Permanent link for Why new products and services fail on October 27, 2023

There are lots of reasons why businesses fail, but some reasons are more common than others, and many entrepreneurs bump up against at least one of these three:

• No market
• Team is missing key experience or expertise
• New product category, requiring extensive customer education

No market

Few customers will adopt a new product or service if they aren't experiencing a pain with existing solutions. Without a thorough understanding of your target audience's pain points, preferences, and behavior, you risk creating something that people simply don't want or need. This disconnect can lead to wasted resources, low adoption rates, and ultimately, business failure. Successful innovation starts with robust market research, customer feedback, and a deep understanding of the problem you're solving. Only by aligning your product or service with a clear market demand can you increase your chances of success, ensuring that your innovation meets real customer needs and creates value in the market.

Another incarnation of this failure occurs when the pain customers experience is so ubiquitous—so ingrained into everyday experience—that they don't recognize it as a pain. In such cases, the innovator needs to educate potential customers to get them to see the problem, recognize it as a pain, and perceive the new product or service as a solution.

Missing team expertise

A lack of diverse expertise within a startup team can significantly contribute to venture failure. Critical skill gaps often include financial expertise, marketing and sales expertise, and technical skills. Without these essential competencies, ventures may make costly mistakes, miss growth opportunities, or struggle to adapt in a rapidly changing market. Building a well-rounded team with expertise in these areas is crucial to navigating the challenges of entrepreneurship and increasing the odds of success.

New product category

Much like lacking a market, customers will often struggle with making sense of a new product that carves out a new product category. They will need to be convinced of the need for a product.

The Segway provides a classic example of the product category failure. Even on the company's website, the product has been variously identified as "personal, green transportation" and "small electric vehicle." Does the Segway compete with bicycles? Walking? The inventor said that the Segway would "do for walking what the calculator did for pad and pencil." In the end, despite abundant hype, the Segway just hasn't quite connected with consumers, and the evidence points to a failure of consumers to "get" the product.

How to avoid

• Try to intentionally test your business model against these failure modes
• Conduct thorough market research
• Work on being clear about the value proposition you're providing…from your customer's perspective
• Look for market, financial, and social trends that would make your idea inevitable, and get to market just ahead of the competition
• Be prepared to pivot

CB Insights did a big study that confirms the above, and Harvard Business Review have a slightly different take on why most product launches fail, and it's worth reading.

Categories: entrepreneurship innovation
Posted by Thomas Hopper on Permanent link for Why new products and services fail on October 27, 2023.