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New Product Challenges

I've spent most of the past thirty years trying to invent, develop, launch and sell new products. There's an anarchic side to my character that can't be bothered trying to sell something that someone else already sells. Or perhaps it's not about searching for challenges, but satisfying my insecurities. Maybe I just don't want to be beaten. If I'm selling something that nobody else sells, then if I fail it's not because somebody else is better than me at selling, it's because I didn't get the pitch right in some way, or that the market is simply not ready for my vision - like the company I co-founded which developed intelligent search engines in the mid-80s for example, or the social networks idea in the early 90s. Well they always say that timing is everything. But in the case of New Products there are other factors at play.

Now I'm in the twilight of my career, I've amassed plenty of experience in trying to make business successes out of new products (mainly my own but also advising others). For this blog post I thought I'd look back at why some succeeded and why others failed. What are the ingredients for a successful new product? Whilst most of my experience has been accumulated in the Business to Business (B2B) sector (as opposed to Business to Consumer (B2C) or even the fast emerging C2C world of collaborative consumption), the observations below ought to be relevant for all types of commerce.
  1. The fundamental process towards commercial success. It starts with finding something that you believe people need. The next step is to get them to try it. This is followed by getting them to keep using it, getting them to pay for it, and finally getting others like them to recognise they have the same problem, to decide to look for an answer to it, to find yours, to select it and eagerly to pay for it. None of these steps are easy, and all of them are hurdles over which you might fall and not recover.
  2. Evolution not Revolution. Easier, cheaper, faster, stronger, lighter, etc. If people can't immediately see that what you're offering them is better than what they've already got or understand, then they either won't relate to it or won't see a justification to buy it. It's one of the reasons I hate the word disruptive. Why would anyone want to buy into something because it disrupts what they're used to? Change is resisted. Improvement is welcomed. So the first rule of new products is to ensure they take small steps not vast leaps as Neil Armstrong actually said... (definitely not a giant leap). Most people think Facebook invented social networks. But many existed long before Zuckers built his. However, what he brilliantly realised was that pictures of you are nearly always taken by someone else. Online they exist in other people's galleries. He invented tagging to let you see pics of yourself posted by others. That's it. That's his simple evolutionary step. All other features of FB already existed in countless other social networks.
  3. Focus only on sales. Business is about one thing - selling. Inventing something that no-one wants to buy means you've developed a solution looking for a problem to solve. Find a problem, research whether people really want it solved and would be prepared to pay in some way to have it solved, and you stand a chance of introducing a successful product.
  4. Ensure volume potential. Your product might be evolutionary, and it might solve a problem, but if it only satisfies a few people and none of them want to pay you serious amounts for it (ideally regularly), then you probably don't have a viable business opportunity. On the other hand, you may have something that a lot of people want, which few, if any, might be prepared to pay for. Google had this problem. When Page and Brin developed their version of online search, it won the engine war (being fought at the time by dozens of similar services) because it was by far the quickest and easiest to use (great evolutionary benefits). Had they decided to charge for it, we'd all still be using Yahoo, Altavista et al. It was only later after they'd won hundreds of millions of users that they worked out they could charge businesses to 'sponsor' classified ads using their Adwords bidding system.
  5. Be passionate about your product. If you don't think it's the dog's bollocks, why should anyone else? And if any little detail about your product annoys you or lets it down in some way, you're probably not the only one. Whilst these might not be show-stoppers and your product basically works, you can't let them persist in case competitors identify them and then do something about offering solutions that avoid them (Google was faster - that's all). Also any negativity about your products is not likely to help sales - although people talking about it, for any reason, can be a good thing - but only if you take action to resolve their issues, and communicate that you've taken action.
  6. Advocates. Use every means at your disposal to find and hang onto product advocates. These are people who will share your own passion for your product and, more importantly, provide three vital things:
    1. A testbed.
    2. Independent validation.
    3. Their own network of potential advocates and, hopefully, customers.
  7. Research, research, research. No matter how clever you and your colleagues are, the market ALWAYS knows best. And then even if you do manage to interest a group of people in your new product, don't stop finding out what they think of it. How could it be better. Maybe you can sell them other products and services to increase their enjoyment of it. But most importantly, your competitors never stand still. Indeed I've experienced my customers encouraging would-be competitors to develop something to compete with my new products. Nobody (except the businesses selling them) likes a monopoly. So competition is s sign of a healthy market - and the way to stay on top is always to be innovating. And the way to do that is to listen very carefully to your customers and never stop trying to be better.

