Failure is likely to happen in product development, so why not push back with customer insights?
Not to be a downer, but unfortunately, the numbers for successful experiences aren’t in our favor. Let’s talk about startups for a moment; 9 out of 10 startups fail. Why? Time and time again, research tells us the biggest problems with startups can be categorized into what many refer to as “product-market fit.”
Marc Andreesen, a famous VC, puts it as: “Product/market fit means being in a good market with a product that can satisfy that market.” And when we hear “market,” they mean people. And satisfying people is hard.
Startups
Fortune’s data shows: “the number-one reason for failure, cited by 42% of polled startups, is the lack of a market need for their product.” and they continue “Many startups build things people don’t want with the irrational hope that they’ll convince them otherwise.”
One group tracking startup failures discuss two key ways to prevent epic fails from what they’ve seen over time. One: validation: Talk to customers, test your assumptions, and find a market before you invest a considerable amount of time, effort, and money into an idea. And two, MVP: Build a prototype to test the market as quickly and cheaply as possible. Iterate often.
One big recent startup fail (and there is no shortage of big fails) — was Quibi. Noted as a $1.8bn failure in the “micro-content” space… And the CEO said, “…The idea behind Quibi […] wasn’t strong enough to justify a stand-alone streaming service” — was this hypothesis testable without spending $1.8bn? (The answer — yes!)
Three more quick failures — and for three different reasons:
Galaxy Fold:
“…it became clear that the Galaxy Fold wasn’t going to be the success we all expected. For one thing, when the device was folded, it became thick and cumbersome to carry (like carrying 2 phones at once).”
Shyp:
“Another pitfall was the audience they were targeting. Shyp users were mostly individuals, who shipped items sporadically and were therefore not the dependable clients…”
Google Allo:
“…biggest complaints among users included a lack of SMS support, the fact that Allo didn’t work on more than one device at a time, and that each account was tied to specific phone numbers and not a Google account.”
So, the galaxy fold was a device without a customer, shyp was a service with the wrong customers, and Google Allo didn’t have the MVP features to succeed. So you can fail due to a lack of customer understanding (building the wrong thing) or because the features or quality didn’t meet expectations (building things right).
Targeted at startups, some advice:
“The first step to failing fast is to bring your customers into the design process as early as possible. That way, any shortcomings or product flaws will be identified straight away, before the stakes get too big.”
The number of product teams that don’t assess market needs or interact with customers to determine what that need is high. Another group focused on startups found:
“Tackling problems that are interesting to solve rather than those that serve a market need was cited as the №2 reason for failure, noted in 35% of cases.”
This is an unnecessary reason for startups to fail.
Innovation
And it’s not just startups; innovation inside established companies (like the google and Samsung examples) have the same issues. Forbes talks about:
“Misunderstanding your market is one of the worst innovation failures your organization can make. And you won’t even realize you’ve failed until the product has gone to market.”
How do they say you can keep this from happening? You need to ask three things constantly:
What is this innovative idea a solution for?
Is this really a problem that needs solving?
Is there market data that backs up the answers to the previous questions?
I’d add, you can get the data for #3 to test #1 and #2. While most in the innovation space skip this part because “hey, it’s innovation, how can you get data on something that doesn’t exist” — that’s a falsehood. You can gather insights on greenfield ideas and concepts and “pull” ideas from current or potential customers to focus your innovation efforts to meet better or exceed their needs.
Another challenge is when shiny, new technology drives innovation — similar to that of Steve Jobs quote:
“You’ve got to start with the customer experience and work back toward the technology, not the other way around.”
They put it as: “But often, new technology is prioritized over the real goals behind using it.”
Business Ideas
Lastly — moving from startups to innovation now to generally any new business idea fails, whether labeled innovation or not. O’reilly just had a large study where they found that “70–90% of ideas to either have no impact at all or actually move the metrics in the opposite direction of what was intended.”
They list out quotes from successful and well-known companies:
Microsoft declared that roughly one-third of their ideas yield negative results, one-third yield no results, and one-third yield positive results (Kohavi and Thomke, 2017).
Streaming service Netflix believes that 90% of its ideas are wrong(Moran, 2007).
Google reported that as much as 96.1% of their ideas fail to generate positive results (Thomke, 2020).
Travel site Booking.com shared that 9 out of 10 of their ideas fail to improve metrics (Thomke, 2020).
One key reason from the study is that — it’s hard, and people are not great predictors of the future due to nothing more than human nature — things like: Groupthink, Sunk cost, and confirmation bias. But this is something that building proper customer understanding can fight against!
So when ready to push against failure, remember:
Spend more time determining if you’re solving the right problems.
Launching successful experiences is hard. Outside-in customer understanding reduces risk.
Bring data to the table to combat human nature and “inside” thinking.
And when you focus on the problem and the customer, you can push back on failure to improve your chances of launching a thriving product or service into a market with ample customers, getting that “product-market fit” needed for success!!!