Pushing a new product to market is a risky venture for any business, whether they are a startup or an established company.
However, there are ways and means to try and reduce that risks of product failure.
Specific methodologies and management techniques have developed in order to create a smoother product development journey. These methods are also designed to maximise your chances of success.
In this post, I’m going to investigate the reasons behind the failure of new products. I’ll then explain one method, the MVP, and how it can maximise your chance of success.
How Many New Products Fail?
Although 79.8% of small businesses survive their first year, only half make it to their fifth anniversary. This drops again as only 1/3 of businesses manage to stay in operation for ten years.
These sorts of statistics paint a bleak picture of the likelihood of sustainability in business.
Turning to the rate of failure for new products, there is some variation in statistics.
However, a common average online sits at around 80%, with the highest rate of failure given a horrifying 95%. I do take these sky-high rates of failure with a pinch of salt, however. This is because some more academic articles claim the failure rate is much lower. (Around 40%.)
Nonetheless, all of the percentages given make for sobering reading. With between ½ to ¾ of products doomed to failure, it is clearly a high-risk venture.
But as I said, there are ways and means to provide your product with the best chance of survival.
Why do Products Fail?
Unlike the figures for rates of failure, the reasons why products fail seems to be consistent across the board. One article from the Oxford College of Marketing lists the following five reasons for the failure of new products:
- A lack of independent & unbiased research into the market and target audience.
- The product falls short of claims made and suffers bad reviews.
- The product defines a new category and requires substantial consumer education—but they don’t understand it.
- Simple margin rules make bad pricing policy.
- A weak or a poorly executed launch.
It is no work of genius to conclude that by understanding and rectifying the above points of failure, you can hopefully increase your new product’s chances of success.
There are various methodologies and management systems that have emerged over the years that try to do just this. The method that I have used and found the most success, for myself and my clients, is the adoption of the minimum viable product approach for any new product we plan to develop.
This, alongside The Lean Startup Methodology – which birthed the MVP – has helped to combat many of the above reasons for failure.
Additionally, despite the name, the principles do not apply just to startups. They will help any business to achieve the same goals.
What is a Minimum Viable Product?
A minimum viable product, or MVP for short, is a method of product management. It aims to deliver a product in the shortest possible time, with reduced effort. The goal is to access market learning sooner and gather as much validated learning as possible.
I’ll break the term down and explain in more detail to give you a clearer idea.
To develop the product quickly with less effort, the “minimum” targeted effort is used to create it.
This means that rather than develop an extensive and perfected end-product with numerous features, a “minimal” version of the product is developed. IE: The first workable version of your product.
The product is one that focuses and delivers only a few core features, those that solve the problem and provide value to the user. It has the fewest features possible whilst maintaining the value and purpose of the product.
As mentioned above, the product must still have enough functionality and features to deliver value to a user and solve a problem.
Additionally, it must be valuable and desirable enough as a product or service to attract users. (Although if your product solves a real problem people face, that should make it attractive enough.) Despite having the “minimum” number of features, the product must be a viable solution to the problem.
Product is self-explanatory.
However, it does not always need to be a product. It can be a video or a business hypothesis. No matter what it is, it is an experiment to deliver an idea to the market and gather learning from them regarding the viability of the venture.
In the case of a digital MVP, it is an app created with the fewest screens and features possible to deliver the experience and services you require from your mobile app.
From reading the definition of an MVP, you have hopefully realised one or two ways in which it can help to solve the problems associated with new product failure. Now, let’s examine in more detail the ways in which an MVP can reduce the risk of failure for new products.
How Can an MVP Reduce the Likelihood of Product Failure?
To explain how an MVP can reduce the risk of product failure, I’m going to work through the five reasons for failure listed above. I’ll then outline the ways that a minimum viable product can help combat these problems and increase your product’s chances of success.
Ensuring There Is Sufficient Research into a Market
As defined in The Lean Startup, the core purpose of an MVP is “to begin learning as quickly as possible.” To gather learning sooner, you must spend less time developing and launch earlier.
This is in contrast to traditional product management methods which aim to release a perfect product off the bat.
To be able to launch a successful product, you “must learn what customers really want, not what they say they want or what we think they should want.”
Releasing early gives you the opportunity to learn what a market wants.
It allows you to gather market validation and feedback much sooner than if you aimed to build the perfect product first.
This also saves you from spending inordinate and unnecessary amounts of time and money. You’re won’t piling all of your investment and resources developing a “perfect” product, on the assumption people want it. Not to mention the risk that you could launch and discover nobody actually needs or wants your product. In which case, you’ll face significant losses.
Of course, you can still launch an MVP and see slow uptake. But you will have the resources to adapt or improve the product. Then, because you have already gathered market feedback on your actual product, you will know how to improve it to make it more desirable.
“This notion of early customer engagement, getting in front of potential customers early, I think is really, really important.” It is vital in helping you to minimise the inherent risks of launching a new product, and in allowing you to build a sustainable business.
If you still want more research into our market, carry out further feedback gathering.
You could consider building a prototype and undergoing user testing to understand your market before even launching an MVP. Or, you could poll people on your social media, monitor your website activity, or survey your email list. There are many methods of gathering research, it’s down to you to put the time and effort in to gather it.
Combatting False Claims and Preventing Bad Reviews
Making sure your product delivers on your claims is crucial in preventing bad reviews. Being honest about your product’s capabilities is one way to ensure you do not face this sort of negative reception.
Firstly, never make promises that you can’t keep.
If you aren’t certain you will be able to deliver something, don’t say you can. If you’re desperate to include it, make sure you very clearly say it is a potential feature or asset, not definite.
