One of the most exciting things entrepreneurs and forward thinking enterprises do is to launch something new. A new product or service introduction can dramatically change an organization. It’s not just the revenue reward; it’s an opportunity to grow your organization in many dimensions.
From solopreneurs to the largest enterprises organizations that find new ways to grow the top line, distance themselves from competition and create shareholder value are category leaders. How they do this is the often-overused buzzword “innovation.” It is spoken about as if it were something that could be bottled and poured like hot sauce when you want to heat up revenues. Instead, try a holistic approach to an NPSI (New Product/Service Introduction) where you get to test your organization. It’s a very powerful way to learn about your business ecosystem. Product launches test an organization’s People, Process and Infrastructure on many levels.
There are many industry frameworks for NPSI, each with dozens of steps that look daunting and are perceived to be a massive investment. Here are four large grained steps for an NPSI, part of a methodology I call Constructive Disruption. Disruption brings about the often-needed transformation in organizations that ask why the status quo isn’t achieving their goals. Constructive is the well-laid out journey to growth or transformation. It will equally help you to learn more about your company culture and the appetite/adaptability to growth or transformation. After an NPSI you should know:
How do we satisfy customer needs?
What organizational strengths do we have?
Why are we relevant to our market?
The timeline for these steps should be “as long as it takes, but no longer.”
What Problem are we solving? (Uncover)
The brainstorming of new product or service ideas may come from customer feedback, competitor research, employees or an idle doodle. You build your company upon multiple disciplines it’s now time to take advantage of that, using your core skills that will safely accelerate time to launch. NPSI is all about getting from Zero to One. Workshops are a good format for brainstorming.
1. Are you good at it?
Whether you are creating a physical item or a service you need to take a hard look at how you bring the proposed product to market. Being good at something is different than never done it before. Everyone has heard the story of how Amazon began by selling books. They earned what I call Market Permission to sell online. As they started to diversify their product mix, they were able to demonstrate the art of the possible to consumers. If Amazon told consumers they were going into a market, it was accepted. Selling online became “normal” to the point where online sales are no longer looked at as “an experiment” or a novelty way of selling.
What are your core competencies? What has been successful about past product launches? If you don’t have the internal resources how will you build/grow/obtain them?
2. Does it have internal support?
Do all the internal stakeholders (e.g., executives, finance, HR, IT) support the idea? You’ll need to examine people’s personal preferences, the company’s culture (Is “Not invented here,” a common statement?), processes and a desire for change? If not, you need to manufacture consent. People generally agree that growth is healthy. Not everyone feels the same about how you get there. It's key to identify champions and develop alignment.
3. What problem does it solve?
Have a very clear understanding of the problem you are helping other businesses or consumers to solve. For example, luxury products provide the exclusivity that some people desire. Try to solve one problem at a time. Trying to deliver a complex service that provides fast, convenient and cheap for the first at the same time is difficult. It may cause so many setbacks or exceptions that it derails the process entirely. Go for an MVP (Minimum Viable Product).
4. Avoid the temptation to make early decisions
At this point you should still be in the collection process. Until you have a very clear problem statement and the alignment to move ahead, wait. It’s important to have all the facts/beliefs/preferences/needs/wants or as many as you can around a problem statement before even building a prototype. This is different than iteration, which happens after the Examine phase.
At this point your team must have a very well defined problem. Your answer should be “Yes” to all three of these statements
Can you put a boundary on the problem?
Is the organization committed?
Do we know what we are going to deliver?
If not, address the open item(s).
Complete the Question (Examine)
This is the stage where you round out the “how” and “what” we are delivering. It’s essential to break the problem down to its smallest components (figuratively and literally). Ensure you fully understand how they work and the relationship (processes) between them. Your supply chain is a good example of understanding dependencies and relationships.
1. Start with a Product Map
Identify the discrete pieces to that will make your product or service come to life. If you are selling automotive repair you will need adequate workspace, trained technicians (How different is each make and model of car?), an intake process, tools, parts and supply chain. What’s the relationship (process map) between all of these? Understanding these all of the relationships takes time and internal talent. With everyone moving in the same direction, you’ll get valuable input from a collaborative thought process.
Be prepared to answer:
Where does it fit in your current business model?
What is the product vocabulary? – This is an extension to marketing
What are the processes/technologies/talent we need?
2. Identify your addressable market
The size of your market should be something you can estimate within an order of magnitude. I call this the addressable market. This is the number of consumers or companies you can practically and reasonably target. As an example, eReaders such as the Kindle should be something that “everyone” will want to purchase. If you start the filtering to make it addressable (this is only an example and not meant to be 100% accurate):
Total population of Earth is about 7 Billion
Worldwide literacy rate is 84.1%. It only includes adults over 15 years old
Perhaps you want to start in the US. Literacy rate is 86% (on 371 million people)
76.5% of the US population are over 18
We now have a market size of about 244,000,000
The use and cost of a Kindle makes it a luxury. Suppose only 30% (and this is where some research should have been done) can afford the Kindle.
- 73,000,000 million people is your approximate addressable market. According to TabTimes the total number of tablets in the US, at the end of 2013, was about 70,000,000
3. Talk to your customers
Does anyone want to buy or use it? How will they use it? Market tests and one-on-one conversations are invaluable. Socialize the product idea with a select market, even if you are still in the concept stage. Allow for cultural differences if you are selling outside your native country. There is an apocryphal story of a successful golf ball manufacturer that went to Japan. The manufacturer sold golf balls in packages of threes, which is an unlucky number in the culture. Changing to a package of four was victory for them.
