Only 10 percent of new products launched in the United States are successful, according to Ernst & Young. This 90 percent failure rate for new products is tragic and avoidable. Leading innovators could consistently and successfully launch new products, simply through better planning and execution. The failure rate of new products doesn’t have to be so high, and the number of people and companies launching successful new products can be greater. Here are five Best Practices for innovation and launch of new products:
1. Set priorities and expectations: Innovation is more successful when it is established as a corporate priority. Senior management must set and broadly communicate clear and consistent innovation goals within the corporate strategy. Goals must be measurable and have clear accountability: Sales, profit and payback goals for the entire innovation effort (all products and services), typically for a one-year or five-year timeframe. Both marketing and research and development have interdependent accountability to deliver these goals. This step alone can address the paralyzing chasm between most marketing and R&D teams.
2. Capitalize on true core competencies: Innovation winners exploit what they do best. Assess and leverage core competencies and avoid areas where you cannot or should not compete. When winners choose the path of diversification, they wisely develop or acquire the capabilities needed to succeed in a new area, rather than suffer from optimism or arrogance.
3. Build a rich pipeline: Leaders generate, evaluate and filter through far more potential new ideas than their “just do it” counterparts. Determine whether projects can demonstrate financial and consumer viability before committing resources. At the idea stage, ask: Is the product financially viable? Review year-one and ongoing (typically year-three) profit and loss statements on each proposed project. Crude estimates can suffice. Is there a true unmet market need for the product? Who is the target? What’s the relevant consumer benefit? (One that motivates consumption, not just “nice to have”) How is the product superior to the competition? Flawed ideas don’t get any better in development and launch, just more costly.
4. Properly plan and position the product: Successful innovators develop a realistic financial plan and compelling positioning for the product up front. Plan sufficient sales and marketing support in the early project financials, rather than treat it as a downstream task. Set project performance hurdles up front (e.g., monthly retail sales or reorder rates). This helps you be objective when evaluating whether in-market performance has earned additional resources or requires adjustment. Top performers develop and refine a distinct and consumer-based positioning for the product early — at concept, not launch. Product performance hinges on whether the consumer knows exactly what the product is, what benefit it provides and why it’s superior to current options.
5. Engineer excellent execution: World-class innovators have a well-organized, structured innovation process that drives collaboration and continuous improvement. Use cross-functional teams religiously. Appoint empowered project leaders to lead these teams and support them with a management sponsor, who will help them — when needed — address common “project killers,” like conflicting priorities and bottlenecks. Hold these teams accountable for shepherding projects from concept through execution. Innovation leaders have more new product success rates, fewer product quality issues, and launch blunders because they use effective cross-functional teams.
Use these five Best Practices to improve new product results and increase the speed and productivity of efforts. New product success not only drives business results, it elevates creativity, teamwork and a thirst for continued improvement.