The era of wearables is afoot with introduction of many wearable devices like Apple’s iWatch. However, there are countless innovations that never see the light of day or never hit their stride in the market.
Inventor’s dilemma: Go-to-market strategy lessons learned from a rendezvous with a designer
Hong Kong 2007 – Product designers setup their booths at a product fair. They had stalled their products out, and were busy pitching their ideas. One designer in particular stood out not due to the impressiveness of her stand, but due to the minimalistic nature of her product: something resembling a fabric shopping bag, the likes of what you see in supermarket settings. In short, a very utilitarian product, with no frills.
The fashion designer in question had designed this bag so that it can be precisely cut out of a square piece of felt, with no leftover waste. As the pitch continued, I was told that the felt that was used for the bag was manufactured from recycled fabrics. Clearly, one of the value propositions of this product is that it is relatively environmental friendly and efficiently produced. I asked the owner of the booth, what her target market was and what her aspired retail price would be for this bag and what followed was, to say the least, surprising.
Her dream as a fashion designer, was to design products for exactly that purpose: fashion. She believed that there was a market for her bags in fashion-conscious, upper/middle-class women and deemed that a price tag comparable to luxury brands would be feasible and attractive. Perhaps it was my ignorance that obstructed my perception of the value propositions of the bag, however, the designer was firm in her strategy. Even after proposing that the bag might be something the Olympics Committee in China would be interested in to promote the environment, she stood strong. Fast forward to today, I have never heard of or come across this bag again.
Pitfalls of corporate innovators
The example above typifies, albeit on a small scale, where corporate innovation oftentimes goes wrong. Five main factors of commercial failure of new product development lay not so much in the quality of the idea/product itself, it can be traced back to a more fundamental organisational mindset, namely, as a corporate product developer once told me: ‘First, let’s turn this idea into a product and perfect it, everything else depends on the product and comes later’. What happens in practice is the following:
- Product ideas are evaluated on qualitative measures and by a committee.
- R&D teams keep the product to themselves as they intend to minimize the risk of intellectual property leakage.
- Target market is optimistically estimated, where usually the total market is analysed, not taking into account the addressable and attainable market. Moreover, value propositions and customer needs assessments are not used to determine value-based price and willingness-to-pay, leading to sub-par monetisation.
- Business cases are drawn on a high-level where price of the product is a ballpark figure and where the volume uptake chart invariably resembles a hockey stick (sudden high volume increase at end of business, used as a lever to create an acceptable financial case).
- Oftentimes sales and marketing are not seen as an integral part of the product development team. This leads to unwilling sales and marketing teams to sell the new product, and mismatch between products developed and market demand.
Besides the aforementioned pitfalls, a culture needs to be established in which failing fast is rewarded as well as succeeding. Otherwise, many projects will fail slowly, leading to much higher than expected costs.
Additional to using a traditional stage-gate innovation process, I would recommend using an innovation pricing playbook to establish, in a fact-based way, the right price and business model for innovative products at an early stage of the funnel to determine whether a project should be accelerated or stopped. This creates more lucrative, and oftentimes faster, commercial realisation of promising innovative products by preemptively shutting down projects which are unlikely to succeed and focusing on the ‘winning’ products instead.