Monetizing Innovation

Why Products Fail

About 75% of new products don’t meet sales expectations or fail entirely. Products fail mainly because organizations design them before they determine their customers’ desire for them and their “willingness-to-pay” (WTP). Test your customers’ WTP before you begin product design. Know precisely what they want, what they will pay for it and whether the product would make a profit for you. Design to customer specifications, and include only the elements they say they’ll buy.

Reasons to Fail

Products that firms design before they understand their customers’ WTP fail for four reasons:

1. “Feature shock” – When product designers advocate for functionality that isn’t in your original plan or they want to build more tools because “customers don’t know what they want,” feature shock often results. Too many features and a high price tag for unnecessary bells and whistles leads to stagnant sales. To save the product, manufacturers drop the price. Typically, once they do that, the product loses viability.
2. “Minivations” – Organizations undermine their potential when they...