People talk about the high rate of new product failures (about 85%) as if there is no way to change it, and no way to understand the market. Like innovation is some kind of hit and miss affair, or magic. It's not.
Nielsen, a well known quant-focused research group, has been deconstructing and quantifying innovation successes for a few years now with the Breakthrough Innovation studies. I recently heard Lauren Galletta present at a professional meeting on this topic, and it was terrific stuff.
They have studied tens of thousands of product launches, and have strict criteria for being a winner -- there has to be something new happening (distinctiveness) not just a reformulation. The sales of the new thing need to be big enough to be relevant. And the sales have to continue at close to the launch levels for at least a second year.
Their framework for how to create these kinds of wins is this: Demand driven insight, demand driven development, and demand driven activation. Let's look at what they mean by this.
Being demand driven means starting with what the customer/consumer wants, not what you are trying to sell. This is a biggie, and many technology-focused products fail on this point. They are products looking for consumer problems to solve, rather than the other way around.
To produce marketplace results, innovation must be consumer centric, which they define as: A new offering that resolves a circumstance of struggle and fulfils an unmet aspiration.
Consumer Centric Innovation
A new offering that resolves a circumstance of struggle and fulfils an unmet aspiration.
Consumers hire products and fire them all the time. Products are "hired" using a clear specification for perfect fulfilment of the job spec -- not all products achieve this, but breakthrough ones do.
Demand Driven Insight means you understand what consumers are trying to achieve. What are they struggling with? What are their unmet aspirations? This means going deep into their lives (hello qualitative!) We need to understand exactly what the job spec is for the new product.
Demand Driven Development means adhering faithfully to the specs you identified. "The margin for error," says Lauren Galletta, "is insanely small."
Demand Driven Activation is the process of getting the product moving in the marketplace. This is not necessarily about spending a ton of money. It is about linking the product to the job to be done. The consumer insight is what should animate the creative execution.
Other elements that are important are strong in-store activation and a resonant package design. All the pieces need to be working during the first three months: the product must be in stock, have consistent pricing, and generally have distribution in place.
If you want genuine breakthrough innovations, you need to start by getting closer to the consumer. It might sound obvious, but it doesn't happen as often as it should.