Segment and identify different types/sizes of buyers. Where will you be able to set price/margin? Products/Services that are market-making (e.g., iPod) may not be easily understood and may take more time.
Get as much feedback as you can. Ideally it should be a minimum of three data points.
4. How does this product or service extend your brand?
Your products or services should pass the sniff test to your customers. Would you buy smartphones from your local coffee shop? If you make or sell lifestyle products (e.g., sporting goods retailer REI) and extend your services to include sport themed vacations, there is a high-level of synergy. Compare your brand messaging to the theme the product provides. Victronix, the company that makes the icon Swiss Army Knife has added personal products such as watches and kitchen knives. These all reinforce the lifestyle and caché of the product.
After this stage, you should have all of the foundational information to design your solution or product. You should be well bounded enough to begin designing an MVP (Minimum Viable Product or Service) and have alignment with potential markets.
Develop the Solution (Prepare)
With the foundation you’ve just created, it’s time to begin the solutioning process. As you develop the product or service you’ll want to engage different experts within your team. Smaller or highly specialized organizations may wish to engage outside experts.
1. Start with Design
This is a stage where you want your technical experts to begin with diagrams. Your process flows, customer behavior analysis and solution strategy are best suited to a diagramming tool. It’s not expensive to change or present to different audiences.
2. Will your product be understood?
You’ve begun to assemble components of the solution. All of the processes, physical models and talent are here to bring it to market. After you’ve done an initial test with a focused market, now is the time to understand how you will deliver and message it in today’s market? That positioning, packaging and pitch are as important to success as quality. Timing is also important, is your product relevant in today’s market? How would Twitter or LinkedIn have been received at the dawn of the modern Internet age?
Your product must be timed for your ability to deliver it and what the market is ready to accept. Just a few years ago, I was building IT services for a California based consulting company. I had developed a cloud-based model for doing Business Intelligence as a Service (BIaaS). I shared the fully developed design with a well-regarded IT analyst firm. The feedback was constructive and I was told businesses were not ready; therefore I would not receive market permission. Nine months later everyone in the industry was talking about “cloud.”
3. Work backwards from your delivery date
Before you are ready to go to market, know all of the details of your supply chain whether it is physical or virtual (e.g., you depend on having enough computing power to deliver). If you are promising a start/delivery date of June, then some of the milestones you need to start posting in January or earlier
Who needs to be trained and how many of people do we need? Do we have them on staff today? How long does it take to hire them?
Are there regulatory or compliance requirements?
Do you have the tools/raw materials for your manufacturing process? Can you/should out use a contract manufacturer?
Will your suppliers commit to an adequate amount of stock and reserve?
Do you have funds to support the time until launch?
4. Manage quality
Nothing will kill a product faster than poor quality, especially on launch. You may not need the best of the best in materials or talent but they need to be up to the task. Be relentless in your focus on attention to detail and put them all in perspective.
Iterate between Examine and Prepare as your assumptions are challenged or lessons are learned. This is also an excellent exercise to enhance or extend existing product and services.
Present the solution (Satisfy)
At this point you should have a solution that is ready to be marketed. You may choose to begin the full delivery, prototype or set a future date.
1. Understand your Quality of Revenue
Except for very special circumstances your product or services must be profitable. How profitable depends on multiple factors and is beyond the scope of this article. You should factor in your all in costs to deliver to market and make the determination. QoR is an ongoing exercise to go through with new and existing clients. It’s good to begin early.
Some clients will be easier to sell and maintain than others. As a simple exercise, determine where they fall in this chart. Your ideal client is relatively easy support and maintain, yet they generate high revenues. Clients that fall in the lower left might be well suited to a self-service model. Clients in the upper left must be reviewed carefully. With a High effort to maintain, margins may be low or worse. What decision will you make about them?
2. Train your sales team
If you have a separate sales team, you’ll need to get them up to speed on the value proposition. They are usually compensated by a percentage of the sale price of the product or service. Don’t expect them to become technical experts on the nuances of the solution. They must be well versed in the domain and have a solid foundation in the value proposition.
Questions you should be prepared to answer:
What is it?
Why is it relevant to the market?
What are three leading questions to ask potential buyers?
3. Being a fast follower is ok too
Sometimes you cannot be first to market with a product or service. That’s ok. First movers may create a barrier to entry but at the same time they create market permission (or not, watch carefully). If your product is particularly new or different for a geography they may do a lot of the hard work for you.
Use your organization’s strengths in Examine to see where you might be able to learn from them. Think you can make a better hamburger than McDonalds? I bet you can but that’s not their core business. The have a five-phase model of People, Products, Place, Price and Promotion. They are about feeding and satisfying people at a point in time. If your goal is to make great hamburgers, there are still lessons to be learned.
4. Develop your sales/marketing materials
Few products are self-explanatory. Be prepared to develop a simple message about why yours is the right buy for your client. Here are some tips from Rule of Three: The Business of Keeping it Simple
These were some basic steps to help your organization align and move ahead. You should be ready to begin your product launch. Have a mechanism to capture, understand and iterate on customer feedback.