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Why it's easier for established businesses to bring new products to market

I’ve been reflecting recently on the difference between product development strategy for developed businesses and start ups. 

An established business has customers, business infrastructure, cash flow and an experienced team.  A lot of solutions to the problems of developing new products and taking them to market are already in the business DNA and infrastructure.  There are people who know what to do, and have the supporting systems they need to do it.  Above all, the business has customers, and can reasonably predict how they will respond to a new offering. 

A start up can theoretically build a team, put in place infrastructure and buy systems.  It can’t really predict how strongly customers will respond.  Market research and focus groups can tell you a lot of things, but not how much customers will like the product and how compelling it will be for them. 

An established business can generally write a detailed specification for a product and set about designing it, producing it and selling it.  That is a risky path for a start up. The biggest risk for a start up is not that no one will buy the product; it’s that they won’t buy enough, or quickly enough.  That’s when the business becomes a zombie; it won’t die, it absorbs money, but fails to thrive.

Paradoxically, the best thing a start up can do is be inefficient when developing its product.  First make something, then get it into customers’ hands and find out what they really want.  Then do it again.  That approach solves several life threatening problems for the start up.

Aiming for a final design in one cycle may consume all available funds for no result.  Having potential customers using the demonstration version will teach you how much they are prepared to pay, how much they really want it, and how many customers there really are.  Armed with that knowledge, you will be able to raise money to develop your production version that does what customers really want, is priced how they expect to pay for it, and is produced at the volume needed.

Out team has worked in established businesses and is experienced in the “do it once, do it right” approach that works when adding new features to an established product line.  We do that when it’s the best approach for our clients.  We’ve also worked extensively with start ups and have developed a library of pre-existing design blocks we can use to get your first demonstrator into customers hands at low development cost.  Give us a call if you would like to know more.

Stewart Snell

Chief Executive Officer