Balancing Risk vs. Reward of Surging Into Big Ideas

Posted by Jon Hall on Mar 27, 2014

104241079It seems that every day, we hear about a new start-up introducing a product that addresses a consumer need and quickly becomes a household name. These young companies are out-foxing well-known consumer brands with a history of launching successful products: What are the newbies doing, or not doing, that’s allowing them to quickly enter the market and position themselves as innovators?

To steal a line from Apple in its heyday, they think different. Chances are, start-ups’ initial ideas aren’t any better or more revolutionary than those coming out of corporate development teams, but they treat those ideas differently.

When start-ups see a great idea with potential, they charge down the development path without a lot of overthinking – or overspending. They test a few assumptions, experiment and prototype to play with their idea, make some cheap mistakes, share iterations with a very targeted group of potential customers and make it happen within a short period of time, with little more input than a thumbs up or thumbs down from key stakeholders. They don’t have the infrastructure or bureaucracy to slow them down. Their investment is relatively low so they also have a higher tolerance for risk.

Contrast that with a traditional corporate model. Where the start-ups might have five or six steps in their process, corporate product development flowcharts often look like a multiplex architectural drawing that includes idea generation, idea screening and refinement, business case development, consumer research, concept testing, prototyping, consumer purchase likelihood testing, commercialization, forecasting – and lots in between. Plus, each step of the process likely has a go/no-go tree branching from it that may require additional work or iterations. Meld that cumbersome process with analytical tools like BASES, high-volume thresholds and adoption curve uncertainty and it’s no wonder launching a new product takes so long and causes so much angst.

There’s no question start-ups are, and should be, more willing to fail – they have less to lose. However, recognized consumer brands are keenly aware of the revenue impact of days, weeks, months and even years of delays when bringing a product to market. Can these two polar opposite approaches be bridged? Is there a way to help CPG brands capitalize on the mindsets of their start-up competitors? We say yes, and we’re not alone.

  • Following WWII, Toyota introduced its Quality Circles that were the foundation for Kaizen. Kaizen reached the west in 1986 and with it brought the concept of TryStorming. TryStorming is a combination of quick brainstorming and rapid prototyping with the least amount of money possible, yet repeatedly simulating the product or idea until the kinks are worked out and the final product is launched. This is a huge departure from the typical brainstorm, screen, budget, schedule and hope approach
  • In 2011, Eric Ries introduced the Lean Start-up concept meant to be a movement that transforms how new products are built and launched and their associated dollar requirements. The premise is to accelerate the introduction to market by learning quickly what works and discarding what doesn’t. According to Harvard Business Review, Lean Start-up favors experimentation over elaborate planning, customer feedback over conference room contemplation and iterative design over traditional “big design up front” development. HBR goes on to suggest that despite “start-up” in its name, Lean Start-up offers the biggest payoff to large companies that embrace it

Three ideas from both concepts jump right out at us: experimentation, customer feedback and iterative design. Those are the guiding principles of SpencerHall’s Disciplined Creativity® and concept development processes. Through our innovative tools and expertise, we focus your team’s efforts on exploring a wide range of opportunities, utilizing consumer insights to their fullest and writing concepts with a high degree of consumer acceptance likelihood. And, with a vastly lower resource requirement than clients have experienced in the past. Our bridge between start-up spirit and corporate bureaucracy ultimately guides our clients to the exact balance between risk and reward.

Innovations, concepts and product launches that take 12-18 months can quickly wither and die. Consumer brands that heed the success of start-ups and learn how to transfer that mindset into their own organizations are going to be the ones primed for success and profitability long-term. What is your company doing to reinvent its concept-to-market process?

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Topics: innovation, breakthrough products, product development process, product development