Creating and launching a successful new product or service can take months or even years to accomplish. And it’s costly both in terms of direct investment as well as opportunity cost (i.e., what else could you have done with that time or money). In more instances than you’d expect, however, product and service launches fall well short of expectations or fail altogether. Companies get excited about innovation opportunities, become focused on somewhat arbitrary milestones they want to hit and believe internal knowledge (which there tends to be a lot of) is substantial enough to navigate the market. They rush to get a half-baked or unsupported product to market. To avoid similar missteps, it is imperative that you pause early in the product and service development process and consider the following four things first. You need to make sure that your planned product or service:
1) Solves an actual need,
2) Occupies a meaningful position within the market,
3) Has a solid and achievable plan and goals, and
4) Allows you to excite and evangelize lead customers.
In more instances than you’d expect product and service launches fall well short of expectations or fail altogether.
To expand on this, before beginning to invest in capital-intensive portions of the development process, you should first make sure the proposed offering solves specific customer needs. Voice of the customer research is a powerful tool for ensuring that both end-customer as well as intermediary (e.g., distributors, agents, etc.) needs are taken into account and that, as a result, your new proposition is customer and market-centric. By testing a new proposition with your existing customer base you can further define what you produce, the pricing strategy around it and how you plan to reach and engage customers. Those existing customers are your base. But the best-in-class also test new propositions with customers they’ve lost over the years as well as customers they’ve wanted but never had, as those prospective customers represent opportunities to drive substantial share and revenue gains.
Second, you need to make certain that you have a crystal-clear understanding of the current and future state of your value chain so customer needs can be put in a broader market context. What are the various segments of players within your market? Are your direct competitors engaging in close-in innovation or are they aggressively pushing the boundaries of their portfolio and business models? To what degree do you see forward or backward integration across your supplier or customer / channel environment? How are the preceding likely to change over time and what does that mean in terms of your position within the market? It’s not enough to meet customer expectations; you have to meet them in a unique, differentiated way, and value chain assessment can help you do that with an eye towards the future.
Third, while doing the above contributes to developing a solid strategy (where to play and how to win), it doesn’t ensure mid- to long-term buy-in across the executive team. The key to keeping strategy for major new product and service launches on track over years, not quarters, is to define ambitious but reasonable and achievable plans and goals upfront. Everyone wants the next new blockbuster that siphons off share and pricing power from the competitive set. Such plans are easy to attract resources and attention for. Well, at least until a few quarters in when the big stretch goals aren’t met and the specter of hitting earnings targets looms. And then, the same things happen time-and-again. Resources for the newly commercialized product or service begin to dry up, shifting over to the next big bet on your organization’s radar. Instead, creating plans that are more staged, with progressive and frequent “wins” keeps organizational buy-in high and a steady stream of investment flowing.
And last, but certainly not least, don’t forget to evangelize the powerful, taste-making customers within your market. Integrating lead customers into your development cycle (e.g., through the voice of the customer research cited above, pilot sites, etc.) is the first step in accomplishing this. However, you can increase hype and buy-in through a variety of other means, depending on the market. For example, providing your highest volume distributors with differentiated value (e.g., a margin-advantaged position, temporary exclusivity, co-marketing dollars, incentives and giveaways for store staff, etc.) to transition them from customers to strategic partners remains critical to winning in-aisle, for example, in retail. We see that in industries as diverse as spirits, pharmaceuticals and HVAC systems. The differential level of pull through in such instances can be dramatic relative to cases where you maintain traditional supplier-customer relationships.
Contact us to learn more if you have questions regarding these steps or would like assistance from us in adopting the best practices necessary to execute against them successfully.