Tuesday, September 09, 2003

Relaunching Failed Products - Seven Thoughts

One of the most popular topics on the Eclicktick Corporation (www.eclicktick.com) is the subject of re-launching failed products. It's an interesting challenge.

Having done turnarounds and worked with many startups there seem to be some fairly standard rules that are useful.

First, it's really rather tough relaunching a product that you were responsible for developing. You've lost your objectivity. I personally did not realize this until I did my first turnaround after having run my own company for many years where I had designed, architected, marketed, launched and sold the three generations of products and services. When I had to do a turnaround on someone else' company it was very different. Someone else's product or service is far easier to fix than your own. Even Michael Dell brought in some outside assistance to help when his company got into trouble in the 90s.

Second, some products can't be relaunched. The initial concept was wrong. The business model was crazy. The product did not work or did not deliver the benefits. Customers did not want the benefits offered.

Third, sometimes what it takes to turn around a company is throwing out everything you have done. And that is hard to do. One of the most common pieces of advice I give inexperienced entrepreneurs is "Don't do R&D." Distribute someone else's product to learn about the market you want to launch into. Develop your own product or service only once you have experience obtaining revenues from your target customer. Very few take this pieces of advice, but empirical data and experience suggests that about half of R&D is wasted. And I would guess way more (perhaps as much as 90%) is wasted in software and technology based businesses.

Fourth, probably the biggest problem in relaunching a product is credibility with investors or head office (particularly if they are in another country).

Fifth, most of the companies I work with really don't have a very good idea of how value is perceived by a customer. As a result, they delude themselves in to thinking that the customer is "stupid". Customers are actually very smart about what they buy. If you give them a good reason to do business with you, they will. It's no coincidence that the leading cause of product launch failure is inadequate or no market research. Now, don't get me wrong. Some products are launched so you can get market research on usage, but the more expensive the R&D requirements, the more market research you need to do.

Sixth, quality and ethics do make a difference. I am often amazed at companies who think that they are in the business of making money. Actually, you are in the business of creating value for customers. If you create value for the customer, then the customer will allow you to make money. Once you adopt this perspective, relaunching becomes a whole lot easier.

Seventh, value is not just about features. It is about services, perceptions of risk, support for standards, availability - soft things as well as hard.

My free e-book "Turn Around!" has more on this topic at www.eclicktick.com.

Alistair Davidson

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