Why Do Innovations Fail?

Most new products and services launched onto the market fail to deliver the expected results. There is a big debate about how many fail. The numbers range from estimates of 80% – 90% all the way down to around 30%. The very best and most experienced companies seem to be successful around 65% of the time. We don’t really seem to have a good handle on failure rates, partly because it depends how you define failure, but a white paper by Castellion and Markham gives an overview of the numbers.

The exact number of failures doesn’t matter; the point is that it is a difficult and risky thing to take an innovation from concept all the way through to commercial success. Michael Schrage summarised the situation nicely in the Harvard Business Review; “Most innovations, no matter how inspired, end up on the scrap heap of history…”.

Given the risks it is worth thinking about the factors that influence success and what we can do about them.

Solving the wrong problem

Many studies have been carried out on what differentiates successful from unsuccessful innovation projects, dating back to the 1970’s[1][2]. One characteristic of products that are unsuccessful in the market keeps coming up and seems to be one of the dominant causes of failure – the product solved a problem the customer didn’t have.

As a simple description of a core problem, that rings true to me. I have talked to so many companies about what new products and services they are working on, listened to their enthusiasm, seen the real cleverness and creativity in what they have done, and still been left with a nagging thought – yes but who cares?

Why does this happen? It’s probably human nature. As innovators we become excited by the idea itself. The buzz of creativity and the satisfaction of solving all those problems to create a prototype that works. We become so committed to the idea that we forget to ask all those niggling questions like – what does this enable the customer to do that they couldn’t do before, how much do they care, and crucially, how much will they pay?

It’s the customer’s opinion that matters

Thinking very hard about the customer perspective is critical. Understand what they are trying to do. Talk to them, figure out their pain points, and ask how you can help them. Think about the benefits of your innovation to the customer, not its features.

The best sales director I knew would always jump on anyone getting carried away by their wonderful new product or service by firmly asking “never mind what you are selling – what is the customer buying!”.  That flip in perspective from the innovator to the customer always stopped us dead in our tracks, and it was often surprisingly difficult to answer the question. It focused us on the obvious, but often ignored, fact that we don’t get to decide whether a product is a success or not; that’s the customers’ job.

The problem is these are all simple questions to be found in any text or course on innovation, creating a business or sales and marketing. But they are simple questions we seem either not to ask, or not to listen to the answers.

The need is always there, but the solutions change

Now at this point a lot of innovators get quite irritated and tell me that truly breakthrough innovations address wants and needs that the customer didn’t even know they had. I have had stand up rows with innovators who are convinced that they know what the customer wants better than the customer does. They quote examples such as the Sony Walkman and the Internet as evidence. And it is true that sometimes you get a completely transforming innovation that creates a totally new market, but it is rare.

Even the commonly quoted examples are not as simple as they seem. Readily available mobile music can be traced back to the super-rich in the Middle Ages with their personal musicians, through Edwardian wind-up gramophones on picnics and in the trenches, to the little plastic transistor radio with a monaural earpiece I had as a child that let me listen to pirate radio under the blankets at night. The Walkman was a brilliant product that improved quality, flexibility and dramatically personalised music choice, but the need it addressed had always been there.

In the same way the Internet and the World Wide Web have been transformative, but instant access to communications, knowledge, and even shopping, have been a staple of science-fiction stories and thinkers about the future since at least the 19^th Century.  In 1966 in “The Age of the Pussyfoot” Frederick Pohl introduces the Joymaker – a mobile phone with access to a global library, computing power, shopping and financial services (it’s a much better book than the Wikipedia summary makes it sound). What the exact solution would turn out to be could not be foreseen, but the need for and value of such a technology was clearly described.

It’s the customer stupid!

So don’t despise those questions from Sales 101, recognise our tendency to be blind to the weaknesses of our innovations, and understand, to paraphrase Bill Clinton’s presidential campaign, it’s the customer stupid!

A previous version of this post appeared on the Innovate UK blog in 2016

[1] Success and Failure in Industrial Innovation: report on Project Sappho, by the Science Policy Research Unit, University of Sussex, Science Policy Research Unit, Centre for the Study of Industrial Innovation, London, 1972

[2] “New Product Scenarios: Prospects for Success”, Roger Calantone and Robert G. Cooper, Journal of Marketing, Vol. 45, No. 2 (Spring, 1981), pp. 48-60