Why Are New Products Launched? (Part 4 of 4)

April 6th, 2010 by Rob Berman Leave a reply »

This post is the fourth and last in a series about “Why New Products Are Launched.”  In the first part we covered the success or failure rate of new products. The second part covered launching new products for the correct reason, the third part covered externally focused reasons for product development.

The proverbial “rational man” would tell us we introduce new products to make more money.  However, the “rational man” does not always occupy the decision maker’s chair.  This post is geared to internal reasons for product development.

1. “We must use the budget dollars or we will lose them for next year”:

Budgets are typically set well in advance of the next fiscal year and are part of a ritualistic dance of managers overestimating required amounts to obtain necessary funding for the next year from senior management.

Not using or spending all of your allocation this year assures you of a lower budget next year.  Therefore, projects, which may have been rejected or sent back for retooling, are pursued.  The goal is to utilize the R&D or advertising dollars in order to help preserve next year’s budget.

Effort and capital are expended and the result is often a product delivered by the deadline whose failure could have been predicted.

2. The product concept is the “pet” idea of a senior executive or powerful person in the organization:

Parochial interests may impinge on the greater good of the firm if pet projects, which are not sound, are allowed to proceed. Nevertheless, they go forward.  They exhaust scarce resources.  Lost opportunities are the price we pay for these ideas.

3. We must introduce the product by the promised deadline:

An expected delivery date is often decided upon for product introduction before the product has even been planned and executed.  The development team strives to balance the necessary resources and project components with the need to meet the projected deadline.  Many times unwise shortcuts or scaled down versions of the product are the result of inflexible timelines.  The product is introduced to a marketplace, which views the product as too generic, incomplete or unsophisticated.

The executive responsible for ensuring that a product is delivered in the prescribed time simply crosses off the project and focuses on meeting the deadline for another project.  To the project leader, bare bones or not, a product has been introduced in the prescribed time.  What are the implications for poorly executed or completed products?

Playing catch up in subsequent months to enhance the product may be too late and position the company in the eyes of buyers, wholesalers, and sales representatives as missing the mark with the initial product.  A potentially highly salable item becomes an inconsistent performer or outright flop.  In the short run, goals are met; however in the long run goals are unmet.

The Takeaway

To get the full picture, we must examine the foundations of why we launch new products and eliminate those approaches, which by their nature, are most likely to lead to failure.

That is what is on my mind.  What do you think? Please leave a reply in the Comments Section below.

  1. Has this series on the reasons why products are developed matched your experience?
  2. For what other reasons have you developed products?
  3. Do you have different experiences with services versus products?
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