A “3Ws” framework to size up your new product development risks

July 11, 2016

In the world of new product development (NPD), there are a number of tools and techniques to improve your odds of launching a product that meets customer needs and provides a healthy profit to your organization. 

These include qualitative user interviews, engineering failure mode and effects analysis (FMEA), and financial formulas such as net present value (NPV).

All of these techniques help us size up an opportunity and determine where our Achilles heel(s) might be. In Design Thinking, there’s a well-known framework that considers three broad areas—Feasibility, Desirability, Viability—that helps hone in on risk. However, because I’m a big fan of the “would a child understand this?” approach to explaining concepts, I’d like to suggest a modified terminology that might be easier to remember. It’s the 3Ws framework: Will it Work? Is it Wanted? And is it Worth it?

Using these three categories to build a Venn diagram, every company should aim to be as close to the center as possible while avoiding any of the other overlapping sections, which I will refer to as “no launch” zones.

Given the low rate of success, it is imperative that entrepreneurs and NPD managers thoroughly assess the technical, emotional and financial aspects before launching a new concept.

Here’s a description of each “no launch” zone, along with a real-world example and some solutions to mitigate associated risks:

NARCISSISTIC (Works + Worth It, but not Wanted): This pitfall occurs when a company is enamored with its own idea and can make a product based on internal capabilities, but market desire has not been properly validated. Keep in mind this is different from launching a product based upon hunches gleaned from user feedback. Startups, through methodologies such as Sprints or Lean, try to move away from this state of mind as quickly as possible and either pivot or kill an idea, if necessary, before running out of money.

ExampleNew Coke. This is a classic case study where in response to Pepsi’s growing competitive advantage in the marketplace in the mid 80’s, Coca Cola introduced a sweeter product that—although viable with internal capabilities and potentially profitable—was not well received by the market. New Coke was on the market for only 90 days. While Coke had done thousands of blind tests with consumers prior to launch, the favorable results did not manifest in actual demand due to a misalignment between the brand loyalists and the new product. This goes to show that consumer behavior is far more complex and it needs to be thoroughly understood.

Solutions: Market/ethnographic research, Design Thinking, prototype development and testing.

IDEALISTIC (Works + Wanted, but not Worth It): Unless you’re a non-profit, giving your products or services away for free is not how you want your entire business to operate. If your company makes quality products that are very desirable but financing is limited, profit margins too low, competitive pressures too high or payment terms too lax, you may be in the Idealistic zone and will soon run out of cash flow. Whatever the case, the business model has to be re-evaluated quickly or risk a rapid demise.

Example: Quirky. Launched in 2009, this startup aimed to bring new consumer products to life every week by enabling collaboration between a global community of inventors and an in-house team of designers and engineers on all aspects of design, from sketch to store shelves. This crowdfunding approach was not too different from the more well-known Kickstarter or Indiegogo sites. But taking care of the marketing, engineering, manufacturing and retailing became too costly to sustain. “The reason why Kickstarter makes a ton of money is they don’t have to do anything besides put up a website,” said Quirky founder Ben Kaufman when reflecting on his startup’s failure.

Solutions: Market research, financial planning, competitive assessment, venture funding, new business model development (pivoting/downsizing) or simply shutting down.

OPPORTUNISTIC (Wanted + Worth It, but doesn’t Work): While taking advantage of a market opportunity that fits well with your capabilities is no sin, rushing to market by cutting corners on product quality/testing or user experience will inevitably lead to refunds, recalls, negative word-of-mouth or even worse—lawsuits.

Example: Theranos. The once fast-rising startup (and its admired young founder, Elizabeth Holmes) that promised to run 30 lab tests on only one drop of blood is now facing scrutiny by regulators and the public alike for not fully disclosing and misrepresenting trial test results.

Solutions: Proof-of-principle models; human factor summative/formative studies; FEA (finite element analysis) or FMEA engineering studies; quality assurance tests, etc.

Given the low rate of success for both startups and new products in larger companies, it is imperative that entrepreneurs and NPD managers thoroughly assess the technical (does it work?), emotional (is it wanted?) and financial (is it worth it?) aspects before launching a new concept to market. There is too much money, time and reputation risk at stake for entities to overlook these factors. The last thing anyone wants is to see their name on a list of startup failures

Written by Edgar Hernandez