We’ve all heard cautionary tales about technology products failing in the marketplace. From battery catastrophes, to competitive trouncing, to customers yawning at product introduction – products complete their development cycles, launch… and bomb sometime during Revenue Acquisition.
But what about technology products that never make it to market at all? Products with supporting development and test efforts that terminate before the first dollar of revenue? These products never see the light of day, yet cost their companies dearly to sponsor from Concept to Planning, through Design and Test, only to find their way into the corporate landfill. Why do these projects fail, and what are the impacts of failure to high tech companies?
Go Fast, Turn Left
High tech companies find themselves in a shared predicament. On the one hand, market needs change rapidly, and fast time-to-market is critical. On the other, technology products are inherently complex and time-consuming to develop. As a result of this challenging need for speed, top players have figured out the Product Development game, with deep market-sensing capabilities, highly skilled technical organizations, well-resourced project teams, strong program managers, and rapid one-pass design and test capabilities. Still, a startling percentage of Product Development efforts fail to reach market (25% to 49%, depending on industry1).
Conscious Decisions and Admissions of Defeat
A management team’s well-informed decision to pull a Product Development project from the pipeline most often is better than “launching anyway and hoping for the best” (spoiler alert: see exception below). If you’re sure it’s a dog, don’t pretend it’s something else. Certainly no one advocates that ill-defined or incapable products should be launched. Better to admit that you have a problem.
But what causes a development project’s demise to begin with? Failures often group into the following categories:
Market needs changed and now we’re working on the wrong features
We can’t deliver what the market wants
We came up with something better
A. Market Needs Changed
If you’re seeing consistent shifts in market before you can get products out, it’s time to take a long, hard look at your development velocity. Evaluate your competitors while you’re at it. How fast are they? Do they also struggle, or are some of them winning and dominating the rest of the field?
Fast time-to-market is a deep topic warranting a separate discussion (coming soon). It involves careful pipeline planning so that only the most promising products make the list (most strategic, most penetrating, most lucrative). It requires constant pipeline vigilance and honest resource commitment so that Product Development projects can count on the resources they plan for. Ideally, valuable and scarce resources are assigned to fewer but higher impact Product Development efforts. These resources most often come from functional groups that have focused on honing specific skills needed to bring products to market. Cross-functional teams are collaborative, decisive, accountable, and responsive. Project Managers drive schedules, solve problems, and manage risks with parallel paths. Schedules are aggressive and predictable.
Companies that develop and improve rapid time-to-market as a proprietary corporate advantage will make fast work of market intelligence and capture marketplaces as the first responder. Companies that lack speed will cancel projects as a regular practice, and cancel them late.
B. We Can’t Deliver What the Market Wants
Product Development involves tradeoffs, starting with market intelligence. In sophisticated markets, there are many ways to address customer needs, and raw market data should be considered carefully with technology, engineering, and operations to determine a company’s responses. This structured discussion requires product managers who are well-versed in technology as well as engineers and operations staff who understand customer environments. All balance sometimes competing priorities in a series of development give-and-takes.
The end result of these intelligent collaborations and tradeoffs is a set of winning product attributes that can be developed successfully and with first- (or, at most, second-) pass success. Conversely, in the absence of such discussions, an over-the-wall set of raw market needs may foul the development pipeline, with the highest risk feature executions slowing projects or, for 18% of new product projects across industries, stopping them completely.2
Companies that manage development risk with collaborative product definition will carry concepts successfully to market. Companies that throw requirements over-the-wall will cancel projects as a regular practice, and cancel them late.
C. We Came Up With Something Better
Sometimes we do conceptualize something better than what is under development. But if this happens constantly at your company, you likely have a decision-making dynamic that borders on indecisive and non-committal. Absolute perfection does not exist in Product Development. There is always something that could be better polished, easier to operate, or less effort to maintain.
If upstream marketing succeeds in defining customer needs, the cross-functional team collaborates on a truly enlightened and realistic feature set, and the same collaboration and skilled development execution is quickly and completely delivering that feature set, then the product is right. Short of a true market or competitive disruption, if the numbers still look good, go to market. The time to think about what else the market may need is when strategizing the product pipeline and directing upstream market research, but certainly no later than early phases of Concept and Planning. (Well- functioning Product Development pipelines cancel up to 55% of their projects prior to Plan of Record Adoption.3) Product Development is about delivering.
