the test. It showcases your organization’s “inclusivity” and determination to focus on real-world customer preferences, needs, and problems. It also demonstrates how you seek to introduce new products and services as inexpensively as possible, thus helping keep prices down.
Your use of pretotyping techniques thus provides a practical demonstration of your awareness of intelligent customer-centric development approaches in a disruptive and disrupted business world, and the potential customers targeted by your efforts feel involved and informed. In some cases, this can even be a way to build a new market following.
We can help!
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