The Tough Road to Innovation Success
As the owner of our product development firm, I often get calls that go something like this, “I’m calling from Company XYZ and we have this idea for a new product and we’re not sure how to get it developed. Can you help me?” As the conversation goes on, I sense that this company thinks their idea is a big winner and visions of early retirement are already dancing in their head.
Some believe that all they need to do is just breathe the hint of their idea to me and I will drop everything and make them a millionaire. After all, that’s what I do, right? Well, if it were that easy we’d all be millionaires sipping cool drinks on some tropical beach somewhere, which, of course, I am not because I am sitting here at my computer about to tell you that innovation success is difficult. Sorry to ruin your early retirement dance.
There are many steps along the tough road of innovation and the percent of ideas that make it successfully through to market is very small.
+ 50% of all patent applications were awarded as patents in the last 4 years (US Patent Office)
+ 2% of all patents awarded reach the marketplace (The Innovators Bible)
+ 25% of inventions that reach the marketplace achieve profitable volume (Product Development Institute)
So of all the patents applied for, only 0.25% are successful (i.e. reach profitable volume) in the marketplace. In baseball terms, that’s like batting .0025 or getting a hit every 400th time at bat.
What makes it so difficult?
There are a lot of reasons it is difficult. Here are the most common:
1) Innovation can be a long road, especially for those who are ‘pioneering’ new technologies.
2) The risks and difficulties are underestimated along the way. The June 15, 2009 BusinessWeek cover story on ‘Innovation Interrupted’ took a look at why nine key innovations from 1998 were slow to commercialize ten years later. These innovations ranged from cancer treatment to MEMS to Fuel Cell Powered cars to Tissue Engineering – seven of these nine innovations gave the same reason for their lack of results: “was far more complicated than originally anticipated.”
3) Poor execution during the project by the team.
4) Not enough funds available.
5) We are either ignorant or arrogant – ignorance is ‘not knowing what you don’t know’ and arrogance is ‘thinking you know it all’. Both lead to innovating with limited information and you can go too far down a dead end path before you realize it. This last reason is likely the biggest reason innovation fails, according to Dr. Robert G. Cooper of the Product Development Institute.
What does it take?
However, whether you are working on a design team for one of your customer’s products or you are developing your own, you can improve your chances of success on your new product. I believe it takes two things:
1) Solving the right problems and
2) Solving those problems right.
One proven approach that will help you do this involves doing your homework in three key disciplines: consumer desirability, business viability and technical feasibility. When all three are understood and accomplished, you significantly increase your chances of success in new product development. Often, companies or individuals approach product development with strength in only one of these areas. They will approach all their innovation with only one discipline.
For example, engineers and designers almost always focus on technical feasibility and skimp on understanding whether the consumer really will pay for it and if there is a real business case for it. Maybe it’s not their job to understand these other areas, but someone on their team needs to understand them. Without regard for the other disciplines, the team will likely fail in its attempt at success in the market.
Even with two strengths, you leave out the key understanding of the third area. If you neglect consumer desirability, for example, you may produce a product that no one wants to buy. If you leave out business viability, you may end up producing a product that is not able to make money or you may not be able to get funding. And if you leave out technical feasibility, you may end up producing a product that doesn’t work well or has poor quality. In each of these cases, we end up going too far down the path of failure before we realize it. We waste money. We waste time. And we strike out!
This three-disciplined approach allows you to identify and address the biggest risks to your market success early in your product development. Understanding consumer desirability helps you determine the features and price for which consumers are willing to pay. This activity helps you solve the right problem. Some publications suggest that consumer research is the most often skipped activity in new product development and, hence, the cause of most of the market failures of new products.
Addressing business viability helps you know if the financials can work all the way through the value stream, while understanding technical feasibility helps you know if the right product solution is possible given all the targets. These last two, business viability and technical feasibility, help you solve problems right. If you get back to solving the right problems and solving those problems right, you and your customer will drive more hits.
There are many curveballs in new product development and they can strike you out if you aren’t prepared for them. Do your homework in these three disciplines and maybe you and your team can start dancing again.
Written By: Jeff Disher, Founder & President | Jeff is a 26 year veteran of new product development. He has held roles in program management, product design, manufacturing, quality and training & development. He has a BS from Hope College and an MS in Mechanical Engineering from the University of Michigan. He also is a certified Professional Engineer in the State of Michigan. Jeff and his family enjoy many outdoor activities.