One of the most exciting things entrepreneurs and forward-thinking enterprises do is to launch something new. A new product or service introduction can dramatically change an organization. It’s not just the revenue reward; it’s an opportunity to grow your organization in many dimensions.
From solopreneurs to the largest enterprises, organizations that find new ways to grow the top line, distance themselves from the competition, and create shareholder value are category leaders. How they do this is the often-overused buzzword “innovation.” Unfortunately, it is spoken about as if it could be bottled and poured like a hot sauce when you want to heat revenues. Instead, try a holistic approach to an NPSI (New Product/Service Introduction), where you can test your organization. It’s a compelling way to learn about your business ecosystem. Product launches test an organization’s People, Processes, and Infrastructure on many levels.
There are many industry frameworks for NPSI, each with dozens of steps that look daunting and are perceived to be a massive investment. Here are four large-grained steps for an NPSI, part of a methodology I call Constructive Disruption. Disruption brings about the often-needed transformation in organizations that ask why the status quo isn’t achieving their goals. Constructive is the well-laid-out journey to growth or transformation. It will help you learn more about your company culture and the appetite/adaptability to shift or change. After an NPSI, you should know the following:
- How do we satisfy customer needs?
- What organizational strengths do we have?
- Why are we relevant to our market?
The timeline for these steps should be “as long as it takes, but no longer.”
What Problem are we solving? (Uncover)
Brainstorming new product or service ideas may come from customer feedback, competitor research, employees, or an idle doodle. You build your company upon multiple disciplines. It’s time to take advantage of that, using your core skills to accelerate launch time safely. NPSI is all about getting from Zero to One. Workshops are a suitable format for brainstorming.
1. Are you good at it?
Whether creating a physical item or a service, you must take a hard look at how you bring the proposed product to market. Being good at something is different from having never done it before. Everyone has heard the story of how Amazon began selling books. They earned what I call Market Permission to sell online. As they started to diversify their product mix, they were able to demonstrate the art of the possible to consumers. It was accepted if Amazon told consumers they were going into a market. Selling online has become “normal” to the point where online sales are no longer considered “an experiment” or a novelty.
What are your core competencies? What has been successful about past product launches? How will you build/grow/obtain the internal resources if you don’t?
2. Does it have internal support?
Do all the internal stakeholders (e.g., executives, finance, HR, IT) support the idea? You’ll need to examine people’s personal preferences, the company’s culture (Is “Not invented here” a joint statement?), processes, and a desire for change? If not, you need to manufacture consent. People generally agree that growth is healthy. However, not everyone feels the same about how you get there. Therefore, it's critical to identify champions and develop alignment.
3. What problem does it solve?
Clearly understand the problem you are helping other businesses or consumers solve. For example, luxury products provide the exclusivity that some people desire. Try to solve one problem at a time. Trying to deliver a complex service that is fast, convenient, and cheap for the first time takes time. It may cause so many setbacks or exceptions that it derails the process entirely. Go for an MVP (Minimum Viable Product).
4. Avoid the temptation to make early decisions
At this point, you should still be in the collection process. Wait until you have a clear problem statement and the alignment to move ahead. It’s essential to have all the facts/beliefs/preferences/needs/wants or as many as you can around a problem statement before even building a prototype. This is different from iteration, which happens after the Examine phase.
At this point, your team must have a very well-defined problem. Therefore, your answer should be “Yes” to all three of these statements.
- Can you put a boundary on the problem?
- Is the organization committed?
- Do we know what we are going to deliver?
If not, address the open item(s).
Complete the Question (Examine)
This is the stage where you round out the “how” and “what” we deliver. It’s essential to break the problem into its tiniest components (figuratively and literally). Then, ensure you fully understand how they work and the relationship (processes) between them. Your supply chain is an excellent example of understanding dependencies and relationships.
1. Start with a Product Map
Identify the discrete pieces that will make your product or service come to life. For example, if you are selling automotive repair, you will need adequate workspace, trained technicians (How different is each make and model of car?), an intake process, tools, parts, and a supply chain. What’s the relationship (process map) between all of these? Understanding these relationships takes time and internal talent. With everyone moving in the same direction; you’ll get valuable input from a collaborative thought process.
Be prepared to answer:
- Where does it fit in your current business model?
- What is the product vocabulary? – This is an extension of marketing
- What are the processes/technologies/talent we need?
2. Identify your addressable market
The size of your market should be something you can estimate within an order of magnitude. I call this the addressable market. This is the number of consumers or companies you can practically and reasonably target. For example, eReaders such as the Kindle should be something that “everyone” will want to purchase. If you start the filtering to make it addressable (this is only an example and not meant to be 100% accurate):
- The total population of Earth is about 7 Billion.
- The worldwide literacy rate is 84.1%. It only includes adults over 15 years old
- Perhaps you want to start in the US. The literacy rate is 86% (on 371 million people)
- 76.5% of the US population is over 18
- We now have a market size of about 244,000,000
- The use and cost of a Kindle make it a luxury. For example, suppose only 30% (and this is where some research should have been done) can afford the Kindle.
- Seventy-three million people are your approximate addressable market. According to TabTimes, the total number of tablets in the US at the end of 2013 was about 70,000,000
Update - According to GoodReader, as of 2018,
Amazon has sold between 20 and 90 million kindles. The point is in the exercise's validity in helping you think through your market; not the precision level.
