Page 107 - Free the Idea Monkey

6. The Market Is Too Small. For a new product to be success-
ful, you need sufficient sales. It sounds ridiculously obvious, doesn’t
it? But you would be amazed at the number of companies that design
a product for too small a mar-
ket. Say your new product is tar-
geted at households with at least
$55,000 in annual income. Well,
that’s only 50 percent of the 105
million U.S. households. But it’s
really just for the 18-65 age groups—that eliminates another third.
And this mythical product will only appeal to those with an active life-
style: one-third of the remaining 35 million homes—some 12 million.
Say you get 33 percent to try it, and of those four million households,
only 50 percent say they would buy it again. Your potential market is
about two million households, and sales at that level won’t cover the
developmental costs, advertising, etc. Instead of acknowledging this,
we redefine the market as “for everyone 18 and over”—and then won-
der why a product designed for a narrow target didn’t sell well.

Related to the size of the market is the size of your innovation
budget. Revolutionary innovation creates disruption in the market
and within your company. Changing the way your company works
is expensive, and a typical innovation budget does not consider this
cost. Leaders must consider the holistic benefits of change and bud-
get accordingly.

5. Dartboard Product Design. There is almost never sufficient
thought given to what the total product should look like. Let’s say there
are four key components—price, packaging, size and usability—that
could affect how well it sells. And each one of them has four options.
So there are 256 different ways you could manufacture that product.
What’s the predominant technique used to choose among them? People
sit around a conference table with some pizza and soft drinks and say,
about a new paper towel, for example, “Let’s go with 500 sheets, super-
high absorbency, middle-of-the-road packaging and priced 10 percent
above the market leader.” What’s the probability they’ve chosen right?
By definition, it is 1 out of 256. Maybe they have some expertise. That
boosts the odds to 1:128. Better, but still not great.

92 I F A I L , T H E R E F O R E I A M ( A N I N N O V A T O R )