Wheels still on?
There are lots of reasons, I have heard them all, and even used a couple myself, but blaming the retailers, engineers, competitors, lack of advertising, or the weather misses the essential truth.
The process is flawed.
We know the constraints of the retailers, they set the rules and suppliers have to live with them. We cannot control the competition, although mostly they are pretty predictable, and resources for advertising are never enough. Our engineers and designers are ours, so we can get the best out of them, if we are good enough, and we cannot predict the weather, let along control it.
The thing we do control, but rarely leverage well is the innovation management processes most of us use.
If 9/10 products fail, surely there must be something wrong with the logic and processes that allowed them to progress through the system to launch, consuming precious resources as they go.
They get spat out, launched, fail, and we blame everything but the stray dog around the corner, and our NPD&C process.
Silly really.
Why are the processes flawed?
There are standard operating procedures taught with minor variations almost everywhere, they are logical, sequential, and like economics assume knowledge and insight. Nothing like the real world really.
Following is a list of the failure-drivers I have seen over the years.
The ideas are narrow. Ask yourself where most ideas that get into the system come from.
- Customers. In many industries, solving a customer problem is a great source of ideas, but in FMCG, customers or as we should call them, buyers, have little idea beyond ways to save a few bob, or copy something else that is doing OK, but they have the shelf space to rent, so we bend over.
- Consumers. We spend millions asking consumers what they want, then trying to interpret the answers in some coherent way, when the truth is as it always was, consumers do not know what they do not know. Henry Fords quip that had he asked his customers what they wanted, they would have answered a faster horse, still holds.
- The bosses wife. Always a good source of ideas, mostly crap, but carrying considerable weight in the system.
- Your sales force. There can be the gem hidden amongst the dross, but usually they are responding to what their customers (read buyers) tell them, what the opposition has done to pinch a shelf facing, or just looking for reasons they are behind budget. Good sales people are usually pretty focussed on the things that make a difference now, not next year or next decade, so at best they may come up with a useful range extension.
The business case. I am in favor of rigorous planning and being held accountable for results, but when you think about it, our ability to tell the future is pretty limited to non-existent, but we persist with executing on a business plan because it is, well, the plan. Every business case I have ever seen has two common features:
- A positive forecast of outcomes. Profits, market share, volumes, whatever it is, the forecast is for great things.
- Detailed cost analysis. This includes the costs to manufacture, buy shelf space, promotional programs, advertising, research, and all the rest. Again, all if we are honest with ourselves, factors we can only really take a best guess at. The only thing we know for sure is that the forecasts will be wrong.
We believe our own bullshit. Because we have spent all that time, effort, and money creating a business case, we then use them to prioritise the options on the basis of the best returns.
We fail at articulating the product. Every successful product I have seen has some essential component that both makes it different to anything else around, and in the process adds value to sufficient lives for there to be an incremental source of new demand. If all we do is cut the existing cake differently, the only winner is the retailer. Somehow we need to make the cake bigger, find that new and elusive consumer demand.
We fail to brief designers. This follows the previous failure, we stumble at articulating the product specs against which the technologists, engineers and creatives have to execute. If we do not know, how can they? Besides, they are usually brought in too late in the design process, they respond to the performance specs marketing tells them the market wants, instead of being a proactive part of designing the specs. This usually ensures that few operational or technology innovations get a guernsey.
Momentum. Once a project starts to move along, it builds momentum, garners support in all sorts of places, and becomes a “project” to be completed, rather than an expression of new consumer demand.
The net result of all the above is that the biggest risk is at the end, when the sunk cost in resources and ego play against anything other than a gung ho launch.
So what is the solution to all this waste, apart from just getting better at fortune telling?
Take some lessons for the “lean” movement, the operational implementation of the scientific method.
Iterate in small steps, get a few consumers involved early in a hands on way to see of if your value proposition is sound, do a series of small experiments testing hypotheses, and be prepared to be wrong, and alter the approach. Deploy genuine cross functional teams from both inside and outside the organisation, engage in constructive “devils advocate” thinking, and most important of all, have a strategy for the business that drives the new product development process to contribute to the strategic outcomes, not just the forecast sales and financial ones.
None of this is easy, but that is why there is so much upside, the corporate clones cannot see the opportunities. It is also why increasingly, small and medium business has an advantage over the corporate behemoths that dominate the landscape. They are able to take quick decisions based in instinct, experience, discontinuities that emerge, and an intimacy with customers large businesses can only dream about.
Call me when I can help.
