One of the most exciting things you can do in business is launch a new product, service, or entire business for that matter. As high as six out of ten US adult consumers are thinking about launching a business at any given time. If you chose to take the leap yourself, you will experience what I refer to as the “50 ugly truths…” but in so doing you will become stronger, and if you survive you will ultimately help people solve problems.
I can’t imagine anything more rewarding than helping someone solve a problem they thought there was no solution for. If this is true, then why do over 70% of new products (businesses) fail?
They fail because they failed to answer “yes” to four simple but key questions.
Do you clearly understand the problem you are trying to solve and does your product (service) solve that problem completely? (if you have already said “no” stop, gather more data)
Are there enough people, a market of people, with this problem to meet your desired ROA? ( if your answer is “I think so” stop and validate)
Do the members of the market you validated as big enough have the ability to pay to solve their problem? (there are all kinds of problems we all have, but we are not willing to pay to fix)
Are the members of the market you validated that is big enough, with the problem you solve, and ability to pay, “willing” to pay now? (there are many problems we have, and we have the ability to pay for, but not the willingness to pay for)
If you answered “Yes” with current market data (not data from three years ago when you first came up with this idea) go for it!
But remember; An Idea is not a product and it’s definitely not a Business.
Where most entrepreneurs blow it …as Jim Collins refers to it is; Hubris. They believe because they have launched products in the past and they were very successful they trust their gut and intuition that there new endeavor will also be a huge success.
So what happens if you launch based on emotion and Hubris?….
Your sales may come, but slowly
You will miss ROA targets
Need to add investment, instead of cutting bait
Your sales team (who trusted you) will push mud uphill each day…the good ones will leave due to frustration
You strain your entire organization (who is probably already multi tasking) morale suffers
You demonstrate to your market you do not know them
Personally you will become frustrated, aggravated, distracted, and you will loose focus
How can I rattle the above off so quickly?…Because I have done it. I have experienced the rush of growing companies by launching new products and or new divisions and when I find what feels like a huge unsolved problem in a market ….I get excited (emotional).
Instead of gathering current market date, I used to move into; validate my gut mode.
Instead of admitting what I did not know… and finding answers…I relied on past experiences to get me through the unforeseen roadblocks.
I have felt the emotion that builds, and heard that little voice in your head that says; “I don’t care what engineering, marketing, operations, and sales thinks we should do, or the more information they want to gather…we need to launch before someone else beats us to market”
What I lacked back then was a filter…simple filter that quickly cuts through the emotions and feelings and quickly lets you know if you have an “idea” or a “business”. The above four questions are the filter I recommend everyone use PRIOR to launching your new product, service, or business.
How about your company….
Have you ever had to push mud uphill?
While your team loyally pushes mud uphill, what is the opportunity cost of their time?
Do you have other questions to add to the filter to insure the products you launch do not fall into the 70% of those that are an expense without a ROA?
Again, having launched products, services, even new businesses in my career I understand that inner rush of adrenaline that makes your creative juices fire on all cylinders…I do. Maybe it’s an age thing…but I now highly recommend a pause, a strategic pause, before you launch and ask yourself the above questions.
To insure you maximize your percent of wins and your ROA for new products, make sure you use a filter, get the four “yes’s” prior to launch.
If you do not use mine above, I have also used the economic value added model back in the day. This model helps insure decisions are not made of Hubris.
Whatever you do, do not rely just on your gut, and or your key accounts, friends, and family members saying “go for it”.
If you would like to read more about this topic, I recommend you read;
How the Mighty Fall