Learn to identify your product's innovation.
Most companies fail because they put themselves in a position with an increased likelihood of failure. If you’re not bringing innovation to the market, based on their needs, you’re likely to fail. You’re then working against the numbers.
Here’s what Waverly Deutsch (Clinical Professor of Entrepreneurship at Chicago Booth) had to say when asked, “why do so many startups fail?”
At its basic core, it’s a numbers game. There are about 6 million employer companies in the U.S. and every year about 400K people attempt to start a new business. Well that;s about 8% of all comapnies. So, in an economy that’s only growing at 1-2% a year, there simply isn’t enough rooom to absorb new companies.
There’s another problem. Very often entrepreneurs choose to start their businesses in industries that have low barriers to entry, low cost of capital, low initial investment. So, in 2006 about 35% of new startups fell in retail, food services, and accomidations.
Well, those industries only make up 9% of the economy. When you’re in an industry that has low barriers to entry, low capital requirements youre going to have a lot of compitition. Which means a lot of those businesses are not going to work.Wery Deutsch https://www.youtube.com/watch?v=l_9OGlnAT58
So, by taking a numbers perspective it’s easy to see that a commodity approach to starting a business means your putting yourself in direct competition, not only with existing players but with the majority of new ones as well. With 35% of new companies starting every year in direct competition with each other, they’re creating negative space for attention.
If you’re not innovating on what the market needs then you’re hoping for luck to strike.
When we think of innovation one may think of technological advancements or global-scale impact. While you need to think big you also need to think narrow.
A Couple of Examples
As an example, The Body Shop‘s innovation was to lead people towards a world where cosmetic and skincare products were produced with zero harmful chemicals. It seems odd when looking through a contemporary lens but this innovation, this seemingly slight twist of a product, was missing from the market.
Here’s another example: Copilot‘s innovation was to remove every barrier between a PC support specialist and their customer. Life for a specialist before Copilot meant 30-60 minutes of ramp-up time and guesswork, completely blind to what was happening on the side of their customer.
These were not difficult innovation opportunities to identify. Before The Body Shop, you knew full well that there were harmful chemicals in your skincare products. Before Copilot you knew what an aggravation remote tech support was like.
You’re Product’s Innovation
The questions then become, why:
- Make life difficult for yourself?
- Go through the aggravation of trying to come up with opportunities out of thin air?
- Not let others point you towards the opportunities?
- Do what everyone else is doing?
When you start asking these questions and interacting with your customers you’ll begin to understand what’s innovative about your product. You won’t be so quick to scrap things and start fresh. You will, however, start to think about your marketing and copy in new ways. With a focus on innovation.
Innovation is rarely something you see. It’s an idea as much as it is inherent in the product.