Seven product development pitfalls to avoid
Many of the world’s most successful entrepreneurs claim they’ve learned their best life lessons from making mistakes and bouncing back. But that doesn’t mean that expensive errors should be embraced. Spotting problems early on and better understanding the challenges ahead can help limit the cost and potential damage when things don’t go as planned.
Between them, Alan Hart and Jeremy Carey have helped many startups, SMEs and big brand players to bring innovative new technologies and products to market. Alan is head of business development at product development consultancy 42 Technology and an entrepreneur; and Jeremy, MD of Exergetic, a technology commercialisation consultancy. In this article Alan and Jeremy highlight some of the most common new product development mistakes, along with ideas on how best to avoid them.
Ignoring volume markets
Entrepreneurs are always being advised to focus on developing a Minimum Viable Product (MVP) to avoid costly and emotion-driven developments when creating their first generation product and to help secure early revenues. But MVP doesn’t necessarily provide a robust case for the longer term.
It’s not unusual for early adopter customers to have niche requirements, different from the mass market and their needs can become a distraction as companies strive to satisfy them. To avoid this, MVP should be linked to an evolving view of the market requirements when sales are tens (or even thousands) of times higher than they are today.
Failing to understand market structures
Even some of the most promising new products can fail to sell because they are presented to customers in ways that are impossible for them to buy. For example: large corporations might be prohibited from purchasing from newly established businesses; or a product that solves a problem within a standards-driven industry, but in a totally different way, might need buy-in up and down the value chain before it will sell.
Entrepreneurs need to understand the purchasing process, the structure of the markets they’re initially launching into, and how they can best fit into the existing value-net. And some projects might not even be commercially viable when the structure of the target industry is factored in.
Ignoring critical development risks
Like the rest of us, entrepreneurs can get drawn into the aspects of their jobs that they love. And often defer tackling the areas that they don’t understand quite as well, in the belief that they’re somehow simpler, not mission critical or can be considered later.
Bringing a product to commercial success almost always involves multiple risks and challenges across a whole host of areas. But having a laser-like focus in any one area – for example on technical development or getting the branding ‘right’ – and without balanced risk reduction across all parts of the business can be a recipe for disaster.
Over-promising the upside
Entrepreneurs walk a fine line between raising enough capital to progress their developments, and retaining sufficient ownership to make it all worthwhile. This is particularly true in the early days, when they need to convince potential investors of the company’s valuation but might have very little to show beyond an idea.
To overcome this, many entrepreneurs fall into the trap of over-promising the upside or understating the total likely investment required, presumably in the hope that luck will be on their side. All too often they get ‘found out’ which can seriously damage their professional reputation, potentially lead to a dreaded ‘down round’, or even prevent follow-on investment.
In the early days, sometimes the only sensible route is to scale back the company’s ambitions so that ‘bootstrapping’ is an option, or to turn to early investors less focused on immediate financial returns. For example: family, friends, university incubators, or government.
Ignoring significant uncertainties
Most entrepreneurs who have raised public funding (for example through Innovate UK) will have prepared a ‘risk register’ but in an R&D context it’s usually more helpful to think about ‘uncertainties’. In other words, to consider what you just don’t know yet.
A well-deployed uncertainty register will equip the entrepreneur to pilot the optimum development route, to identify skills and experience gaps within the team, and to decide where best to focus scarce resources. The register needs to fully consider all uncertainties on the road to commercial success, as well as when they’ll be resolved, by whom, and how.
Failing to invest in product roadmapping
Even with a carefully developed MVP and a good understanding of the target market, a focus on the highest priorities can inevitably lead to some product features being deferred as a way of saving development cost. Whereas, with hindsight, incorporating those features from the start would have saved more time and money overall.
For example: incorporating an ‘over the air’ software update functionality is often seen as being a ‘nice to have’ but not essential from day one. However, it could prove invaluable if the product needs more than one iteration of firmware before (and even after) launch or to solve unexpected behavioural issues when first products are in the field.
It’s always worth investing in some light-touch product roadmapping and ‘platform thinking’ to ensure the initial launch product/MVP can be evolved, rather than being used to test the market then binned for subsequent release generations.
Not thinking through production ramp-up
Most developments follow a progressive scale-up in production volumes: from a handful of prototype units through to higher volume manufacturing. In the early days, when you’re trying to build a single proof of concept unit, the bill of materials cost is usually relatively unimportant. But it becomes critical when you want to sell a million units at £10 each.
Most design for manufacturing stages tend to focus on manufacturing larger volumes at the lowest possible marginal cost but the upfront tooling costs are considerable. Similarly, the budgets needed to scale the processes used for prototype manufacturing are likely to be prohibitive if you need intermediate volumes for field trials or to satisfy year one sales. If the business plan calls for a low number of units at reasonable cost, then this needs to be carefully planned and budgeted for.
We hope the ideas discussed above will be useful and will help even the more experienced entrepreneur to navigate around the inevitable hurdles and roadblocks on their road to commercial success. Good luck!