The New Product Economy _bethtemple4u

the new product economy

why the practice of building new products is critical to your business

SlideShare!

FEATURED!

It is commonly estimated that between 33-95% of new products fail.

Sources: 1) http://faculty.msb.edu/homak/HomaHelpSite/WebHelp/New_Product_Failure_Rates.htm 2) Clay Christensen's Milkshake Marketing, Harvard Business School, Working Knowledge, 2/14/2011

Which is a frightening statistic because new products are continually in demand.

Evidenced by the fact that product lifecycles are shortening.

Why product lifecycles are shortening

rapid advancement of

technology

an overabundance

of products

creates

consumer attention spans

shortening

requiring

!e short life of the netbook

1977 2001 2007

5 years

iPod/ iTunes

PC desktop

iPhone

2010 iPad

1985 Laptop

2012: end of

Netbook2

2013 Surface

Sources: 1, eWeek, July 2010; 2, The Guardian, Dec 2012

“Netbook sales are showing no signs of waning, ABI Research announced July 22 [2010] … Nearly 60 million netbooks are expected to ship worldwide by the end of 2010, and that figure is likely to double by 2013.”1

2007: Netbook

introduced2

A company can’t rely on outside forecasts – change is

occurring too rapidly and it is directly affecting product viability.

Change happens within industries when new products with

new business models enter the market.

Industry leader

New industry entrant

1985: first Blockbuster store opens 1986: goes public 2010: filed for bankruptcy Out of business in 25 years

Blockbuster photo credit: Los Angeles Times, latimes.com

Industry leader

1971: opens first store 1995: goes public 2011: filed for bankruptcy Out of business in 40 years

Industry leader

Even more concerning is competition comes from non-peer companies building new products that aren’t

obviously competitive.

Industry leader

Non-industry entrant

1889: founded by George Eastman 1976: 90% marketshare 2012: filed for bankruptcy From market leader to bankruptcy in 36 years

Industry leader

2007: first Flip Ultra 2009: acquired by Cisco 2011: division shut down Out of business in 4 years

Industry leader

And it’s not only traditional companies that are at risk from

new products entering the market.

“(Steve) Blank believes that the leading tech companies are in a particularly vulnerable spot. Tech behemoths —

Oracle, SAP, Cisco, even Google — are facing serious threats from smaller

players, who can push new products into the market at a faster rate.”

Steve Blank on ‘continuous innovation’ February 16, 2013

How many businesses will be at risk with the adoption of this

new product?

3D printing: The Printrbot Jr. in the process of making a 3-D model.

So how can a company survive in this new product economy?

ü  Be paranoid – expect constant change

ü  Have a vision – allow for wiggle room

ü  Establish a distinct value proposition – don’t veer from it

ü  Create an amazing experience – constantly make it better

ü  Make size an advantage

ü  Hire Swiss Army knives

Be paranoid - expect constant change

n  Specifically, don’t assume long-term dominance or marketshare.

n  Intel's Andy Grove had it right: “only the paranoid survive”. This has to be top-down paranoia that requires constant evaluation of customer needs, market opportunities, and emerging trends.

–  Make your Chief Strategic Officer is a Chief Paranoid Officer (seriously!)

n  Foster open communication and on-going ideation. –  Take in data from all levels, create a system to share the findings.

n  Don’t assume your competition is in your category or industry.

Case study: Facebook

n  Facebook was built on the web (founded in 2004).

n  With a clear dominance on the web, the company continued to grow the web platform.

n  However, by early 2012, as it prepared for an IPO, there was glaring evidence that Facebook was critically behind in mobile (despite the fact that the founder was using a smartphone).

n  Facebook had to ramp up fast and just prior to the IPO made a $1 billion acquisition of the mobile app Instagram to prove its mobile intentions.

Have a vision – allow for wiggle room

n  Establish a broad mission for the company but don't box the business in.

n  Constantly reexamine your overall vision in the context of the wider market and make strategic adjustments as necessary.

–  Do this, at least, annually – quarterly would be better.

n  Think: flexibility and agility.

Case study: IBM

n  IBM has been brilliant at being agile with their vision.

n  From the beginning their vision was to package technology for use by businesses.

n  They started out making and selling punch-card tabulators and ended up as technology consultants.

–  In between they brought to market some of the most well-known business technologies: the mainframe, the PC, the ThinkPad, to name a few.

n  As business needs changed over the past 100 years, so did IBM.

Packaging technology for businesses

1992 2002 ThinkPad

laptop

Punch-card

tabulators

Acquired PwC

consulting

Electronic data

processing machine/ FORTRAN

This is only a partial list of the many transitions and products (including patents) developed by IBM.

1961 Selectric typewriter

IBM System/360 computer

1974 UPC and scanner

1981 IBM PC

Coins the term

“e-business”

Sells PC business to

Lenovo

1952 Mainframe

Establish a distinct value proposition – don’t veer from it n  Once you have a clear (and flexible) vision, let the world know

why you exist and are different than all the other alternatives.

n  A value proposition equates a company’s core offering to audience needs.

n  It is the standard by which all decisions must be made.

n  Too often companies try to duplicate the efforts of the market leader – these companies can end up late to the market and first to exit, decreasing overall value.