Carrying out user testing with a prototype or an MVP can give users the opportunity to try your product and ensure it meets their needs and lives up to your claims. Ask testers and early adopters if it did all they expected, and if not, what was missing. If it doesn’t meet your claims or their expectations, invest more time to develop the product until it does.
In doing so, you will improve the quality of your product as well as the likelihood of a good reception, thus, reducing the risk of product failure.
For more details and tips on managing user expectations and ensuring all your claims are valid, I suggest reading this article from the Advertising Standards Authority.
Making Sure Customers Understand the Product
When you are developing a product in a new category, and users have limited exposure to anything similar, they can quickly become confused. And a confused user won’t convert. They’re also unlikely to pick a product back up unless their need is so great it is worth persevering through a steep learning curve in order to use it.
If your product is unlike anything users would have seen before, it is worthwhile trying to reduce their learning time. Including tooltips and tutorials can be one way to help your users along. However, even how you design your product can help.
We have become so familiar with certain aspects of digital design, that it does not need explaining to us how to use it. Taking advantage of the familiar can reduce the time it takes for someone to get to grips with your product.
Additionally, just ensure your digital product follows a logical structure. If you make your workflow needlessly long or contradictory to established conventions, you risk confusing users.
Take advantage of established conventions to maximise familiarity and reduce learning time.
For example, word processors all work in a similar manner, whether they are Microsoft or Google, etc. Creating a new word processor that is wildly different from the established ones might make you seem unique. But, it certainly won’t win you any favours when users realise it doesn’t work how they would expect.
In fact, we are even drawn to the familiar and are inclined to prefer it over novelty. It’s called the ‘mere-exposure effect’, or ‘familiarity principle’.
Know the Value of Your Product
As the reason for failure states, “Simple margin rules make bad pricing policy.”
Having a hurdle margin is important to measure your success, but there must be a level of flexibility.
It’s very easy to set your margin too high and overprice a product, or too low and underprice.
Part of knowing how to price your product comes with thorough market research. With learning about your market you should understand potential competitors and their price ranges, as well as find out more about your target audience and how much they are willing to pay for a product.
An MVP could help you understand the value your customers give to your product. Initially, this could be through the “learning” stage, and simply asking potential users the value they would give your product.
Furthermore, given the “minimum” nature of your product at this stage, if it sees a good level of interest, you know that you can increase the price for a more complex, perfected product further on down the line.
Ergo, an MVP will not only help to validate your product but also your pricing model.
Carry Out a Well-Executed Launch
As much as an MVP is about delivering a product to market quickly, never release your product unless you are satisfied it does everything you claimed. Ask yourself, “Is my product ready?” If you don’t believe it does everything you claimed it could or fails to solve a problem your market faces, then keep working on it.
Launching early is good, but never launch TOO early.
Again, it’s about creating a product that 1. does everything you said it would, and 2. is still desirable and valuable for users.
For the launch itself, remember to invest adequate time in marketing your product and the launch.
There’s little point going live when no-one knows who you are and what you do. And much less if they haven’t a clue about your product. You can leverage a basic MVP to build a warm audience in a way similar to Dropbox.
You will also need to ensure you have adequate teams and processes in place to handle the launch.
This means having a well-equipped sales team in place who can handle the sudden increase in sales, and ensure purchasing runs smoothly. You will also need a well-equipped support team who can handle any queries or problems your customers have can be dealt with effectively.
An entire article in itself can be written about how to prepare for and handle a product launch. If you’d like more detail on the subject, you can read about the 6 steps to a successful launch here.
Learn More About Maximising Your Chances of Success
This bizjournals article gives an 11 step plan for a successful product launch. You should recognise many of the points being similar to ones I have already raised in this post. So by developing an MVP, you are already gearing yourself up towards a successful launch simply by following the methodology.
Additionally, you should recognise the language of the last two points. They are directly inspired by the lean startup methodology and the MVP method.
For an example of how an MVP can be used to successfully launch a product, I’d highly recommend reading about how AirBnB did it. Reading in detail about how the method works in practice might better illustrate to you how it helps reduce risk and maximise the chances of success.
I also discussed how AirBnB used their MVP to kickstart their business in my dedicated MVP mailing list. (You can sign up using the form below.)
Following the principles of the lean startup and developing a minimum viable product can help reduce the risks associated with launching a new product. They also significantly help you to combat the common reasons for product failure. In turn, it increases your chance of survival and success for your new product and business.
Using these learnings helps you to avoid the setbacks others have faced previously, and emulate successful approaches.
The method means that in your quest to launch a successful product or business, “you can get there quicker, you can get there successfully, and have much more fun doing it.”
Continued learning and support is key to developing a successful product. Yet many developers leave you once your digital product has been created.
However, IT Enterprise not only helps to support your launch but continues to work with you afterwards until you are satisfied with the viability and success of your product. It makes who you choose to develop your product just as important as how it is developed.
Want to maximise your MVPs chances of success?
If you’d like to find out more about how you can develop your own minimum viable product, sign up for an exclusive MVP discovery session.
By signing up, you will receive learning resources and exclusive 1-on-1 planning session. We will discuss your product and define the priorities, aims, and how it could be achieved. Over the course of the workshop, we would have completed the initial planning stage of developing an MVP.
If you already know you want to develop your own marvellous MVP, here’s how you can make one.
- Build Your Minimum Viable Product with the Eisenhower Matrix, Cerebro
- Eric Ries, The Lean Startup, p.38
- The Unconventional Path, Episode 34, Bela and Mike.
- The Unconventional Path, Episode 34, Bela and Mike.