The New Product Economy - encapsulates the speed of the internet companies in conjunction to the slower pace of the establishment enterprises - which often loss the battle. In these slides are the why it happened and how you can change your fate in the new product economy .

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the new product economy
why the practice of building new products
is critical to your business
2013
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It is commonly estimated that between
33-95% of new products fail.
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Sources: 1) http://faculty.msb.edu/homak/HomaHelpSite/WebHelp/New_Product_Failure_Rates.htm
2) Clay Christensen's Milkshake Marketing, Harvard Business School, Working Knowledge, 2/14/2011

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Which is a frightening statistic because
new products are continually in demand.
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Evidenced by the fact that
product lifecycles are shortening.
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Why product lifecycles are shortening
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rapid
advancement of
technology
an
overabundance
of products
creates
consumer
attention spans
shortening
requiring

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The short life of the netbook
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1977 2001 2007
5 years
iPod/
iTunes
PC
desktop
iPhone
2010
iPad
1985
Laptop
2012:
end of
Netbook2
2013
Surface
Pro
Sources: 1, eWeek, July 2010; 2, The Guardian, Dec 2012
“Netbook sales are showing no signs of waning,
ABI Research announced July 22 [2010] …
Nearly 60 million netbooks are expected to ship
worldwide by the end of 2010, and that figure is
likely to double by 2013.”1
2007:
Netbook
introduced2

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A company can’t rely on
outside forecasts – change is
occurring too rapidly and it is directly
affecting product viability.
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Change happens within industries when
new products with
new business models enter the market.
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Industry leader New industry entrant
1985: first Blockbuster store opens
1986: goes public
2010: filed for bankruptcy
Out of business in 25 years
Blockbuster photo credit: Los Angeles Times, latimes.com

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Industry leader New industry entrant
1971: opens first store
1995: goes public
2011: filed for bankruptcy
Out of business in 40 years

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Industry leader New industry entrant
?

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Even more concerning is competition
comes from non-peer companies
building new products that aren’t
obviously competitive.
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Industry leader Non-industry entrant
1889: founded by George Eastman
1976: 90% marketshare
2012: filed for bankruptcy
From market leader to bankruptcy in 36 years

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Industry leader Non-industry entrant
2007: first Flip Ultra
2009: acquired by Cisco
2011: division shut down
Out of business in 4 years

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Industry leader Non-industry entrant
?

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And it’s not only traditional companies
that are at risk from
new products entering the market.
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“(Steve) Blank believes that the leading
tech companies are in a particularly
vulnerable spot. Tech behemoths —
Oracle, SAP, Cisco, even Google — are
facing serious threats from smaller
players, who can push new products into
the market at a faster rate.”
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Steve Blank on ‘continuous innovation’
February 16, 2013

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How many businesses will be
at risk with the adoption of this
new product?
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3D printing: The Printrbot Jr. in the process of making a 3-D model.

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So how can a company survive in this
new product economy?
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ü Be paranoid – expect constant change
ü Have a vision – allow for wiggle room
ü Establish a distinct value proposition – don’t veer from it
ü Create an amazing experience – constantly make it better
ü Make size an advantage
ü Hire Swiss Army knives
new product economy
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Be paranoid - expect constant change
n Specifically, don’t assume long-term dominance or marketshare.
n Intel's Andy Grove had it right: “only the paranoid survive”. This
has to be top-down paranoia that requires constant evaluation
of customer needs, market opportunities, and emerging trends.
– Make your Chief Strategic Officer is a Chief Paranoid Officer (seriously!)
n Foster open communication and on-going ideation.
– Take in data from all levels, create a system to share the findings.
n Don’t assume your competition is in your category or industry.
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Case study: Facebook
n Facebook was built on the web (founded in 2004).
n With a clear dominance on the web, the company continued to
grow the web platform.
n However, by early 2012, as it prepared for an IPO, there was
glaring evidence that Facebook was critically behind in mobile
(despite the fact that the founder was using a smartphone).
n Facebook had to ramp up fast and just prior to the IPO made a
$1 billion acquisition of the mobile app Instagram to prove its
mobile intentions.
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Have a vision – allow for wiggle room
n Establish a broad mission for the company but don't box the
business in.
n Constantly reexamine your overall vision in the context of the
wider market and make strategic adjustments as necessary.
– Do this, at least, annually – quarterly would be better.
n Think: flexibility and agility.
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Case study: IBM
n IBM has been brilliant at being agile with their vision.
n From the beginning their vision was to package technology for
use by businesses.
n They started out making and selling punch-card tabulators and
ended up as technology consultants.
– In between they brought to market some of the most well-known business
technologies: the mainframe, the PC, the ThinkPad, to name a few.
n As business needs changed over the past 100 years, so did IBM.
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Packaging technology for businesses
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1911
1992 2002
ThinkPad
laptop
Punch-
card
tabulators
Acquired
PwC
consulting
1957
Electronic
data
processing
machine/
FORTRAN
This is only a partial list of the many transitions and products (including patents) developed by IBM.
1961
Selectric
typewriter
1964
IBM
System/360
computer
1974
UPC and
scanner
1981
IBM PC
1997
Coins the
term
“e-business”
2005
Sells PC
business to
Lenovo
1952
Mainframe

