Question

Identify the factors responsible for the high failure rates of new-to-the-world products with relevant examples.

Answer 1

Part of the reason for the high rate of failure for new-to-the-world products is that they are difficult to manage. Almost by definition, new-to-the-world products, like the first cell phone or the first personal computers, require discontinuities (sometimes several of them) in order to succeed. Consider the introduction of the personal computer. Contributing to its rapid adoption were discontinuities in technology (computer companies, including some new startups, had to design essentially a totally new computer), in the market (individual homeowners and small businesses now were buying computers, and not just big firms), organizational (personal computers were sold in electronics shops and department stores, not through a professional sales force), and social (millions of people realized how much they needed a computer). To do incubation correctly, failure must be tolerated, but at the same time learning from the failure so that a firm continues to move toward a successful launch. Business development is often done over a one- to two-year time horizon and maybe completely done by marketing or management personnel. Due to its focus on business model development for radical innovation (in an uncertain environment), the time horizon for incubation can be three to five years, and typically technical development, as well as customer and market interaction, is involved.