MISTAKE #11: The Two-Tailed Resource Risk Gets You
There is a two-tailed risk when launching a new product. On the one end, you can easily over-spend and destroy the future profitability of the product as costs get out of control. On the other end, you can limit your spending and resources to such an extent that your product never has a viable chance of succeeding.
I’ve worked with both approaches, and I’ve seen each produce both success and failure.
THE HAVES
While resource-rich organizations definitely have an advantage, they are just as capable of making poor decisions that compromise their product potential. These organizations run the risk of being overly confident or they end up relying on a small group of like-minded individuals that produce groupthink, which makes them blind to significant issues with their launch.
At the same time, the Haves can fall into the trap of going through the actions they know are necessary to launch a product, but not operating with the desperation and dedication of smaller companies that need the product to succeed for them to survive. They can over-invest in pursuit of further perfecting their product or packaging or positioning long after diminishing returns have kicked in. They can become focused on checking boxes and clearing decision gates in their “proven” process while never applying unbiased, critical thinking to the viability of their product.
Access to so many resources can make the Haves lazy.
THE HAVE-NOTS
On the other extreme are the companies that are operating on a shoestring. They are the companies funded by an idea and a liquidated 401K account. They are the ‘virtual’ companies with no office space and just a handful of part-time contracted labor.
Size, desperation, and ignorance can be the key competitive advantages of these organizations. We all know that they can move faster and make bolder decisions than larger organizations. They are not constricted by bureaucracy or process or office politics.
They can take advantage of the leveled omnichannel playing field to gain far faster and greater access to shoppers. Their desperation can trigger creative solutions to communicating with potential shoppers. They don’t have a bias toward ‘the way we’ve always done it or following ‘corporate best practices.’
They wake up every day, look in the mirror, and find reasons to believe in what they’re doing. They depend on manufactured confidence and the ability to ignore the odds against them.
But the Have-Nots are also more likely to fail due to all the things they don’t do. They operate on intuition, assumption, enthusiasm, and hope. Data can be scarce and the subjective opinion of one or two people in charge can evolve into ‘truth’.
The fact that they probably have limited experience launching a product means they lack some of the valuable experience and discipline that exists in the institutional knowledge of larger organizations. They will likely relearn some of the lessons taught to organizations through previously failed products.
They try to appeal to everyone only to fail because they are no one’s first choice. In the process of selling to everyone, they get no one to buy.
They surround themselves with people that encourage and support and cheer them on when they should be asking the critical question “If this product would end up failing, what do you see today that could be the source of that failure?”
They save money by not studying the consumption experience, not optimizing the packaging and value proposition, and not creating a data-based selling story to get retail buyers to say yes.
They pay a high price for the things they don’t do or the times they get too greedy.
WHAT MISTAKES ARE YOU MAKING?
Are you making some mistakes today? The answer is yes. Trust me. If you don’t think you are, well, that is another mistake you just made.
Take some time to step back from the details. Stop focusing on the individual brushstrokes and take in the entire painting.
What do you see? Is a masterpiece really taking form or does it resemble paint-by-numbers?
What areas are you neglecting?
What areas are you trying to avoid investing in when you know you should?
What areas require a more critical eye?
What areas do you want to believe you’ve already finished, but really need to be redone?
What areas truly are finished and any more work is unnecessary?
Remember that your success will just not come from the things you did right. And it will not come from the things you do not do.
Your success will come from the mistakes you avoid. And it will come from the mistakes you notice and fix before it is too late.
Get a good understanding of the long tails of risk. Take action to fix or control what you see and your odds of success just went up significantly.