Many of us often encounter would-be entrepreneurs who passionately express their excellent product idea. Their infectious passion is contagious with a will of taking on the world behind them, with aspirations of being the next Unicorn. Heck, if you’re reading this, you might have one or even a few of these ideas yourself. And why not? All the great products and businesses we see around us today at some point started as simple ideas.
Despite the belief in these great ideas and inventions, ideas alone are not enough. As the great Thomas Edison is commonly referenced to have said: “Vision without execution is hallucination”. Innovation requires a different form of management rigour which contrasts with what’s widely taught and advocated as good practice. Innovation isn’t loose or abstract but is highly disciplined and exploratory. Below are five common reasons why innovation fails :
1. Not engaging customers soon enough
However magnificent you think your idea may be, unless the customer is willing to pay for it, you have no business. A common mistake many people make when developing new products is to represent the customer and avoid validating your idea with them as early as possible and continuously after that. Being fearful of testing your idea or looking for confirmation is dangerous and has taken more than a few casualties. It’s difficult running the risk of potentially hearing your idea might not be as good as you thought, but it’s best you learn that sooner rather than later. Conversely, you may learn more about how you can make a more significant and more impactful difference.
2. Expecting revenue too early
Many ideas die before they get a chance to live as they are managed with expectations to generate revenue early. This expectation kills many ideas before they get off the ground. In the very early stages of a product idea, expecting a long-term business plan when you know least about your idea and market can be a plan to fail. The first stages of the innovation process beyond the idea should explore and discover a scalable and repeatable business model, which requires flexibility and the adaptability away from a long-term tactical plan.
3. Not considering different customer cohorts
When businesses launch, often they have a loyal following of early adopters. This cohort of customers are usually much higher risk takers and are more tolerant and forgiving of the products flaws and the services supporting the product. Scaling beyond early adopters may require more thought and new or enhanced scalable tactics to support these higher expectations. Failure to do this can see many new businesses fall flat and struggle to get market penetration where such struggles result is a regression or brand damage, providing opportunities for competitors to emerge and take the lead. Understanding your customer cohorts is essential for continued growth.
4. Focusing on products over the business model
A lot of great ideas die because people focus on the product and not the business model overall. A great product is just one piece of a larger puzzle. Products alone are not enough for innovation to succeed and die because they can’t sustain their existence being only part of a wider system — the business model. A repeatable, scalable business model needs to be discovered, understood and managed for scalable businesses to emerge and continuously evolve to sustain itself.
5. Unit Economics & Financial Management Knowledge
Having vision and strategy is all well and good, but poor economic tactics kill innovations. Understanding the market trends, your financial operations with your unit economics provides useful insights to sustain a healthy longer-term existence. Failing to balance your cash flow against growth expectations with an understanding of your cost, sales and profit models kill businesses and hinders innovation. Not only this, but such poor management reduces the appetite for would-be investors who understand this to be a common issue of business failure.
Traditional management is measured and performed around efficiencies and variance, not disruption, difference and opportunity. Moreover, management skills and needs differ between searching for a business model to executing on a business model and those who commonly control budgets sit within the latter.
Contextual and adaptive management at different product lifecycle stages is a crucial enabler to innovation; maximising the potential for new ideas to flourish. Knowing what the key questions to ask when and knowing how to learn fast using evidence-based iterative practices, can make all the difference to success or failure.
Recognising this, we developed and published an international award-winning innovation framework, the Lean Product Lifecycle. A practical hands-on guide, focusing on six distinct lifecycle stages. Utilising innovation accounting, agile, beyond budgeting and lean principles we share the right questions to ask at the right time to maximise innovation and growth potential.