It’s The People, Stupid

I’ve been intrigued by the lengthening string/threaded discussion on one of the popular professional social network sites about why such a large percentage of new products fail. The question initiating the discussion, which at the time of writing this had already elicited several hundred replies, states that 80% of new products ‘fail’ and asks the seemingly unanswerable question ‘why?’ No one seems to agree on where the 80% statistic comes from, though a segment of responders to the site converge around the Pareto principle (i.e., the 80/20 ‘law’). Personally, I’m not surprised by the figure, and in fact have seen it quoted as being even higher – 90% is a common stat I recall from the past, mainly linked to the consumer packaged goods sectors.

Several of the replies to the failure question revolved around the expected culprits:

failure to fill a true consumer need;
poor execution on a good idea;
poor or insufficient market research and planning;
failure to communicate properly across the ‘silos’ within companies;
corporate/internal politics;
or generally a non-innovative product.

All of the above, plus the dozens of other replies, certainly influence the success or failure rate for new product introductions, but the one that resonated most to me in the threaded discussion was ‘the people.’
I had never specifically thought about it this way, but now that I do, it makes sense. ‘People’ are the common thread to all of the reasons listed above, and, in fact, throughout the discussion. ‘People’ make the decisions – correctly or incorrectly – on new product introductions and thus determine their fate. And, ‘people’ are also the starting points for generating the ideas that eventually, in theory, become the next successful new products.

The ‘people-idea’ relationship was reinforced for me on a recent client visit and the conversation we had about their approach to ideation; specifically, the very early stages (or ‘fuzzy front end’) of initially developing the new product ideas. I found it interesting when the clients described their approach – generating lots of ideas from a group of their internal stakeholders or, more specifically, their ‘people.’ The ‘people’ were more than capable of suggesting ideas for their new product initiative, and were also successful at culling their idea list down to the winning propositions to continue in development. They were surprised, however, when none of the so-called winning ideas fared well with target consumers, for it seemed that the ‘people’ generating the ideas were not the ‘people’ who would eventually purchase and use/consume such products. Hence, a failure linked to, you guessed it, people. This surprised me, especially in today’s era of consumer co-creation and related crowd-sourcing techniques, yet demonstrated how we often neglect to include the right mix of people at key points in the development continuum.

I’ve seen a related dilemma, also at the early ideation stage and also concerning the people involved – or not – in such initiatives. Unlike the above example, I’ve witnessed lots of occasions when ideas generated by internal stakeholders also get the ‘thumb’s up’ when tested with target consumers. So, winning ideas, produced and confirmed with future intended buyers – a sign indicative of success! But not so fast. More often than anybody wants, these ‘people-generated, consumer-vetted’ ideas fall victim to failures at later stages of development for various reasons:

someone finds out they can’t be produced;
someone learns that the desired shelf-life can’t be achieved;
the selected packaging format that tested well in the concept test is not feasible;
etc.

This causes me to question who was or was not involved in the generation/vetting process; in other words, the ‘people.’ Specifically, did R&D have a seat at the table, either in a generative or evaluative role as concepts were assessed? What about representatives from manufacturing? Or packaging engineers? Taking it a step further, how about folks from Quality or Food Safety? Any or all of these stakeholders can, and should, add to the idea generation process. More important than that, though, they need to be more heavily involved in the vetting process before the good ideas go down the track of likely failure – assessing each proposed idea with a commercialization lens and weeding out the unfeasible ideas – for whatever reason – before time and resources are invested in their continued development. It’s a simple concept, but we often take simplicity for granted and ignore putting it into practice as often as we should.

Getting back to the statistic, why do 80% of new products fail? Regardless of the real percentage, I’m glad some of the responders to the threaded discussion cited ‘people.’ The next initiative you launch, especially at the early ideation stages, don’t under-estimate the right mix of people that are needed and should be included to generate, design and eventually commercialize your ideas. It’s a simple statement, but a powerful one, and should allow you to improve the failure rate of new product introductions.

- Kevin Waters