In this part of the world, most new products launched onto the market fail to deliver the expected results. It has been discovered that it is difficult and risky to take an innovation (no matter how great) from concept all the way through to commercial success. This discovery led to the fundamental questions entrepreneurs need to ask about an innovation before launching. The questions were developed using R-W-W {Real- Win-Worth} Screen originated by Dominic (Don) M. Schrello. The R-W-W Screen is a simple tool built on a series of questions about the innovation concept. It is not a step by step plan for making go/no-go decisions, rather, it engages a disciplined process that can be employed at multiple stages of product development to expose faulty assumptions, gaps in knowledge, and potential sources of risk, and to ensure that every avenue for improvement has been explored.

Innovation is inherently messy and nonlinear which makes the three fundamental questions “is it real? Can we win it? Is it worth doing?” very crucial.

RWW chart

Is it real?

Whether a market is real or a product can be made to satisfy that market are the first steps in screening a product concept. Figuring it out would indicate the degree of opportunity for considering the potential market and how competitive the market might be from the start. One might think that asking if the conceptual product is even a possibility before investigating the potential market. But establishing that the market takes precedence is because the evincing strength of the market is almost always less certain than the technological ability to make something. The probability of a product failure becomes greater when the market is unfamiliar to the entrepreneur than when the product is unfamiliar. The ability of a company to have a precise understanding of the market concept and how the product can meet its needs is far more important than the technological concept of the product. In fact, research by Proctor and Gamble suggest that 70% of products failures occur because companies misconstrue the market.

A market opportunity is real only when four conditions are satisfied: the proposed product will clearly meet a need or solve a problem better than available alternatives; customers are able to buy it; the potential market is big enough to be worth pursuing and customers are willing to buy the product. It should be noted that there is a difference between being “able to buy” and “willing to buy”.  Once a company has established the reality of the market, it should look closely at the product concept; is it a clear concept, can the product be made and if the final product would actually satisfy the market.  Whether the market and the product are real should dominate the company’s thinking dialogue at the start of the developmental process.

Can we win?

The next step after determining that the market and product are real is to gain and hold an adequate share of the market. Simply finding a real opportunity does not guarantee success. The more real the opportunity, the more likely it is that hungry competitors are eyeing it. And if the market is already established incumbents will defend their positions by coping or leapfrogging any innovations. A real example can be sighted with Pepsi and Coca-Cola. Customers would choose one product over alternatives if it’s seen as delivering superior value with some combination of benefits such as better features, lower lifecycle cost and reduced risk. The company must assess all sources of perceived value for a given product and consider the question does it have a competitive advantage? Can the advantage be sustained? Competitive advantage is only as good as the company’s ability to keep imitators at bay. Considering this, one must contemplate how the competitors would respond.  A good place to start would be doing a war exercise; if we were going to attack our own product, where would we start? What vulnerabilities would we find? How can we reduce them? A common error companies make is to assume that competitors will stand still while the new entrant fine-tunes its product prior to launch.

After establishing that what the company offers can win, the team must determine whether or not the company’s resources, management, and market insight are better than those of the competition. For example, most companies wait until after development to figure out how to price the new product and then sometimes discover that the customers would not pay. Procter & Gamble avoids this problem by including pricing research early in the development process. It also asks customers to actually buy the products in development. Survey questions where the customers answer whether they would buy a product are not always reliable for future purchasing behavior.

 

Is it worth doing?

Just because the product can pass the tests up to this point does not mean it is worth pursuing. The final stage of screening provides a more rigorous analysis of financial and strategic value.  Are forecasted returns greater than costs? This requires projecting the timing and amount of capital outlays, marketing expenses, costs, and margins; applying time to breakeven, cash flow, net present value, and other standard financial performance measures. Most importantly estimating the profitability and cash flow from both aggressive and cautious launch plans. Unfortunately, if not careful forecasts of financial returns of new products are notoriously unreliable and involve a considerable amount of risk. But the company has to answer the question are the risks acceptable? Consider all the potential causes of product failure that has been unreeled by the R-W-W screen and devise ways to mitigate them like partnering with a company that has market or technology expertise your enterprise lacks.

Before launching a business venture or product, it certainly pays to spend some time to consider the above. It just might be the determinant of success for your business or product. At the very least, you will be as informed about the market as you are about your product and with that knowledge combination, you can hardly go wrong.

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