Privileging the Hypothesis…or why new product ideas fail
NPD is a minefield. It’s often entered because senior management has spotted that the innovation pipeline is empty, or bunged up with sure-fire flops. And once you’re in the minefield, if the stats are to be believed, you have a 9 in 10 chance of failure, so its good news that minefield is metaphorical!
Take a look at the process and possible results outlined below if you’re in any doubt.
Which means Chief Innovation Officer is a rung on the ladder best missed out. Or is it?
First, the 9 in 10 failure rate needs inspection because the definition of failure covers a wide range of outcomes. The stats conflate failure to launch with failure to meet commercial objectives, which is the widest of definitions and could, conceivably, cover concepts culled at the idea stage.
Also it seems the rate of failure varies by market segment. Research,in the US,by the Product Development & Management Association suggests that only 35% of products failed in the healthcare market, in comparison to what it reports as only a 50:50 record of failure in FMCG.
Happily then, the odds of surviving in the minefield are at least variable. But a 50:50 shot at success is still unacceptably low given the huge amounts of time and money most companies spend on innovation. So, even if we’re better than we thought, why are we still so bad at innovation?
In a Harvard Business Review article, Schnieder and Hall put forward a number of good reasons for failure, which I’ve paraphrased below:
· Buyer inertia: In the US families, on average, repeatedly buy the same 150 items, which constitute as much as 85% of their household needs. This doesn’t leave much room for new ideas.
· Poor process: The design and manufacturing team eat nearly all the available resource and time, leaving little of either to get market ready
· Failure to scale: The company can’t support fast growth.
· Promises, promises: The product either doesn’t live up to its own claims or the claims aren’t relevant. (Maybe that’s why failure in healthcare NPD is lower, because you have to test and prove the claims)
· Education, education, education: The product defines a new category and requires substantial consumer education—but doesn’t get it.
· Revolutionary product, but there’s no market for it: Or put another way, the product solves a problem nobody has.
All of which are good reasons for being bad.
At Sagency we discovered another reason for NPD failure that is arguably even more fundamental and, surprisingly, it’s something they teach you to avoid at detective school.
A common failing in solving crime is known as ‘privileging the hypothesis’. Put simply, when solving a ‘whodunnit’ it’s unwise to decide ‘whodunnit’ and then only select evidence that supports your view of ‘whodunnit’. The arrest of Christopher Jeffries in 2010 for the murder of his tenant Joanna Yeates, and the fruitless search for evidence to support that arrest, is a good example of the ‘he looks weird so he must have dunnit’ form of privileging the hypothesis.
In NPD the fact that ‘you love the idea’, ‘your boss loves the idea’, ‘the business needs the idea’, ‘we can make the idea’, or, ‘we’re too far in to turn around now,’ are all reasons for privileging the hypothesis and the concept behind it. Research is read, but only to look for proof. Any nay-saying is either pilloried as negativity, or simply ignored. A spectacularly monocular view of ‘our precious‘ is presented to the board and, hey presto, we’re in the market with another clunker.
The way to avoid privileging the hypothesis is simple and it’s one we follow at Sagency. Never have just one hypothesis. Have many and test them all, and then continue to test the leading hypothesis against controls at every stage of the process. Ours is a tough and attritional method but it stacks the odds of success in our clients’ favour, and saves time, money and disappointment.
