New innovations are ten-a-penny in the tech business world. Over a quarter of a million new products are launched every year in the USA alone – and that’s a conservative estimate. It doesn’t include all those ideas that didn’t make it to the invention stage, nor does it include the multitude of products that NEARLY made it to launch but ran out of steam, or resources along the way.
Whether it’s new technologies, new ways of looking at old problems or creating new problems entirely, the appetite for invention seems to be unquenchable. Yet so many new products fail to get launched or build any traction, even when they are developed by large companies in their sizeable and well-resourced product development labs. According to reports, 66% of all products fail within 2 years and over 96% do not return the capital investment in development. The failure rate is high in the technology sector where over 90% of all technology companies fail within 2 years, regardless of the investment they receive.
What makes a technology product succeed?
The B.U.I.L.D. model for a tech business?
The B.U.I.L.D. model is a step by step process for the investment and development decisions making of a new product or technology. Each project is assessed through pre-defined stages that gives you an opportunity to either halt or proceed with further investment over a period of time. Each stage allows the product development to be tested, refined and paused for decision on whether to invest further resources to progress with the idea. This allows you to make sure that every area of the product has a “common sense check” and a market test before launching.
Using the B.U.I.L.D. method means stop or proceed decisions are made earlier thus saving investors’ money and ensuring a better chance of a successful launch.
From having the “Big Idea” through to “Deliver” the product is invested in only as far as it passes the stage tests. Each stage has a “bulls” test built into it to keep focused on the problem you are solving, make sure the development team are grounded and focused on the appropriate outcomes for the end customers – including the differentiation between who the users are and who is buying the product.
What this MODEL achieves
Even the most successful entrepreneurs have come up with ideas that sounded great but just didn’t work commercially. In a report from a leading market research organisation only 40% of developed products make it to a market launch, and of those only 60% generate revenue – which means 75% of all products don’t result in any paid sales at all regardless of where that investment comes from. This makes product development a risky prospect. Using the B.U.I.L.D. methodology mitigates some of those risks.
One of the major challenges of many new businesses is being underfunded, which often means that any new product development projects are doomed to failure at the start. The B.U.I.L.D. model allows you to stretch the budget and get the most out of valuable and scarce resources. Equally it can be used in some of the most cash rich and well capitalised businesses to explore more ideas that they would otherwise pursue. In a world where ideas are cheap and its investment in the execution that is the main challenge. The more idea that are explored, the more successes there will be.
Using the B.U.I.L.D. methodology allows the balance of speed of development (the old adage “Fail fast” comes into its own here) and building a product that is precisely what the market wants (rather than needs). Timing is often everything. One of the major factors in business success is TIMING! Changes in the economy, in technology, in social attitudes can all influence the outcomes for your fledgling business.
Bill Gross gave an excellent TEDx talk in 2015. He wanted to find out why so many failed! He wanted to know what influenced success after analysis of success factors in 100’s of Start-Ups, was surprised by the outcomes. He used to think that the IDEA was the key, though he also looked at the TEAM, the BUSINESS MODEL, levels of FUNDING and TIMING.
Having looked at 200 companies, he judged that for 42% of all the companies, TIMING was the biggest factor in their success. This was followed by TEAM at 32%. Surprisingly FUNDING was the last factor in the list.
The other aspect of speed is that if you have identified a compelling pain point then someone else will also have noticed it and may get a solution in the market before you. Competition is not a bad thing but getting the right solution at the right time can change your outcomes.
Some of the main challenges the B.U.I.L.D. model overcomes includes:
- Lack of preparation and market research
- Over promising and underdelivering on the product features and benefits
- Not having the capacity to scale if the product takes off
- Lack of product differentiation leaving the product languishing in limbo
- Potential customer just doesn’t get it and need educating
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