–  Example: HP’s TouchPad was on the market for a total of 48 days.

Case study: Apple

n  Apple has always had a distinct value proposition based on high design.

–  All decisions are based on creating a well-designed product.

n  From the early Mac through to the iPad, they’ve designed great-looking products, both hardware and software, that work well together.

–  More recently that design has included the commerce-based ecosystem based on the centralized iTunes.

n  In the beginning design was seen as a benefit to only a small percentage of the market – but this market grew, exponentially.

Create an amazing experience – constantly make it better n  The value proposition should come shining through in the

experience your customers have with your products and your company.

n  Every touch point should reinforce both your vision and your promise.

n  When adding to an established experience, any incremental decisions must result in a much better experience.

n  To ensure this, comparison test the present experience against any possible changes with customers before going to market.

Case study: Netflix

n  Netflix introduced itself by delivering a better rental experience.

n  Not only did we not have to drive someplace to pick one up, there were no late fees and we could manage our own video list.

n  Unfortunately they made a major decision (splitting streaming from DVD and making a significant price change) without considering the impact on the existing experience.

–  It’s unlikely they tested the change with customers.

n  Customers noticed a dilution in the experience and left in droves (yes, pricing is part of the experience).

Make size an advantage

n  We often hear that bigger companies can’t move fast enough to counter smaller insurgents, and there is some truth in it.

n  But size has its advantages: established distribution channels, financial resources, brand recognition … customers!

n  Assuming you are being paranoid and you are looking across industries, you should be identifying possible disrupters earlier giving you an earlier head start.

n  Use some of the human and financial resources to test new products throughout the year – be proactive.

“One of my fears is being this big, slow, constipated, bureaucratic company that’s happy with its success … Companies fall apart when their model is so successful that it stifles thinking that challenges it.”

- Nike CEO Mark Parker

Source: Fast Company, March 2013

Case study: Nike

n  Nike became famous for its shoes and then its apparel.

n  In 2012 they added the FuelBand bracelet because their customers were going digital.

–  Could have easily lost their large audience to competitors Jawbone & FitBit.

n  They also disrupted their own main product – shoes!

–  Their FlyKnit material changes the shoes and how they are manufactured.

n  Nike proactively tests new products in multiple ‘innovation’ labs.

n  All of these evolutions and still true to its performance brand.

Hire Swiss Army knives

n  A flexible company needs an adaptable, curious, and self-directed workforce.

n  Along with the specialists, hire generalists who can interpret what is going on from multiple perspectives.

n  Reconstruct yearly reviews to focus on what employees are seeing in their jobs and in the marketplace; talk to them about the products they use.

–  Make these reviews quarterly.

–  Couple this with the reviews of market needs and emerging trends that are hallmarks of a company that is aware that change is constant.

–  Eliminate: “This is the way we’ve always done it.”

Case study: W. L. Gore

n  While not exactly employing ‘Swiss Army knives’ (employees have specialities), W.L. Gore (a product development company) has one of the most innovative organizational (non)structures to foster creativity and teamwork.

–  There are no bosses – instead associates and sponsors.

–  Teams organize around opportunities and leaders emerge; this is dynamic and not structurally permanent.

–  Associates have freedom to commit to projects that match their skills.

–  No pre-determined chains of command or channels of communication.

n  W. L. Gore has both consistently churned out innovative products and received honors for being one of Fortune’s “Best Companies to Work For.”

In the new product economy, its not good enough to survive –

you have to thrive!

Beth Temple bethtemple4u llc http://bethtemple4u.com

Let’s build your next new product together!

beth[at]bethtemple4u.com

The New Product Economy _bethtemple4u

Business

New Economy Summit 2014

New Energy Economy

Understanding Our New Economy

New Economy New Rules | Redefining Staffing

0230201709 India's New Economy

New digital economy

V1 13 March 2018 - INCA...to fly economy – ‘Economy Light’, Economy Classic’ or ‘Economy Delight. The three new ways to fly will allow customers to choose the product that

1 Table 2-1: Old Economy vs. New Economy Old EconomyNew Economy Organize by product units Focus on profitable transactions Look primarily at financial

New Plastics Economy - Food Packaging Forum€¦ · 25/10/2016 · The New Plastics Economy. #NewPlasticsEconomy Food Packaging Forum October 2016 New Plastics Economy initiative

The New Media Economy

New economy, new KPIs - nsuchaud

New Media in the New Economy

New Economy, New Democracy, New Ecology?

New France & Economy

New skills new economy nmi

PRODUCT OVERVIEW - Club Economy

Open Economy New

The Rise of the Smart Product Economy

New York’s Innovation Economy - innovateinnyc.orginnovateinnyc.org/.../06/Report-New-Yorks-Innovation-Economy-06-2… · NEW YORK’S INNOVATION ECONOMY 3 Introduction The Partnership

THE NEW PLASTICS ECONOMY RETHINKING THE ... NEW PLASTICS ECONOMY • • • 1 The New Plastics Economy Rethinking the future of plastics THE NEW PLASTICS ECONOMY RETHINKING THE FUTURE