Bringing complex products to market
Posted by Grant Brewer on 01 Jul 2006
Bringing complex products to market is never easy, but there are some ideas that can increase your probability of success. Complex products don't always need to be high technology products, but can also include home appliances, software, or even professional or financial services. The history of business is littered with examples of companies that had a good idea, found some initial market traction but just couldn't break through into mainstream success.
Bringing complex products to market is never easy, but there are some ideas that can increase your probability of success. Complex products don't always need to be high technology products, but can also include home appliances, software, or even professional or financial services. The history of business is littered with examples of companies that had a good idea, found some initial market traction but just couldn't break through into mainstream success.
After all the time and money invested in developing an extraordinary product or service, the last thing you want to do is to take it market incorrectly and lose the benefit of your investment in innovation. This can easily happen by chasing the market without understanding its dynamics.
The first step is always innovation. You have to have something that is new and remarkable. If you want to learn more about creating remarkable products or services, you should give Seth Godin's Purple Cow a read. Previous Strategym columns have also outlines ideas on accelerating or managing innovation. The second step is making sure you understand your business purpose. A clear purpose that is easy to understand and that pervades the organisation brings focus to the people and their day-to-day actions. Your purpose doesn't always need to be a wonderfully visionary thing, but it does need to be clear, be believable and be understood by your people.
As a part of your purpose, you should understand how exactly your product or service is different from the competitive offerings. And avoid the entrepreneur's trap of thinking that your product is unique and without competitors. Usually this just isn't true. And it doesn't really matter as much as you think. Contrary to popular opinion, it is easier to bring a new product to market when there are existing competitors. It is extremely difficult to launch a new product category - not only must you sell your product, but you must also establish an understanding of the category or establish a common identity with a need. That is a far harder challenge. Competitors allow you to contrast your product against their offerings: whilst they offer X, you can offer Y. Or you can be faster, simpler or better designed. You'll be surprised by just how useful it is to have competitors. Its even better when they aren't doing a particularly good job of product or service quality.
You also need to understand your market: what is your market? What need are you fulfilling? Markets for products are defined as a group of people who have a similar need that your product will resolve, and that reference each other when buying your product. This "referencing" is the key. Word of mouth is a critical component of modern marketing and product development. The referencing allows your success to become self sustaining. If you're interested in learning about how ideas spread - give Malcolm Gladwell's The Tipping Point a read.
It is important to recognise the that the behaviour of the buyers of your product change as your product becomes more successful and penetrates the market more deeply. At the beginning, the innovators and early adopters are willing to become buyers. They do so for different reasons: the innovators are buyers because they simply like new things. This is why it is important to find those evangelists for your product sector and win them over -- give them the product, let them try out. Witness the power of word of mouth and evangelism in the open source world of Linux to understand the power of innovators. The early adopters become buyers because they have a strategic need to fulfil and your product is worth a gamble in achieving their strategy. This is why it is so important to collaborate closely with the early adopters - you're mutually important to each other. They want personalised service; they want involvement in the product design and evolution; they want to feel like the solution is being customised for them - believe them when they say that their competitive advantage depends on your product. You have to give them these things. Collaborate with early adopters because they will be the foundation of your revenue base.
Many companies get carried away with the early revenue growth and start extrapolating that growth out into the future. If only it were that simple. The challenge, often referred to crossing the chasm after Geoffrey Moore wrote a book called Crossing the Chasm, is that the market dynamics change. Selling to the early majority segment that follows the early adopters requires a very different focus compared to the the the early market. The mainstream market expects references from other organisations similar to their own in order to support their buying decisions. But they usually don't see early adopter companies as suitable reference. This raises a dilemma: how do you win new customers in the mainstream market, when your early customers don't reference your first customers?
The key is to focus on winning the first sale - don't be tempted to go into a large scale marketing exercise and believe that simply getting the message out will result in large numbers of customers. You need to establish a beachhead first. It's one customer at a time. Each of those customers, acts as a reference for the next. That enables you to expand (slowly).
Once you start to gain a foothold in the mainstream marketplace, you also need to change your perspective on service levels. Where the early adopters demanded (and received) customised service, the mainstream needs service quality that is consistent over time and with their references. If this change in the way you treat your customers is missed, you risk growing service costs and the inability to maintain custom service levels.
Launching new product or service innovations is never easy. Getting the basics right gains you entry the playing field. Winning requires that you go beyond the basics and think more carefully about how your innovation is accepted in the market. Any organisation launching new innovations should give Geoffrey Moore's Crossing the Chasm a read. Ten years on and it is still the best guidance out there.
Bringing complex products to market was published in Intelligence Magazine as Strategym #39 in July 2006.
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