3. Talk to your customers
Does anyone want to buy or use it? How will they use it? Market tests and one-on-one conversations are invaluable. Socialize the product idea with a select market, even if you are still in the concept stage. Allow for cultural differences if you are selling outside your native country. There is an apocryphal story of a successful golf ball manufacturer that went to Japan. The manufacturer sold golf balls in three packages, an unlucky number in the culture. Changing to a box of four was a victory for them.
Segment and identify different types/sizes of buyers. Where will you be able to set the price/margin? Products/Services that are market-making (e.g., iPod) may need to be more easily understood and may take more time.
Get as much feedback as you can. Ideally, it should be a minimum of three data points.
4. How does this product or service extend your brand?
Your products or services should pass the sniff test to your customers. Would you buy smartphones from your local coffee shop? If you make or sell lifestyle products (e.g., sporting goods retailer REI) and extend your services to include sport-themed vacations, there is a high synergy. Compare your brand messaging to the theme the product provides. For example, Victronix, makers of the icon Swiss Army Knife, added personal products such as watches and kitchen knives. These all reinforce the lifestyle and the caché of the product.
After this stage, you should have the foundational information to design your solution or product. It would be best if you were well bounded enough to begin planning an MVP (Minimum Viable Product or Service) and have alignment with potential markets.
Develop the Solution (Prepare)
With the foundation you’ve just created, it’s time to begin the solutioning process. As you develop the product or service, you’ll want to engage different experts within your team. In addition, smaller or highly specialized organizations may wish to hire outside experts.
1. Start with Design
This stage is where you want your technical experts to begin with diagrams. Your process flows, customer behavior analysis, and solution strategy best suit a diagramming tool. It’s not expensive to change or present to different audiences.
2. Will your product be understood?
You’ve begun to assemble the components of the solution. The processes, physical models, and talent are here to bring it to market. After you’ve done an initial test with a focused market, now is the time to understand how you will deliver and message it in today’s market. Positioning, packaging, and pitch are as crucial to success as quality. Timing is also essential. Is your product relevant in today’s market? How would Twitter or LinkedIn have been received at the dawn of the modern Internet age?
Your product must be timed for your ability to deliver it and what the market is ready to accept. Ten years ago, I was building IT services for a California-based consulting company. I developed a cloud-based model for doing Business Intelligence as a Service (BIaaS). I shared the fully developed design with a well-regarded IT analyst firm. The feedback was constructive, and I was told businesses were not ready; therefore, I would not receive market permission. However, nine months later, everyone in the industry talked about the “cloud,” and the service became an overnight must-have solution.
3. Work backward from your delivery date
Before you are ready to market, know all of the details of your supply chain, whether physical or virtual (e.g., you depend on having enough computing power to deliver). If you promise a start/delivery date of June, then some of the milestones you need to start posting in January or earlier.
- Who needs to be trained, and how many people do we need? Do we have them on staff today? How long does it take to hire them?
- Are there regulatory or compliance requirements?
- Do you have the tools/raw materials for your manufacturing process? Can you/should out use a contract manufacturer?
- Will your suppliers commit to an adequate amount of stock and reserve?
- Do you have funds to support the time until launch?
4. Manage quality
Nothing will kill a product faster than poor quality, especially on launch. You may not need the best of the best in materials or talent, but they need to be up to the task. Be relentless in your focus on attention to detail and put them all in perspective.
Iterate between Examine and Prepare as your assumptions are challenged, or lessons are learned. This is also an excellent exercise to enhance or extend existing products and services.
Present the solution (Satisfy)
At this point, you should have a solution that is ready to be marketed. Then, you may choose to begin the full delivery, prototype, or set a future date.
1. Understand your Quality of Revenue
Except for exceptional circumstances, your product or services must be profitable. How profitable depends on multiple factors and is beyond the scope of this article. You should factor in your all-in costs to deliver to the market and make the determination. QoR is an ongoing exercise to go through with new and existing clients. It’s good to begin early.
Some clients will be easier to sell and maintain than others. As a simple exercise, determine where they fall in this chart. Your ideal client is relatively easy to support and maintain, yet they generate high revenues. Clients in the lower left might be well suited to a self-service model. Clients in the upper left must be reviewed carefully. With a High effort to maintain, margins may be low or worse. What decision will you make about them?
2. Train your sales team
If you have a separate sales team, you’ll need to get them up to speed on the value proposition. A percentage of the sale price of the product or service usually compensates them. Don’t expect them to become technical experts on the nuances of the solution. They must be well-versed in the domain and have a solid foundation in the value proposition.
Questions you should be prepared to answer:
- What is it?
- Why is it relevant to the market?
- What are three leading questions to ask potential buyers?
3. Being a fast follower is ok too
Sometimes you need to be first to market with a product or service. That’s ok. First movers may create a barrier to entry but simultaneously create market permission (or not, observe). If your product is particularly new or different in geography, they may do a lot of the hard work for you.
Use your organization’s strengths in Examine to see where you might be able to learn from them. Think you can make a better hamburger than Mcdonald's? I bet you can, but that’s not their core business. They have a five-phase People, Products, Place, Price, and Promotion model. They are about feeding and satisfying people at a point in time. If your goal is to make great hamburgers, there are still lessons to be learned.
4. Develop your sales/marketing materials
Few products are self-explanatory. Be prepared to develop a simple message about why yours is the correct buy for your client. Here are some tips from
Rule of Three: The Business of Keeping it Simple
