When new product launches don’t go your way what’s to blame? Is it the idea? Or the process?
“We ran out of money before it got traction.”
“Customers liked it in tests, but we got mediocre sales in market.”
“We went out too fast and couldn’t meet customer quality expectations.”
These are three excuses I’ve heard recently from corporate managers who struggled with unsuccessful innovation efforts. In each case, they identified the end result as a product failure. They talked about the loss incurred and how their teams were sent scrambling for a better idea.
Companies generally respond to these types of failures in one of three ways.
1. Restructure the team. They put a new innovation manager in place. Or they pull the innovation team out from the business and put it into an incubator. Or they change the titles of the team members and rebrand the squad. In the end, it often amounts to a cosmetic change and rarely gets to the root of what caused the innovation failure and how to turn things around.
2. Revisit the pipeline. Most companies are not lacking for ideas. When one doesn’t work, they dig up the list from past brainstorming sessions and consultant plans. They put the same process in place to bring the next idea to market.
3. Re-research the market. Seeking better data on customers, the economy, and competitors is often an easy fallback for companies when new products and services don’t behave as desired. The infrastructure is already there in most organizations. And every employee wants to be able to answer the “what went wrong” question with stats and charts.
But maybe it wasn’t the idea that failed. Maybe it was the process.
Effectuation shows us that successful entrepreneurs are able to turn all of these excuses into market successes. Nobody intentionally tries to exhaust all of their start up funds, launch something that doesn’t resonate, or bring a less than ready product to market. But the act of creating leads to unknowable outcomes.
Expert entrepreneurs use them to their advantage. Effectuation refers to this as the Lemonade Principle. They turn lemons into lemonade.
Here is how successful entrepreneurs react in similar situations.
1. “We ran out of money before it got traction.”
Precommitments and partnerships are a way around this. Have customers pay prior to development for investment heavy products. It ensures a buyer for what you’re building.
Partnerships also help to spread the risk and expand the network of possible payers for your innovation. Resource constraints also force creativity. In all likelihood if you are having trouble funding the venture, others are as well. This opens opportunities for collaboration.
2. “Customers liked it in tests, but we got mediocre sales in market.”
View your customers as partners in your innovation venture. One way to do this is to employ some form of pre sales. Another way is to actually co-create with them. How can you take advantage of the skin in the game that early adopters are willing to commit? Deepen your relationship with them and make them part of your sales force.
Also, take a wide view of your innovation efforts. Look not just for what you expect to happen, but what is actually happening. Is it the product / service that customers are reacting to? Or is it your distribution channel? Your marketing? Your packaging? Your pricing? Are they giving you an indication of what they do want that you’re not noticing? Engage your customers in figuring this out.
3. “We went out too fast and couldn’t meet customer quality expectations.”
Things don’t go as planned. So be it. What can be controlled is your response to the unforeseen.
Product flops, quality issues, and marketing gaffes attract customer attention. Customers are in dialogue with you. Make the interaction a pleasant one, and you’ll acquire a customer for life.
The lesson for managers and entrepreneurs alike: the failure might be your innovation process, not your products. Flipping your fails into sales could be well within your control.
--Written by Sara Whiffen, Founder & Managing Partner, Insights Ignited LLC