~25% of new product development efforts reach commercial launch. Of those, 45% still fail to meet profit objectives. The product is rarely the problem.
The core message: before diving into a new initiative, understand the ecosystem you need to integrate with for your efforts to even have a chance.
- Three types of risk every innovation faces:
- Execution Risk — can you build what you're promising, on spec and on time?
- Co-Innovation Risk — does your success depend on other innovations also succeeding?
- Adoption Chain Risk — do partners need to adopt your innovation before end consumers even get to evaluate it?
- Co-innovation risk is multiplicative, not averaged. Four suppliers each with an 85% success rate = 52% joint probability. Replace one with a 20% success rate and it collapses to 12%. One weak link breaks the whole chain.
- Innovators think in absolute benefits — what the product delivers. Customers think in relative benefits — what it delivers compared to what they already have, minus all switching costs (retraining, upgrades, disruption). Adoption only happens when the customer sees a clear surplus.
- Every intermediary in the adoption chain needs to see surplus too. One rejection breaks the entire chain. Remember which customer matters — all of them.
- The early bird gets the worm, but the second mouse gets the cheese. In an ecosystem, being first only matters if your co-innovators are ready. Often they're not.
- Minimum Viable Ecosystem — before scaling, identify the smallest configuration of elements needed for your offering to create unique value. Build out from there in the order that best enables subsequent expansion.
- The right questions when stuck: What can be separated? Combined? Relocated? Added? Subtracted?