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Hope Is Not a Strategy – Odds of Success (Part 2)

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Recently I corresponded with a reader who was concerned about the implied negativity around the “odds” of success described in these posts.

I have done quite a bit of research on the odds around product development and am comfortable with my numbers. It is not much different than saying that 1 out of 5 small business startups succeed. I have actually been pushed toward these terrible odds by the senior people I have worked with in product development.

My view is to embrace the numbers. Success comes from dealing well with failure. Run through the things that don’t work. Kill dumb ideas. If you have only one or two new products, it is really hard to prioritize and pick between the winners and failures. View it from a portfolio perspective — an investor who buys one stock is gambling.

Or you could choose to look at it another way: how does one actually calculate the success ratio? What is the numerator, and what is the denominator? A researcher working at the bench may see lots of failures. The chairman, who validates the decision to launch a fully refined product, sees completely different ratios.

It is a lot like sales. When I was young and naive, if someone called and asked about my product, I figured that was about as good as a sale. Now when I have a new lead, it does not even register until there has been a great deal of qualification. As we manage a sales effort, we recognize that it takes multiple leads to result in a sale, and we organize accordingly. We need to recognize that similar metrics apply to new product development.

We Have Met The Enemy and He is Us (Walt Kelly)

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Many organizations do not recognize that they have an innovation problem.

Last year I attended an industry-sponsored event that included a dinner with “thought leaders” on the subject of innovation.

The event started predictably enough with statements such as, “our only problem is finding enough good people”, or “we have so many ideas, the problem is sorting through them.”

After several bottles of wine, the comments became more candid:

  • “Our management only allows us to innovate by modifying packaging, color or size of our existing product line.”
  • “How do we even start?”
  • “Where do you find decent ideas?”
  • “There are no good new product people anymore.”

One confided – “We lost a major opportunity simply because we could not figure out how to get a sample roll through the SAP system.”

There is a revolution taking place in innovation and product development, but many companies are wedded to the old way of doing things. Like the dinosaur, they will face extinction unless they learn how to innovate quicker at lower costs and shorter time to market.