It seemed like a great product idea, so why aren’t they buying it?
At the beginning of the product development cycle, everyone around the management table agreed that this new product idea, possibly inspired by a new technology capability, was going to be a game changer. Perhaps the product management people even had a business case showing how big the opportunity will be. You know what I am talking about, the good old “hockey stick” growth profile.
So the product development team is given the green light, resources are allocated and it’s off to the races. The product development team deploys a very comprehensive NPD gate system because they have been burned in the past by launching products without specific product requirements and specifications. They thought with stage gates, requirements would be defined and locked down. NO MORE FEATURE CREEP – they hoped.
To save time, it was believed that the team had sufficient knowledge of the market.. The NPD leader had been doing product development for some time now and trusted his gut that he knew what the market would want.
Besides, the NPD leader had a good relationship with the sales VP who was out talking to customers all the time. Between the two of them, a talented NPD team, and a stage gate development system, what could go possibly wrong?
Come launch time, which to the credit of the development team was only a few months behind schedule, slightly over budget (stage gate has worked they thought), everyone on the team was excited. The launch looks like a total success, manufacturing was ready to ramp, and a pumped up sales channel ready to sell.
But six months down the road, something terrible was happening. No significant sales orders were coming in. The sales people complained that they need new features and marketing material. Early customers were complaining that the product wasn’t working and wanted to send it back. And the CEO was now in a panic mode:
THE BURN RATE HAS GONE THROUGH THE ROOF – AND NO RELIEF IN SIGHT – WHAT THE HECK HAPPENED?
There is some real truth to this story. I was personally involved in a case like this, and I have seen many of my clients fall into this situation. A technology based idea comes along that looks like it will change the world. The focus is on what kind of things can we make using this nifty technology and how fast can we get it to the market versus asking a fundamental questions:
What problems are out there that are big enough that if solved at a price point deemed attractive to potential customers, would represent a good opportunity for us? Can we create a competitive advantage using our newly minted technology? Will our existing business model and sales channel be able to deliver the value?
The development team and NPD process never validated and verified if the problem they were solving was actually a big and important enough problem real customers wanted solved. Sure they made a bunch of market studies and by inference, rationalized that people would flock to the product once they were aware of it.
But they neglected to get real market input early and often. They instead trusted feedback from their sales VP and technical lead, and convinced themselves, without any real market data, that they had a winner on their hands.
Don’t let this happen to you! There’s nothing inherently wrong with starting a product concept form a technical “what if” scenario. In fact many product breakthroughs start this way. Good ideas can come from any source, but truly new ideas are never fully formed and require vetting and validating using real customer and market inputs.
Your sales VP is not a proxy nor substitute for the voice-of-customer. Sure, the sales team will know a thing or two about the market and should be included in the discussion. But if this is really a new breakthrough, your sales team probably won’t have the right insights to verify or refute the viability and validity of the new concept. And what if the new concept falls totally outside the sales team’s existing business model practices and understanding? At best they will be guessing like your technical leader, at worst, they will kill off a good concept because they can’t relate to it.
Stage gates are all fine and dandy, but without good market feedback and input systems designed into the process, they will only provide a false sense of security. Taking time to form a hypothesis (customer value proposition and business model design), test it early and often, and then verify, refute and redirect if required, is by far a better practice then assuming the voice of customer to the very end.
Whether you like it or not, ultimately you will get input form the customer. They will tell you by their willingness or unwillingness to open their wallets and hire your solution. Wouldn’t it be smarter to get their inputs early on versus at the end of the development cycle where there is no leverage to change the design? Talk about waste.
Moral of the story – “talk to the customer early and often in the NPD cycle, or talk to them late and hope your insights match the customer’s reality. Either way you will get the voice-of-customer.”
Go ask your customers!