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Establish a distinct value proposition – don’t veer
from it
n Once you have a clear (and flexible) vision, let the world know
why you exist and are different than all the other alternatives.
n A value proposition equates a company’s core offering to
audience needs.
n It is the standard by which all decisions must be made.
n Too often companies try to duplicate the efforts of the market
leader – these companies can end up late to the market and
first to exit, decreasing overall value.
– Example: HP’s TouchPad was on the market for a total of 48 days.
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Case study: Apple
n Apple has always had a distinct value proposition based on high
design.
– All decisions are based on creating a well-designed product.
n From the early Mac through to the iPad, they’ve designed great-
looking products, both hardware and software, that work well
together.
– More recently that design has included the commerce-based ecosystem
based on the centralized iTunes.
n In the beginning design was seen as a benefit to only a small
percentage of the market – but this market grew, exponentially.
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Create an amazing experience – constantly make
it better
n The value proposition should come shining through in the
experience your customers have with your products and your
company.
n Every touch point should reinforce both your vision and your
promise.
n When adding to an established experience, any incremental
decisions must result in a much better experience.
n To ensure this, comparison test the present experience against
any possible changes with customers before going to market.
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Case study: Netflix
n Netflix introduced itself by delivering a better rental experience.
n Not only did we not have to drive someplace to pick one up,
there were no late fees and we could manage our own video list.
n Unfortunately they made a major decision (splitting streaming
from DVD and making a significant price change) without
considering the impact on the existing experience.
– It’s unlikely they tested the change with customers.
n Customers noticed a dilution in the experience and left in droves
(yes, pricing is part of the experience).
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Make size an advantage
n We often hear that bigger companies can’t move fast enough to
counter smaller insurgents, and there is some truth in it.
n But size has its advantages: established distribution channels,
financial resources, brand recognition … customers!
n Assuming you are being paranoid and you are looking across
industries, you should be identifying possible disrupters earlier
giving you an earlier head start.
n Use some of the human and financial resources to test new
products throughout the year – be proactive.
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“One of my fears is being this big, slow,
constipated, bureaucratic company that’s
happy with its success … Companies fall
apart when their model is so successful
that it stifles thinking that challenges it.”
- Nike CEO Mark Parker
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Source: Fast Company, March 2013

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Case study: Nike
n Nike became famous for its shoes and then its apparel.
n In 2012 they added the FuelBand bracelet because their
customers were going digital.
– Could have easily lost their large audience to competitors Jawbone & FitBit.
n They also disrupted their own main product – shoes!
– Their FlyKnit material changes the shoes and how they are manufactured.
n Nike proactively tests new products in multiple ‘innovation’ labs.
n All of these evolutions and still true to its performance brand.
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Hire Swiss Army knives
n A flexible company needs an adaptable, curious, and self-
directed workforce.
n Along with the specialists, hire generalists who can interpret
what is going on from multiple perspectives.
n Reconstruct yearly reviews to focus on what employees are
seeing in their jobs and in the marketplace; talk to them about
the products they use.
– Make these reviews quarterly.
– Couple this with the reviews of market needs and emerging trends that are
hallmarks of a company that is aware that change is constant.
– Eliminate: “This is the way we’ve always done it.”
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R

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Case study: W. L. Gore
n While not exactly employing ‘Swiss Army knives’ (employees
have specialities), W.L. Gore (a product development company)
has one of the most innovative organizational (non)structures to
foster creativity and teamwork.
– There are no bosses – instead associates and sponsors.
– Teams organize around opportunities and leaders emerge; this is dynamic
and not structurally permanent.
– Associates have freedom to commit to projects that match their skills.
– No pre-determined chains of command or channels of communication.
n W. L. Gore has both consistently churned out innovative
products and received honors for being one of Fortune’s “Best
Companies to Work For.”
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In the new product economy,
its not good enough to survive –
you have to thrive!
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Beth Temple
bethtemple4u llc
http://bethtemple4u.com
Let’s build your next
new product together!
beth[at]bethtemple4u.com