Companies that act decisively (and decisively right) about Product Development efforts will deliver projects successfully to market and win. Companies that constantly second-guess will cancel or unnecessarily delay good projects that should have gone forward.
Back to Impacts
The math is simple. The primary and most direct impacts of canceling a Product Development project are the expenses that do not convert into revenue and earnings. While these costs do include engineering materials, fixtures, and other expenses, more typically the significant numbers are related to highly skilled people and the time they have invested. The opportunity cost of tying up high-dollar (and typically scarce) experts who could have been developing the company’s next revenue winner is extremely high, particularly if a company waits until late in the development cycle to kill a project.
What to Do?
The themes are clear. If a project is ripe for killing, do it early rather than kicking the can down the road and accumulating expenses that will never be recouped. Invest in professional upstream marketing to ensure that you understand market needs clearly. Establish a culture and process of collaboration between key functions to better understand the priorities of the marketplace against practical engineering and operations challenges. Plan projects thoroughly, know what can be accomplished realistically, and have clear expectations for performance. Continue to monitor customer needs while you are developing, and develop quickly. And understand the difference between Getting It Right and Never Getting It Out There.
Addendum: A Practical Checklist
Pipeline Planning – A continuous prioritization of answers to market needs, resulting in a known and approved feeder list to the Product Development calendar. Strategic marketing drives this list, and all Product Development functions contribute to add considerations such as enabling technologies, cost capability, channel support, and most importantly, reality of delivery. The context of this evolving plan not only feeds Product Development with the right series of project charters, but also protects against indecision when new ideas might interrupt the otherwise smooth stream of products going to market. The plan provides an objective litmus test to consider sunk costs vs. new opportunities, making the right decisions more apparent.
Pipeline Resource Management – Capacity planning of critical Product Development resources, resulting in an (often brutal) understanding of the organization’s project pipeline capacity. Without this capability in place, symptoms of poor planning include constant citations of resources not being available, project plans rarely being achieved except for the most visible projects, and low morale with resources pulled in numerous unplanned directions. Instead, applying Pipeline Resource Management, disciplined planning calculates specific available headcount by month (capacity), with each project in the pipeline subtracting from that headcount (demand). The result of effective Pipeline Resource Management is that approved projects can count on assigned resources, and planned project additions will drive hiring.
Collaborative, Decisive, Accountable, and Responsive Cross-Functional Teams – The core of any discussion on Product Development effectiveness, these teams depend on a corporate culture that first and foremost encourages collaboration. The opposite of collaboration is a culture of Functional-Agendas-First, where team participants come to the table with heels dug in, and a series of over-the-wall passes ensues. The elusive collaborative culture, when expertly cultivated, enables teams to optimize tradeoffs, plan aggressively and realistically, and collectively own the answers. With collaboration securely in the culture, decisiveness, accountability, and responsiveness will naturally fall in place.
Truly Effective Leaders of Product Development Projects – The leader of any Product Development Project drives planning and execution while facilitating the critical collaboration that is required to succeed. The range of available capabilities is broad here, from mere “schedule jockeys” who seem to document their teams’ paths but drive little problem-solving, to true leaders who facilitate their teams to robust, aggressive, and predictable success. The former has little ability to see around corners and attack problems to keep projects on track, while the latter appears to have a Midas Touch. Learning how to nurture leadership capabilities isn’t quick and easy, but it’s certainly well worth the extra effort.
If your company’s products often fail to reach market, fill in these critical gaps in sequence to avert the pitfalls cited here. You’ll be well on your way to greater Product Development success. Let us know how things turn out!
About the Author
Accel Management Group co-founder Kelvin K. Phoon has more than 25 years of experience creating client improvements in technology-based and time-critical companies. Through consulting and interim management roles, his accomplishments include dramatic performance impacts in product development and operations resulting in critically recovered projects, highly efficient product pipelines, and fully ingrained best-in-class practices. Mr. Phoon earned Engineering and MBA degrees from the Massachusetts Institute of Technology and Dartmouth College.
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