Why New Products Fail: An Interview with Tony Ulwick, Founder and CEO, Strategyn Stephen Shaw 11 months ago <span data-mce-type="bookmark" class="mce_SELRES_start amp-wp-32ab865" data-amp-original-style="display: inline-block; width: 0px; overflow: hidden; line-height: 0;"></span><span hidden data-amp-original-style="display: inline-block; width: 0px; overflow: hidden; line-heig</p> <p><strong>ht: </STRONG> 0;” data-mce-type=”bookmark” class=”mce_SELRES_start”></span><span style=" class="amp-wp-2cf7910"> <p><strong>ht: </strong> 0;” data-mce-type=”bookmark” class=”mce_SELRES_start”></p></span><span data-amp-original-style="display: inline-block; width: 0px; overflow: hidden; line-heig</p> <p><strong>ht: </STRONG> 0;” data-mce-type=”bookmark” class=”mce_SELRES_start”></span></iframe></p> <h3><span style=" class="amp-wp-9530d27"><strong> Tony Ulwick is a pioneer in job-to-be done theory and practice and the author of the book “Jobs To Be Done”</strong></span> <p></p><p>The legendary Harvard Marketing Professor Theordore Levitt is widely credited with saying, “People don’t want a quarter inch drill, they want a quarter inch hole”.<br> </p><p>Except he never came up with that saying himself. In his 1969 book “The Marketing Mode” he was actually quoting an obscure New York ad executive by the name of Leo McGivena. Even McGivena may not have come up with it. It’s possible he may have cribbed it from a 1942 newspaper insurance ad that appeared in a Pennsylvania newspaper. The ad copy read in part: “Hardware stores report that over one million men bought one-quarter inch drills in one year. Not one of those million men wanted the drills. They wanted quarter inch holes in metal or wood.” However, Levitt did add this pithy adage of his own: “People don’t buy products; they buy the expectation of benefits.”<br> </p><p>Whoever deserves full credit, the saying is as true now as it was then: when people buy a product, they are looking to solve a problem and satisfy a need. But here’s the mystery: if most marketers acknowledge the wisdom of that saying, why is innovation still largely hit-or-miss for most companies – mostly miss? Depending on the industry, the product failure rate is something like 75-90%. And that record of futility has barely budged in the decades since Levitt immortalized that saying.<br> </p><p>Think how many thousands of new products hit the market every year and the huge amount of R&D money behind it. Think of the time and effort to nurse those product concepts through every phase of the stage-gate process. Think of the money spent on market research – on engineering design – on prototyping and testing – on business case development – on product launches. Companies plow stubbornly ahead relying on the flimsiest signals, thinking they know what the customer wants, when really they don’t. The high-level “needs statements” they extract from segmentation models and personas are often vague, generalized, and subject to misinterpretation. When those new products eventually make their way off the factory floor, they are usually met with a collective yawn or outright rejection by the marketplace.<br> </p><p>A solution to this game of chance began to take shape in the early 1990s when Tony Ulwick, who had founded an innovation consulting firm after a decade of observing product flops at IBM, invented a patentable process he called “Outcome-Driven Innovation” (ODI). His idea, in short, was that customers “hire” products to perform specific jobs in their lives. What marketers needed, he believed, was a failsafe way of matching those jobs to the right solution. Taking his cue from Six Sigma principles, he came up with a systematic process for identifying and prioritizing desired job outcomes based on a rigorous analysis of customer needs (read “jobs”). In 2003 he codified his process in a book titled “What Customers Want”, arguing that marketers can take the guesswork out of innovation by adopting his method of filtering and ranking potential opportunities through the eyes of the customer.<br> </p><p>Around that same time the famed Harvard Business School professor Clayton Christensen, renowned for his theory of “disruptive innovation”, published a book called “The Innovator’s Solution” in which he introduces his own “jobs-to-be done” theory as a companion to his “disruption thesis”, recommending that businesses focus their innovation efforts on identifying jobs customers can’t get done due to a lack of available solutions.<br> </p><p>By that point Tony Ulwick had already spent a decade or so helping businesses transform their innovation processes and dramatically reducing their new product failure rates. Today his starting point is to convince companies that they can achieve a sustainable competitive edge by segmenting their market around unmet or underserved customer needs. The trick is to define a need as a job that needs to be done with multiple desired outcomes that can be measured, scored and ranked. Doing so makes the innovation process far less risky and much more predictable.<br> </p><p>I started by asking Tony about his awakening at IBM following the disastrous launch of PCjr and the lessons he learned from that historic dud.<br> </p><p><strong> Tony Ulwick (TU):</strong>: Like you said, PC Junior was supposed to take over home computing and put IBM on the map in the consumer space. Instead, the day after it was introduced, the headlines in the Wall Street Journal read, “The PC Junior is a flop”. And of course we didn’t believe it. We thought, they don’t get it. Unfortunately, we didn’t get it. They had it right. And about a year later, we closed down the plant and it was about a billion dollar failure. I asked the same question you asked: Why did it fail? What happened?<br> </p><p>Manufacturing engineer at the time working on the manufacturing line, setting it up, getting production ready. But I was very interested in why it failed. And I started looking around IBM to figure out, you know, what research went into this, how’s the process work, that kind of thing. And I quickly realized there wasn’t really a process. It was a pure technology push. It’s like, if we have technology that can do this stuff, let’s do it, right? And that still happens today all the time as well. So it’s not just IBM’s problem back then, it’s many companies problem even still today.<br> </p><p>But in essence, and you read this all the time, you know, why do products fail? They fail to meet a customer need. That’s it, the top reason. And it repeats itself over and over again. And, you know, from that point on I just said there’s got to be a better way. And I got very interested in innovation as a process and working in the space, trying to create a process that mitigates the risk and it’s more predictable ever since. So that’s it in a nutshell.<br> </p><p><strong> Stephen Shaw (SS):</strong>: So you stayed on at IBM for I think another 10 years after the PC Junior flop.</p>
