Like all specialty chemical companies, your company probably has many stories of new product development failures at early-stage commercialization.
Your teams have spent a ton of effort in research, industrial testing, production scale-up, training of all the internal stakeholders and marketing, only to end-up in sales which don’t deliver the anticipated forecasts.
One result is certain — frustration for everyone!
SpecialChem has been supporting specialty chemical companies for more than 20 years. I have seen both amazing success and resounding failure within our diverse clients’ projects.
A lot of money is at stake in the phases of R&D and product development. So, let me share 6 tips to help you spend it wisely.
1. Connect early with the market
Your R&D team certainly has a lot of deep technical and product knowledge.
They developed the chemistry, the applications, the value propositions, and the competitive positioning. They know why it works well in certain applications and why your products are not suitable for others.
They are very creative, and routinely come up with new technologies or new product ideas. These ideas often sound promising to the team, so a new project is approved to further develop and prove out the technical performance requirements.
Wait a minute… Who is the target for this new technology?
"Oh, well it’s obvious it will increase the mechanical strength while keeping other performances intact. Automotive and industrial applications have always been big fans of this property, so they’ll be pleased to see improved performance dealing with this same property."
And based on this usual assumption, the project starts.
Believe it or not, your customers are not the best to know what solution they need, but once you put new solutions in front of them, they will be very good at saying if this would help them solve their challenges or getting their jobs done. They will also be capable of explaining why.
And you’d better do this as early as possible in your process to understand who are the targets of this new product, what minimum features should be developed, what price range would be acceptable.
And for the properties you are aiming at improving, is it a property which matters for your customers? Would they be happy to see it improved? How critical is that property for them?
By learning this early and remaining connected with the market along the way, you will be able to develop a new product fully matching the market needs and with a well-optimized development cost.
On the contrary, connecting late to the market will lead you to make technical development choices based on your internal assumptions. These choices mean you will invest your money and energy in a certain direction. And then, once you confront these results with the market, the chance for success is much lower.
If the market says “I don’t want your product”, then you have to take several steps back, go back to the lab and starting re-investing in the right direction. I’m sure you’ll agree that these useless investments should be avoided!
2. Go beyond your own network to access market feedback
Using market feedback to maximize your chance of success is essential. Relying on relevant sources to get this feedback is obviously important.
Often, I see suppliers relying exclusively on a few selected customers with which they have good relationship.
Although these key customers can have a role in your development process, here is why I highly recommend going beyond them to make sure your product will be valued by the market in a way which will maximize your sales.
You cherry-pick your customers
You have selected these customers because you have reasons to believe they will be interested in your new product.
Indeed, your goal is to get feedback, so you will avoid selecting customers for which you know it is going to be a dead-end.
But doing so, you’ll cut you from a part of the market and miss opportunities to learn more on your product value and you will get a distorted vision of how the market will value your product.
You target the big fishes only
You will most likely select customers from which you expect big volumes. Then you put a lot of importance on their feedback and develop features to please them.
In this hyper-pleasing the big fish, you forget about the main market and you risk ending up with a product dedicated to only a very limited number of customers, cutting you from the bigger part of the market.
Your current relationship bias the discussions
For customers, there are always business relationships at stake. This fact will automatically create a bias in your analysis.
Your way of asking questions or not bringing up certain topics, or the way the customer will share his feedback will be adapted to avoid jeopardizing the existing business relationship or taking advantage of the future ones.
This will again lead to a distorted market perception.
Your priority is not their priority
If you select the big companies, there is also a high chance that your project will not be their priority so you will be slowed down by them.
You should try to connect with companies which are as eager as you to get your product to market.
Identifying companies who have unmet needs which your product likely solves is a critical success factor.
At SpecialChem, we have a name for these companies – we call them “The Hungry 2nds”. They are the ones in 2nd place who are much more nimble, responsive and adaptable as they strive to become #1.
Additionally, when you are dealing with a breakthrough innovation, what makes you think that your existing customer base is the priority target for your new technology or product? Exploring beyond your own network will ensure that you identify with more certainty the priority applications and targets.
3. Get rid of your internal bias
When you are in product development phase and looking for the best applications and the value proposition of your products, you should be aiming at converting assumptions into facts.
The facts will lead you to make decisions based on the market reality and what your product can offer.
However, it is a common fact that this process is negatively influenced by your own (and your company’s) false belief or bias.
For all your projects, you should reassess all the information and make sure that what you take for granted is actually true.
It means that when you have this assumption “we think we know Building & Construction customers want to improve the scratch and abrasion resistance of their floor surfaces”, you should ask yourself:
- “When did we last check that?”
- “What was the context?"
- “Do I have solid proof to confirm that this assumption is true?”
- “How critical is it for my project success?”
The customer interview phase is also a step where there are many pitfalls. Pay attention in the way you ask questions. Here are a few tips:
- Choose open questions vs. closed questions
- Cover all the topics, not just the ones you feel the most confident about. Even more, when you expect negative feedback, be ready to dig more to get a deep understanding.
- Be honest with yourself and do your best to have a questionnaire which would not influence the outcome.
During the analysis of the results, you should be cautious as well. When we analyze the situation, we tend to see what we want to see and discard what is unpleasant or against our opinion.
To avoid that, you should build a team which will analyze the results separately and debate to agree on shared conclusions. Of course, conclusions should highlight what is clear and becomes a fact and what may remain at the stage of assumptions.
For all remaining assumptions, decide what is the new level of uncertainty and importance for the project success, so you know more easily what to do with them in the next phase.
For critical projects, it is worth running your investigation through third parties who will be capable of taking those steps back and identifying what is the real market feedback about your products.
Most often, remaining anonymous through the third party “buffer” will also grant some confidentiality and keep your competitors guessing.
4. Kiss-or-Kill early
It is human — we all love what we invent, what we create.
In business, our motivation is to create maximum revenue with minimal resources. To spend our money wisely, obviously it’s better to invest in the projects with the highest chance of success.
To do that, start all your projects asking yourself: “What would kill this project?”.
In other words, if assumptions, A, E and G are NOT TRUE, then the product will never be a market success so my project should be stopped.
Once those “must be true” assumptions have been identified, the next step is to verify them as a priority.
5. Before market launch, focus on learning and forget about selling
From the early development stage, there is often pressure from upper management on your project. And the closer to the launch you get, the higher this pressure becomes.
Always keep in mind that before the market launch, your job is to turn those assumptions into facts to make the best decisions for your product development to maximize the chances of success.
To remain aligned with this goal, you should maintain close exchanges with the partners testing your products or sharing their feedback and keep asking questions to learn more and share information openly.
If you hide information or don’t ask questions because you are afraid that these precise companies will not buy your products, then you’ll start having a distorted vision of your product value on the market.
And this will lead you to making the wrong choices and ultimately a slow market take-off at best or complete failure in the worst cases.
Putting the priority on short term sales versus sound learnings is clearly a shortsighted vision which will not make your business profitable in the medium and long term.
6. Don’t forget to include indirect competition into your competitive analysis
When you run a competitive analysis, it is very easy to think about your competitors who are manufacturing the same type of products as yours.
In general, you know them quite well, and the majority of the suppliers can tell quite early how and why their new product would be better than the ones sold by your competitors.
However, especially when we are dealing with breakthrough innovation, your new product may be so valuable compared to the available direct alternatives but its benefits to the end-customers can already be covered by another material or additive.
This would result in a reduced addressable market and even more if the market is already satisfied with these other solutions.