Five Common Product Development Mistakes
Product development is full of pitfalls and traps. Avoid these five common product development mistakes.
1. Someone will steal my product
Stealing does happen. Rarely. Very rarely. What happens more often is that a product enters the market and 'fast follow' competition enters the market within six months with a few tweaks, maybe some improvements, and a known brand name. This happens often with products that start selling well when they are released since it proves that there is a good market for the product and probably a way for your competitors to take a share of the market for themselves. Stealing an unproven idea is quite rare since it requires someone in management championing your idea in side of a company to secure the resources to turn the idea in to a product. It can happen, typically when an idea is being shopped around to be licensed and the cost to develop is cheaper than the cost to buy the idea. The fear of someone stealing an idea should not prevent you from getting feedback on the idea from potential customers. Early feedback is truly invaluable since it can save so much time and money spent developing a product that customers will not buy.
2.
Focusing on Patents over Prototypes
Patents are only a piece of paper that grants the rights to be the sole producer of a product for 20 years - they are not a product themselves. They give you the right to sue people and companies that infringe on your right but they do not create sales. They also take a very long time to be issued, often four years or more, which is longer than a product will be sold in some markets. They also cost a lot to get and often millions to defend. Patents have their place, but get them only when they are really needed. NDA's (non-disclosure agreements) can be used to protect intellectual property and idea before a patent is issued for much less cost. Also remember that not everything is patentable and often things like benefits can be discussed openly with potential customers to gain feedback without giving away patentable information or disclosing information that would be patentable. However, since the world is now on a first to file system getting a low cost provisional patent is a great way to initially protect an idea that you will pursue. Provisional patents need to be followed up with a full patent application within a year. Always check with a lawyer to fully understand the laws and guidelines around patents and other legal matters.
3. Focus on Perfection
Perfection is the enemy of good enough and at the end of the day a product that does not ship can't make money and is a failure. Product development is full of stories of design teams continuing to change a product to make it perfectly fit a target audience or an ideal and destroying budgets and time to market goals. Often customers don’t know exactly what they want until it is in their hands. Surveys and focus groups can provide limited insight, but nothing trumps users let alone with a product. Touchscreen interfaces on phones were not welcomed by consumers in the initial focus groups, surveys, and customer research that many phone companies did before Apple introduced the iPhone and changed consumers understanding of the market. Perfection is never achieved, and it takes months for most products to go from a final design to a store shelf. Plan accordingly.
4. Failing to Understand the Costs of Getting a Product to Market
Making and selling a product needs to generate enough revenue to support the entire ecosystem connected to the product. The OEM (Original Equipment Manufacturer), distributors, and retailers all need to be able to pay their people, cover their costs, and make some profit. These costs add up to a much greater level than most people realize. Often, for each party to cover their costs and make a small profit they add 30-50% each to the cost of a product which results in the retail rule of thumb that products should cost 5x less to manufacture than their retail price. Attempting to make a product for only a few dollars less than is in the store already is a recipe for a financial disaster. Understand the product costs, the costs of getting to market and make sure the market is large enough to support the entire ecosystem.
5. Competing on Price Alone
The worse kind of competition is price competition. Entering the market to beat competitors on price often results in a race to the bottom. As prices drop, the products become more and more like commodities with little difference seen between products by consumers. Margins also drop along with the prices. Only a few types of companies can survive in this environment – the giants who can afford small margins or even losing money on the product line, companies that are diverse enough to survive the price war and increase margins once few competitors are left, and companies that specialize in very lean operations and can afford continuous operation with low margins. Compete on customer value whenever possible.
