Monday, April 18, 2016

Failures #1: 18 Colossal Failures

INTRODUCTION

On April 16, 2016, USA Today had an article entitled “The 18 worst product flops of all time.” It was based on a study conducted by 24/7Wall St. to determine which were the most colossal new product failures since 1950. The 18 flops, and my interpretation of primary causes of the flop, are as follows:

1. Edsel by Ford Motor Co.
Key Mistakes:
·   Insufficient New Benefits
·   Too Expensive

2. Touch of Yogurt Shampoo by Bristol-Myers Squibb
Key Mistakes:
·   Confused Customers
·   Eaten by Mistake

3. Apple Lisa by Apple
Key Mistakes:
·   Too Expensive

4. New Coke by Coca-Cola
Key Mistakes:
·   Misunderstood its Brand
·   Trying to Win by Imitation

5. Premier smokeless cigarettes by RJ Reynolds
Key Mistakes:
·   Innovated Too Soon
·   Questionable Benefits

6. Maxwell House Brewed Coffee by Philip Morris Companies
Key Mistakes:
·   Confused Customers
·   Innovated Too Soon

7. Harley Davidson perfume by Harley Davidson Motor Co.
Key Mistakes:
·   Brand Extension Too Far

8. Coors Rocky Mountain Sparkling Water by Adolph Coors Co.
Key Mistakes:
·   Branding Issues

9. Crystal Pepsi by Pepsico
Key Mistakes:
·   Insufficient Benefits
·   Novelty/Fad

10. The Newton MessagePad by Apple
Key Mistakes:
·   Innovated Too Soon

11. Persil Power by Unilever
Key Mistakes:
·   Defective

12. Arch Deluxe by McDonald’s
Key Mistakes:
·   Insufficient Benefits

13. Breakfast Mates by the Kellogg Co.
Key Mistakes:
·   Insufficient Benefits

14. WOW! Chips by Pepsico
Key Mistakes:
·   Defective Product

15. Hot Wheels and Barbie computers by Mattel
Key Mistakes:
·   Defective Product

16. EZ Squirt (colored) Ketchup by Heinz
Key Mistakes:
·   Defective Product
·   Novelty/Fad

17. TouchPad by HP
Key Mistakes:
·   Innovated Too Soon

18. Google Glass by Google
Key Mistakes:
·   Pros overwhelmed by Cons

Over the next few blogs, we will look at some of the lessons to be learned from these failures, so that you can avoid them.

LESSONS LEARNED

Lesson #1: Innovation is Not a Panacea
These 18 innovation flops were huge, causing losses in the millions of dollars. Yes, they may have been outlyers, since most flops are less colossal. But that doesn’t mean that flops are rare. The article claimed that about 40% of new product introductions are flops.

I believe that the 40% failure number underestimates the problem. A lot of what is considered a “new product” isn’t really much of an innovation. It can be just a minor brand extension, like adding a new flavor or size. It is a low risk/low reward bet on a minor tweak. It is not a truly innovative new product.

If you only look at truly innovative new products, the failure rate is much higher—over half.

I know a lot of companies have a strategy based on some variation of “winning via innovation.” The idea is that future success will come from merely introducing new products. The problem is that if over half of innovations fail (and some fail spectacularly), innovation is not automatically going to lead to success.

Just because you innovate doesn’t mean you’ll win. If fact, the odds point in the other direction.

Innovation is more like a tool than a strategy.

Tools are great, but only if used to achieve a viable strategic purpose. For example, cost control is a great tool but not a strategy. It is meaningless to have the lowest cost of production if you are producing something nobody wants. The strategy must first tell you what is desired. Then, cost control can be chosen as a tool to help make it a reality.

Similarly, it is useless to innovate if you are creating innovations which will flop. Just because something is new does not mean it is the right thing to produce. Innovation only succeeds if you are using it as a tool to implement a greater strategy—a strategy which takes into account all the greater issues like image, branding, positioning, switching costs, consumer trends & habits, etc.

The strategy is the vision of what will win. Innovation and cost control are just some of the many tools you can use to achieve the vision.

Make sure your strategy embraces desirable outcomes rather than just embracing a particular business tool, like innovation.

Lesson #2: Don’t Mess With The Mouth
A friend of mine in consumer research used to say that consumers are particularly sensitive regarding anything that goes in the mouth. They may be forgiving of shortfalls and miscues in other areas, but they expect something a lot closer to perfection when it comes to things put in the mouth. Mess up on things put in the mouth and you will pay a heavy price.

This makes sense, since:
  • Health issues are at greater stake;
  • Image Issues are at greater stake (You really are what you eat, including the brand image of what’s eaten).
This seems to be verified by the results. If you look at the list of 18 flops, half of them (nine) are items put in the mouth. If you count the fact that people were mistakenly eating the Yogurt Shampoo, it becomes 10 items.

The lesson here is that if you are innovating around items that go in the mouth, be especially careful. People take these more seriously.

Lesson #3: Innovations Need to Work
Some innovations fail because the new product was defective. WOW! chips caused “abdominal cramping and loose stools,” not something desired in a snack food. Persil Power laundry detergent destroyed clothes at high temperatures. The Hot Wheels and Barbie names were put on computers which didn’t work. It’s no wonder why these innovations failed.

You may start with a great idea. But, if the actual product does not deliver on that idea, then the idea is irrelevant. Make sure the product delivers on the promises.

SUMMARY

Innovation is not a panacea for success. On the contrary, random innovation is probably more likely to fail. To minimize failure, innovation needs to be seen as a tool to create a larger strategy. In addition, the innovation needs to live up to the requirements of the strategy and not be defective. Finally, one needs to be extra careful when innovating around products which go in the mouth.

FINAL THOUGHTS

This is just the beginning. Two more blogs on innovation are to follow.

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