The number-one reason new products fail is poor market research, said Kathy Morrissey, ’98, cofounder of Strategy 2 Market Inc. “Companies misread customer needs. They don’t do enough field testing. They overestimate the market need and acceptance,” she told the Entrepreneurial Roundtable at an event hosted by the alumni group and held at Illinois Institute of Technology in Wheaton on September 19. “Sometimes they just get cocky. They think they know customers and they don’t need to do research.”
Researchers Robert Cooper and Elko Kleinschmidt found that just 84 percent of employees’ time is devoted to new products goes to development, testing and validation, with just 16 percent directed to the “critical upfront stages” of discovery, scoping and business case analysis, Morrissey said. The success rate for projects that are sharply defined early before development is more than three times higher than poorly defined products, she said. “That means they defined the target market; the users’ needs, wants, and preferences; and the product concept,” Morrissey said. “They had better market share and better profitability.”
The top critical success factor of innovation is having a unique, superior product, with 82 percent of copycats failing, said Mary Drotar, ’94, cofounder of Strategy 2 Market. Innovation goes beyond the product, such as with Apple’s I-Pod, Drotar said. “Not only is it a beautiful piece of hardware that’s easy to use, nice to look at and clearly differentiated in the marketplace, but they used different levels of innovation within their organization,” she said. I-Pod’s business model was “truly innovative,” with publishers, musicians, and Apple making money from downloads, Drotar said. “What’s very important is that it’s legal,” she added.
— Phil Rockrohr