As companies seek organic growth, launching new products and services makes sense. Innovation is key to long term success and competitive advantage. Opportunities to sell more to current customers is an obvious motivation for creating new offerings. However, there are pitfalls to avoid. Probably there are hundreds of them, but as a topline, here are a few to think about and avoid:
The Hothouse of Internal Thinking: Once the ball gets rolling on development, everyone has tasks to perform along the path towards launch. Some may indeed focus on market acceptance. At some point, the mindset turns away from asking serious questions about whether customers will buy it. No one on the team wants to be the “skunk at the garden party”.
The Best Customers Pitfall: Quite often, the validation that takes place at the initial ideation stage is to ask the “best customers” what they think. While this feedback is always good, and usually valid, it begs the question whether arm’s-length buyers who don’t yet have a reason to trust your brand will try the new offering.
Market Sizing Mis-steps: In a related way, looking at market sizing can be fraught with pitfalls. Top-down approaches are deceiving, even when overlaying modest sales projections can amount to wishful thinking. For example, if the launch premise is something like, “the new launch opens us up to a bigger market, which we estimate to be $1billion in the US alone. Capturing 1% of that adds $10m to our revenue line.” The danger is on both ends; market size estimates are always over-estimated. The penetration number, however low, is a swag, at best, and is likely to be untested.
Ugly Baby Syndrome: As in the old homily, “be careful whose baby you’re calling ugly”, there may indeed be an executive sponsor of the new product idea. Applying rigor from the bottom-up can be challenging, at best. Having an independent view takes the launch team out of the line of fire. A decision to kill someone’s pet project is difficult, and always benefits from outside perspective.
Running a business day-to-day can be tedious and challenging with the existing product-service mix. The excitement that accompanies a planned new product or service launch can be energizing. It’s an enterprise that invites teamwork and creativity. In the face of that, it takes courage and discipline to focus attention on the headwinds your initiative faces.
It’s usually best to hire an independent third party to help with the market validation. This not only takes pressure off team members; the resulting market insights are more likely be objective and provide evidence the company can weigh in its decision process toward development and launch.