What makes products successful?

As you go through the process of learning more about your product, its market and its manufacture, you should get an ever clearer idea of how likely it is to do well. A number of factors will emerge that will strongly correlate to your product success or failure.

These factors have been well understood for many years. It is not a comprehension of the facets of a success which is lacking but, more often, the willingness of businesses to research these factors, and – more to the point – a willingness to respond to the answers they find when they ask the questions.

Studies of why products fail report the same findings over and over again, and have done for decades. There is simply no mystery to this at all. The mystery, instead, is why those involved in innovative product development seem insistent on re-learning these lessons on every outing.

? Why do products fail?

• Poor alignment with the market – in other words, customers don’t want it.
• Technical issues – in other words, it is difficult and/or expensive to build.
• Insufficient marketing effort – in other words, its benefits haven’t been communicated compellingly to the relevant audience.
• Bad timing – in other words, the product took too long to get to market and/or was beaten by a competitor.

This is not armchair punditry: these are the answers given by the unlucky owners of unsuccessful or never-launched products as to what went wrong. They are as easy to understand as they are unsurprising. And they feed directly into the observations about what will make new products successful.

In New Products, Key Factors in Success (1990) Robert Cooper and Elko Kleinschmidt (inventors of the now widely used Stage-Gate product development methodology) analyse over two hundred product launches, and list the key factors they find to correlate statistically with product success.

Although refined through numerous future studies by Cooper and others, opinion on success factors remain broadly the same today. Again, none of these will make you jump out of your chair in surprise:

Products which deliver real and unique benefits to customers are far more likely to succeed in the marketplace. Perhaps at first this seems glaringly obvious. It should actually come as a relief.

Quality and differentiation are indeed vital, in fact they are the single biggest determinant of success – products in the top 20% by this criterion have a success rate of 98%. Those in the bottom 20% have a success rate of just 18.4%.

? What makes products successful? How is this judged? The criteria are relatively simple:

• Does the product offer unique features not available on competitive products?
• Does the product meet customer needs better than competitive products?
• Does the product have a higher relative product quality?
• Does the product solve a problem the customer had with a competitive product?
• Does the product reduce the customer’s total costs (creating value)?
• Is the product the first of its kind in the market? ?

The implication should be simple (albeit not easily done): learn about the customer, understand and empathise with their world. Be creative in solutions, use a customer feedback cycle to refine ideas and make something people want.

How thoroughly and clearly have you understood the product before we begin development? We’ve often seen companies leap straight to development before a proper understanding of the product has been created.

By deferring execution in favour of better definition (of the market and technical and business characteristics of the product) we significantly increase the odds of success.

Cooper emphasises that this definition

“must be based on solid evidence, not speculation” (p12):“In too many projects, we witnessed a product idea that moved directly into development with very little in the way of homework to define the product and justify the project. More often than not, the results were negative.”(p16)

• Even Cooper’s word of choice, “homework” is interesting in this context. Why homework? Presumably because it is work that people avoid or put off, rather than something which people need to do individually or at home.
• All too often this work is indeed seen as an optional luxury which gets in the way of the real work. Yet, failure rates rocket up to 69% when this work isn’t done against 25–32% when it is.

Those of us who have worked in strategy and planning will not be surprised by this finding, although it is definitely reassuring to see that common sense is reflected by proper statistical analysis. When projects start before the real thinking and evaluation is done, whether or not they have been given a detailed list of requirements, features and functions, they will tend to fail, and to do so at a significantly higher rate than other projects.

A later Cooper study goes further and suggests that having a “well-defined” product is a vital determinant of timely product delivery, a key secondary factor.

Technological synergy is a measure of how far from their current technology a firm must stray to build the product.

The further away they stray, the less likely the project will be successful. Again the spread is broad: those in the top 20% had an 80% chance of success, those in the bottom 20% had a 29% chance.

Beyond synergy itself, although clearly influenced by it, is the quality of technological activities – still a major challenge for many businesses – and one which significantly impacts success.

How well is the product matched with the existing marketing machinery of the business? Again a poor match (the bottom 20% experienced a failure rate of 70%).

How big is the market and in what direction is it travelling? How important is the product to the market? If the product is a first of its kind, will consumers even get it?

• Of course, very few products will get top marks in all of these areas.
• Where one or more of these factors is likely to be an issue for any reason – for example, because a company needs to work outside its technological comfort zone – it will become even more important that the other areas rank high.

How might we relate this analysis to the distinction between revolutionary and normal innovation?

• The key here is that at least two of the indicators of success – market and technical synergy and quality – are likely to be low. By definition, a revolutionary product will be outside of the core experience that a business has in at least one of these areas.

Taking the synergy factors out of the equation for the time being and not thinking for the moment about process and structure, we can now see that in fact there are only two things that matter.

• First, you must create a great product with a very clearly defined and large consumer market where the product resolves a real consumer issue and offers superb differentiation over its competitors.
• Second, the product must be well-defined across consumer, technology and business prior to full execution commencing. ?

So, for revolutionary products, to overcome an inherent weakness in technology and synergy, a new approach is needed that learns through active engagement and experimenting both about what will work technically and about how the market will respond to the product.

What is perhaps just as interesting from the studies of new product development success are the factors which – it turns out – do not directly influence product success.

Previous studies had highlighted the importance of executive support or the buy in of senior managers. Cooper found that in fact, top managers were as likely to support a failure as a success. And, that top management involvement was more likely to take to market projects that might otherwise be put out of their misery earlier on.

Cooper’s feel is that the executive should

“set the stage: commit to a game plan, and make available the right resources… day-to-day meddling and pushing projects by top management is not conducive to success”.

Although reported with less confidence, Cooper and others have evidence that the competitiveness of the market into which the product is launched is not a strong determinant of likely success.

If a product can still be differentiated, the competitiveness of the market itself is of surprisingly little consequence. We’ve deliberately excluded from this discussion the question of making your products work in more than one market.

The learning here is that products originally conceived for international markets are much more likely to succeed in multiple markets than those tried in one place and later extended to multiple markets.

Having multiple countries as potential markets also broadens the range of consumer problems that a product might seek to address. And, in that sense, it broadens the possibilities that can be explored, whilst also amplifying the challenge of understanding the human behaviours that will be at the heart of any successful product development.

? Want to learn more about what makes products successful? Chat to Tom Whitwell. Email [email protected]