Entrepreneurs, small-to-medium sized companies with novel, innovative products and start-ups are especially prone to falling short of their business aspirations and original expectations. Perhaps the most fundamental reasons for this result include:
• The product, technology or service are more ideas than market-ready products.
• Limited resources are in place to fully characterize and assess the market situation. A business plan has not been developed.
• The business case has not been sufficiently analyzed to provide a realistic and viable financial picture.
The reality is that enthusiasm, without a well thought out assessment of the market and what is required to take a unique and often exciting idea forward into the market, has a low probability of success.
Corporations and larger companies, in general, have the individual resources that can provide the market information and organizational support needed to reduce these risks and increase the chances for commercial success. Processes and protocols are typically in place that screen new product/technology options. These processes often precede the initiation of any serious work on a new product development project. In most cases, the value of continued resource support (for a given project) is reviewed and vetted against competing projects.
The Stage Gate process (Figure 1) is representative of a structured approach to managing new product/technology ideas. The greatest value for taking this type of approach is that it maintains alignment between the company’s business objectives, strategies and goals with the resources that are made available to support the research and development effort. A process such as this also adds depth to pre-commercialization preparation. Laboratory testing, compliance considerations, field test validations and applicable specification work are among these preparatory activities.
Smaller organizations and entrepreneurial companies typically do not have processes such as Stage Gate integrated into their company. There are some advantages to this situation. Perhaps the most important of these is the freedom and latitude it can provide for creative thinking in the organization. Ideas are more likely allowed more time to evolve into valid product or technology opportunities for the company.
Somewhere early in the process of taking an idea and moving it forward to potentially becoming a commercial product there are fundamental questions that should be asked. These basic questions, as highlighted in Figure 2, are intended to challenge those involved in advancing new products/technologies ideas forward to better qualify their actual viability and potential value to
As highlighted in Figure 2, there are four key questions you need to challenge yourself with before advancing new ideas forward. First, is it real? Is the market (or markets) real that is being considered and do the actual opportunities fit with the product idea being proposed? Separately, is the product itself real? It becomes very important to make sure enthusiasm and excitement don’t compromise the need for a practical view of what is actually being considered as a viable product for the marketplace.
Second, can we win? Can the product be competitive? Assessment of the competitive situation in the market (for the product or technology) should be realistic. Never assume the expected features and benefits of a given product, by themselves, will win when brought to market. On a broader scale, can our company be competitive? This involves many considerations that require taking a realistic look at the ability of the company to compete within the targeted market space.
Third, is it worth it? Nothing is more fundamental than determining whether “it” will be profitable. Many things go into determining the profitability and return that the company can expect from pursing and launching a new product into the market. Even if the early assessment of profitability is promising, a review and a periodic reassessment of this view are necessary. Often this picture changes on the path toward commercialization. Does it satisfy other company needs? Having a clear set of company business goals and objectives, both short and longer-term, provides a guidepost to determining the value of advancing a product idea forward through the go-to-market process.
Fourth, is it compliant? Current and pending regulatory requirements clearly need to be known as they apply or may apply to the product. Identification of regulatory hurdles or potential barriers-to-market entry is critical early-on. Understanding and identifying pending or potential future regulatory actions that can impact the product being considered for commercial sales is necessary to avoid potential risks and unexpected financial burden to the company down-the-road.
In Part II of this article, we will discuss many of the underlying issues within each of the four decision making consideration areas as highlighted in Figure 3.