New Product Development: Rebuilding Growth & Building Resilience
If I could name one positive coming out of the Great Lockdown of 2020 (and especially here in Alberta where we are facing historically low oil prices), it would be the increased willingness of CEOs to talk openly about their business strategies and what’s next.
While many are unfortunately focusing on survival, forward thinking leaders are building strategies to increase resilience, rebuild growth and how to take advantage of the structural economic break we are all experiencing. On top of this, thanks to Zoom, having free flowing conversations and sharing ideas seems to be much more common as compared to pre-COVID times. For me, I’ve had more conversations with CEOs over the last 30 days than I had in the previous six months - and their openness to change has been surprising and refreshing.
Interestingly, the conversations with traditional industry CEOs are starting to mirror the ones with startup CEOs. Both established and recently formed companies are recognizing the need to trial new strategies to rebuild growth (if not survive) or to diversify their revenue streams (build resilience). As one entrepreneur said, “we have to get better at creating something out of nothing” not just as a response to Covid-19 but to generate long-term success.
When continuing the conversation, it usually evolves towards the concept of “product” – or how to build and sell something new that customers are willing to pay for.
The Product Lens
The concept of creating a new product is simple and obvious but surprisingly it is not fully understood by most.
Entrepreneurs – especially those working with innovation-focused industries – will describe their proposed product by focusing on the value of their technology in terms of it being better, faster or cheaper. Or, they will talk about how innovative it is and how hard it would be to replicate.
That's great but it’s not enough. They may think they are defining a product but they really aren’t.
What they really need to do is use a “product lens” to translate an innovation or new idea into something that creates enough economic value for a customer to buy it. The basics of a product lens is to ask four key questions about an idea and use the answers to build and implement a game plan before significant time and effort is invested (or wasted) in development. At the same time, this process identifies gaps in knowledge and strategy.
Often, these simple steps are ignored by both startups and well established companies. This is unfortunate as research shows that most product development efforts fail and, a key reason why is the lack of preparation.
This can be prevented and is why I created a Product Opportunity Mapping framework to help companies explore new product ideas, re-evaluate existing products for new markets, or translate unique intellectual property into products that create economic value. Or, for the near future, how do you rebuild growth and build resilience?
Four Questions…
The foundation of Product Opportunity Mapping is to ask four key questions at the start of a new product development discussion:
1. What is the business problem you are trying to solve?
The most important decision to be made before initiating a new product development effort is problem selection. Solving a problem for a customer is the foundation of every successful product – a customer won’t pay unless the product solves a problem in a way that is relevant and important to them.
As well, a complementary question to ask is: is it worthwhile to solve this problem? Given the risks associated with new product development and the fact that resources are always limited, will sufficient economic value be created to justify the investment? Can you sell enough of the product to make enough profit for it to be worth your while?
2. Who are the customers and where do they exist?
In order to generate a return on product development efforts, a product must be purchased by a customer.
Identifying and finding those who fit an ideal customer profile is critical along with prioritizing target markets and ensuring they are large enough and accessible.
It is not sufficient to identify an industry or a company. Ideal customer profiles and beachhead customers need to be identified so that the product you are developing is relevant and of interest to them. In the same vein, if you can’t define your customer, how can expect your salespeople to be successful? Who are you asking them to approach?
3. Who are you competing against directly and indirectly?
All new products compete against something whether it’s the current way of doing things (indirect) or a similar offering (direct). Who and what are they? To generate success, competition must be supplanted and to be supplanted, competitors must be understood.
4. How and why will you win?
Identifying a valuable problem to be solved, offering a differentiated solution and closing sales is extremely difficult – if it was easy, failure rates wouldn’t be so high. The product creator must have a “secret sauce” that is at the core of their competitive advantage and which will attract the right team and sufficient financial resources to initiate and implement a product development effort. What are your key sources of competitive advantage and how will you utilize them?
What do you do next?
To reiterate a key point: customers don’t buy technologies or innovations, they buy products. Answering these four questions is the first step of the product development process but it does not guarantee success.
If you can’t answer these questions well, the probability of failure is extremely high. However, they are just the first steppingstones of launching a successful new product (or a company for that matter). You still need to figure out the 50, 100 or 1000 other product attributes that must be added to a core technology or innovation to create something a customer will want to buy. These attributes are the less sexy but extremely important product characteristics such as supply chains, logistics, distribution channels, quality control, customer support, marketing and much, much more.
Collectively they make up a Full Product Definition and this is what customers expect to see, if not insist upon, before committing to a purchase. Furthermore, this is what investors or your boss expects to see before they invest and/or give a go ahead.
Does this ring true?
This is my view - do you agree or disagree? I’d love to hear your thoughts and comments and, if you've taken a product to market, what approach you have used?
Please reach out as I’m always looking for case studies to feature (both for successful and unsuccessful product launches).
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Product Opportunity Mapping sessions are facilitated workshops targeting established companies developing new products that differ from their core current offerings. More information is here: www.product-mapping.com