    Steve Jobs once said “Some people say, ‘Give customers what they want.’ But that’s not my approach. Our job is to figure out what they’re going to want before they do. I think Henry Ford once said, ‘If I’d asked customers what they wanted, they would have told me, “A faster horse!”‘ People don’t know what they want until you show it to them. That’s why I never rely on market research. Our task is to read things that are not yet on the page.” That's all well and good, but when you do have a new product you want people to buy, there's only one way of finding out if they will, and that's by asking them! We call that market research. Making millions of them and hoping for the best is called foolhardy and probably suicidal.
  8. Avoid Catch 22s. Finding early adopters and advocates at any cost is essential, especially if a Catch 22 exists in the product's business model. For example, you might need lots of people offering things for others to be interested in buying them. But why would they offer things if nobody is likely to find them? It's all about making sure you get both ends of the model working. One without the other is a dead-end. The story of Tinder (the very successful dating app) is a revealing example. Tinder works on what they call a double opt-in. Using a simple app, you choose who you fancy from a list of people looking for partners. If any of these people also fancy you, then a match is made and you're both provided with each other's contact details. The problem Tinder faced was although it was a good idea, why would anyone upload their profile only to be disappointed if no-one ends up as a match. Why bother getting involved if no-one else is using it. There are hundreds of thousands of apps available today to clog up your smartphone including copious dating services. The fight for popularity is never going to get less intense. Tinder needed critical mass to get established. So they organised large parties at universities for good looking people ('lookist' perhaps, but it's a fickle world. To digress briefly, psychological experiments have shown we always think we're less attractive than others believe). Literally the Tinder founders went around campuses inviting people to a great party where all they had to do to gain entry was show that they'd downloaded the app... The rest is (very recent) history. So whilst the app is clever, and solves a problem or two (like kids no longer needing to get drunk with their mates to summons up the courage to approach someone they fancy, and avoiding the embarrassment of rejection), the reason it won millions of advocates was because the founders primed the pumps with advocates. Once critical mass has been achieved, other revenue generating models can be adopted. Whatsapp charge $1 a year. But even this would have been excessive if no-one else you knew had the app. It therefore started as free. Interestingly they launched on iPhones only and rapidly found 50m people who were prepared to spend $1 a year. But when they launched on Android, amazingly they struggled. So they made it free and sold it instead to the network operators to bundle as an incentive to switch. They've also just announced that it's also going to be free on iPhones.
  9. Love your customers. Obtaining feedback about your product is vital for any business, but allowing early adopters to fade into history is potentially suicidal. They're not only the best ambassadors for your product, they are part of its family and will take pride in a sort of ownership or custody of its continued success. If they ever decide it doesn't do what they want it to do, or they find an alternative, they could become stronger opponents than allies. It's your customers who tell you what to sell. You must stop listening to them.
  10. Getting customers hooked. Achieving loyalty from a growing army of customers is your ultimate ambition. But weaning them off whatever they were using before you came on the scene is your first massive challenge. A useful read is Hooked by Nir Eyal. He explains why it's so hard to get people to change their habits. 
  11. Making money from them. Assuming you do manage to attract people's attention, you've got an uphill challenge to make money out of your product (assuming that's your objective). The process towards commercial success, especially for things like mobile apps, is summed up as AARRR (like pirates but without the preceding OO!). 
  • Acquisition - In app world, that means downloading it
  • Activation - Opening it and signing up
  • Retention - Using it again and again
  • Referral - Recommending it to friends and colleagues
  • Revenue - Getting them to pay for it in some way - these days probably through an in-app upgrade
I love new ideas. Most of us do - until we get too set in our ways to want to consider changing our habits of a lifetime. But do I want to go through the hassle of changing my habits and probably spending money I don't really need to spend? Maybe not... which is why launching new products is so hard to do, but so rewarding to get right.

Comments

  1. Grom - I think you're mistaken - it's The Wurzles that say oo aarrrr - not pirates. They just say aarrr. Bil

    ReplyDelete

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