Going to Market
May-June, 2020 – Consumer Technology Association magazine article, written by Robert Heiblim
Our industry introduces many amazing, evolutionary, revolutionary and sometimes, odd or even outlandish products and services each year. Sadly, a large portion of these new offerings, well over 60%, will not survive. That is a poor batting average considering how much time, effort and money it takes to create a new technology, device or service.
There are many reasons for this, such as simply a bad product or idea, not enough funding, healthier competition and better products. When working with companies, I find asking a few questions, reveals lots of information. My batting average on this insight is high, so I hope it is helpful for you to consider.
I always ask two basic questions (and often many more): “Who is this product for?” and “How are you taking this to market?” How these questions are answered, and many times if they are not answered, tells a lot.
For the first question the answer too often is, “We are not sure yet” or “We didn’t do the research on that” or the worst response, “For everyone.” The problem with these answers is they are going in blind, so they don’t know what to do, or how to measure and adjust. If you answer for everyone, then recognize that the largest firms in the world do not do that. Walmart knows its customers; they overlap but are not duplicated at Amazon or Best Buy.
Apple does not try to sell to everyone, but their focus nets them the bulk of profits in their field.
Make a Plan
When addressing how to go to market it is much the same. We are told “We have a website”, “We are selling on Amazon” or “We will figure it out.” None of these responses is a plan. Even worse, it seems clear no one engaged with the rest of the company to assure success. Ask sales teams who complain of being delivered goods and services without considering the costs of retail or other partnerships that often are mis-priced or mis-featured. How about finance who likely asked for profit projections to approve the project, but then are hit with unexpected costs and time delays that were not considered or prepared for.
The time for planning needs to start at conception. When the Product Initiation Document (PID) is prepared, that is the time to get research going, finance reviewing, sales commenting and committing, and of course support from management. Without a 360° view of how to succeed the likelihood of success is much lower. Do you have a plan or process in place to mitigate the impacts and improve your new product development (NPD) average success?
The impact of not doing this work ahead of time can be immense. Please consider that letting the “invisible hand” of the market adjust things like selling price, available margins, marketing costs, and other items can take a product from profit to a large loss easily. The time to learn that is not when you have inventory in your possession. We have plenty of observable examples of this from firms large and small. We have seen large write downs and losses, closures and upset investors. The first step is to recognize that bringing new products to market is a total company effort and requires participation by all sectors of a firm.
Get Buy In First
This means having a process in place from the inception of a product idea. Yes, it is hard to make a new product, and often engineering or product development will feel that other disciplines in the company may not understand or buy in. That is certainly true, but if we cannot convince our own departments, how will we convince our partners and customers? This may slow things down but it’s a key part of the process. Despite how hard the engineering and design work is, so is the selling, marketing, production, logistics, and distribution of products and services.
Steve Jobs famously spoke about how many good ideas and products were killed before Apple ever proceeded with them. This is a great insight as not all products and services are good for every firm to pursue if they do not have the assets in place to do so. Making products that your company can execute is far more important as only the execution will result in success. Again, we have seen many good ideas taken up after failure by one firm to rise to success with another. This is due to good fit and efficient execution.
We suggest that you put in place a process from the beginning that forces each company discipline to review new product proposals. This should include their review of the total available market, the proposed volumes, pricing and margins, marketing plan, trade partners, logistics, and other costs and returns. It may be an argument, but if the team can agree, the success rate will rise and so will buy in from the team as execution improves. There are many models for this process, so the specific details are less important than getting commitments from each discipline as well as informed points of view.
This requires leadership and insight to drive the process. It is so core to success that it cannot be left to others and simply reviewed. It is leadership that is needed to ensure a real review and a solid commitment, but an improved “batting average” will have such a great impact it is well worth the effort. Just review the sunk costs for products that have failed to meet the projected sales and returns — a very large line item indeed.
At bluesalve partners, we have an active product development process we can share with clients to accelerate and improve their batting average. Better outcomes are good for everyone, the firms, the industry, and their customers. Let’s all get better together.
Robert Heiblim has more than 35 years of experience in the consumer electronics field encompassing all phases of general management, including management of new technology start-ups, and high growth companies. Along with his teams Mr. Heiblim has developed, marketed and sold hundreds of millions of devices through most global outlets for consumer technology. Robert is the current Chair of the Consumer Technology Association (CTA) Small Business Council as well as ex-officio Chair of the CTA Audio Board.
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