A strange thing happens when a business adds to its products or services. Often by trying to expand and diversify they add a “complimentary” service they fall in to the trap of moving beyond what they’re known for.
A great idea for a product (or service) isn’t enough reason to create it and sell it. There are some key areas a new product or service should satisfy before it is considered and developed further. The impact, positive or negative, goes far beyond the financial - succeed or fail, your new offering could become what you’re known for, so you have to get it right.
- Who needs it?
This is more than identifying the market for the product. You should be identifying what the product is, what it does and why that is important to someone who might buy it.
If there isn’t a clear market for your product, one which will purchase in quantities to make the endeavour worthwhile, entering into the space will be a risk for the business. If you are producing something without a perceivable need the market may see it as a negative, solely profit driven move, and you may find yourself damaging your brand.
- What does it add?
This one has two parts. What does this project add to the customer, that they can’t get from your competitors and their offering? If what you are aiming to present doesn’t innovate or revolutionise an element of what the customer can already purchase, it needs work, or it isn’t a great idea.
The other part is what does your business get from producing it? You should be thinking beyond the financial - there should be a strategic gain to come out of what you’re doing. Building a strong business stems from what you offer. If you don’t
- Why are we doing it?
The answer to this one shouldn’t be only profit. Any new endeavour should have a sound strategic goal as well as financial ones.
The new product should have a link back to the way you have done business in the past. Diversifying your offering is great, but you should be sticking to your strong suits. Your business will become confused and costly to run if you start to provide services outside of your core organisational knowledge.
- Do we know how to do it?
This is probably the most important point. You need to be able to deliver what you’re promising as a business. This means having the strategic and physical resources as well as the capacity to do so.
Learning new skills or buying them is expensive, but it is possible. The fundamental step many businesses miss when they are expanding their offering is acknowledging the parts they don’t know how to deliver.
Identifying early in the process what the additional costs over your normal product or service development and delivery is important to being able to make an educated and accurate estimate regarding your financial position.
It is common for costly delays and revisions to stem from needing to revisit parts of a project the business didn’t know how to do. Identifying these potential issues early is vital to accurately weighing up the viability of the new product.
What is the message?
I’m not saying your business shouldn’t go for something new, not by any means. I am saying it is really important you carefully examine the way a new product fits in to your business before you get to the point where you are offering it to the market.
If something truly has merit and is viable there should always be a way to make the most of it. It might be a matter of setting up a new or subsidiary company to do it, or partnering with another business to protect both the new and the existing part of your business.
The best way I have found to make sure you have a fit is to be ruthless with yourself and your business, and to let others be ruthless with your business and ideas. If you can break it right down and emerge on the other side with a way forward you will be much stronger and ready to capitalise.
The Coaster Group approach is focused on getting the best version of an idea in to the hands of the consumer. Visit our website to find out more or email me - if you have some thing on the boil, I'd love to hear about it!