As a part of the National Manufacturing Day 2016 celebration efforts, the White House issued a Call to Action: “inspire the next generation of manufacturers and support entrepreneurs manufacturing their first product in the United States.” An essential component of entrepreneurship success is to understand the reasons behind venture and product development failures, and take necessary steps to mitigate such risks.
Why Do Nine out of Ten Ventures Fail?
Mr. Steve Blank is a Silicon Valley serial-entrepreneur and academician who is recognized for developing the Customer Development methodology, which launched the Lean Startup movement. In his book, titled: “The Four Steps to the Epiphany – Successful Strategies for Products that Win”, Mr. Blank states,
What if everything you think you know about taking products to market is wrong? What would you do differently if you realized that only 1 out of 10 new product introductions result in a profitable business? Would you continue to operate the same way, week after week, year after year? The surprising fact is that companies large and small, established corporate giants as well as brand new startups, fail in 9 out of 10 attempts to launch their new products. They unnecessarily burn through billions of dollars as they try to force their new products into markets where no one is waiting to buy. Yet time and again they all return to the same processes that produce failure.”
The Art & Science of Product and Market Fit
What is needed is a business model which helps startups or corporate product development teams to develop an effective fit between Product Development and Market Development processes. The following figure represents a suggested business model.
The above model has three components which are balanced at an optimum Product-Market Fit level which is represented by a Red line. These components are – (a) NASA/DoD-developed Technology Readiness Levels (TRLs)-based assessments process, (b) Mr. Steve Blank suggested Market Development process, and (c) A DoD/GAO-adapted process to develop a balanced fit between Product and Customer needs.
This model was introduced during a lecture which I delivered at the University of California, Irvine (UCI) Applied Innovation Center to celebrate the National Manufacturing Day 2016. The presentation slides are available at the UCI Slide-share website –
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