When it comes to deciding whether to launch a new product or not, there is no Magic 8 Ball of right answers. Indeed, it may seem like a Magic 8 Ball was used — or the throw of the dice, or the toss of a coin — on a multitude of unsuccessful unveilings lately. But clearly, there are more strategic ways of getting through what has become known in the industry as the go/no-go decision-making process. Most importantly, these strategies can benefit and be fitted to a company no matter its size — including those looking to outsource the manufacturing or packaging of that “next great idea.”

Certainly ideas are aplenty; actual new-product winners, not so much. In the past three years, approximately 6,000 new products, including line extensions, were launched in both food and non-food in the United States, meaning 1,700 to 2,000 were launched each year, according to Information Resources Inc. (IRI), Chicago. Of those, only about 20 percent crossed the $7.5-million benchmark in year-one dollar sales; only 1 to 2 percent crossed $50 million.

“Those are bleak numbers; most new products fail,” says Sunny Garga, president of the business and consumer insights group at IRI.

And the common benchmarks are not even considered high. “Many [larger] companies talk about a new product being successful only if it’s done $100 million in its first year,” maintains Lynn Dornblaser, senior new product analyst at the Chicago-based Mintel Group.

So what’s wrong? “There is a big problem with go/no-go lately,” according to Garga, particularly the present “formula” for success that many companies follow when introducing a product. “There’s some dialogue with consumers, then they do a concept test, then they take it to market,” he says. “Our contention is that this is not sufficient.”

A Systematic Approach

Stage-Gate, trademarked by the Product Development Institute Inc. (PDI), is perhaps the most widely recognized new-product process that companies can use in determining the go/no-go decision. The Stage-Gate System is basically defined as “a conceptual and operational road map for moving a new-product project from idea to launch,” according to PDI. More specifically, Stage-Gate divides the effort into distinct stages separated by management decision gates. Cross-functional teams must successfully complete a prescribed set of related cross-functional tasks in each stage prior to obtaining management approval to proceed to the next stage of product development. Further details of each stage and gate can be found on PDI’s Web site: www.prod-dev.com.

But the formality and time/labor investment of Stage-Gate is not for every company, nor does the process ensure success. Simply put, “The process advises companies to the degree of risk and consequences,” says Wes Crnkovich, founder and president of Fresh Business Solutions, a consulting company based in Watertown, Wis.

Larger companies are usually attracted to Stage-Gate because it is “a process that allows everyone to stay coordinated on a new product assignment,” maintains Tim Straus, co-founder and chief marketing officer of The Turnover Straus Group, a food and beverage innovation company based in Springfield, Mo.

“Smaller companies may go through it, but they don’t need to — their stakes are lower,” Dornblaser says.

But regardless of whether or not Stage-Gate is applied, and regardless of the size of the company, there are strategic ways of churning out more successful new products moving forward. And despite the actions of many “innovators,” confirming a great idea with friends and family — or even with a few random consumers — is not one of those “strategies.” Straus likens this method to “throwing the dice and hoping 7/11 will come up.”  Others have referred to it as “throwing [the new product] against a wall and praying it sticks.”

To help ensure a much better new-product success rate, Garga and IRI have outlined a three-step plan:


1.Get sufficient and continuous consumer input. Garga believes that potential end users of the new product should be more directly involved in its early stages, and throughout the go/no-go decision process. “There needs to be more active dialogue with consumers and their active involvement in the product development life cycle,” he says. This means using continuous methods of gaining their feedback, including the latest Internet attractions such as You Tube (for ads and such, which Garga explains was utilized recently by Procter & Gamble in the United Kingdom). “The technology today allows us to talk to the consumer and engage in dialogue a lot more than in the past,” he says. “It can help develop pricing, etc.”

And all that “dialoguing” doesn’t necessarily have to be pricey, but it does chalk up hours on the clock, according to Straus. “You can do some very effective testing without incurring a whole lot of expense dollars,” he says. “There’s nothing quite like talking to people about your product and observing them using your product, but that tends to take time.” Do you need 200 people to be successful? Probably not, he adds, especially if you’re a small-to-mid-sized company. “If you talk to 20 or 30 people and really listen to the results,  that might get you where you want to go.”

2.Test the new product in stores. “Very few companies do this; they do a concept test and put it on the shelf,” Garga says. What he and IRI suggest: physically testing a new product in one or two areas, in a handful of stores each, before the national-scale roll-out. “We found companies that do this have an 85 percent higher chance of success, but many skip it because of the time and cost,” he adds.

3.Look for more retailer collaboration. Ideally, retailers should have as much input into the success of a new product as the manufacturer. “A lot of times we see a product fail, not because it was a bad idea or wasn’t strong enough, but because of bad execution,” Garga explains. “Maybe it was supported by a bad promotion, had bad placement or it wasn’t supported by the retailer with the right set of products at the right price. Manufacturers and retailers will have to get it right together to ensure a higher rate of success.”

With the employment of these steps, Garga isn’t suggesting there will be zero failure. “There is no magic formula, but we think these three points will increase the new-product success rate to 50 percent,” he maintains. Another way of looking at it — companies that follow this plan can reduce their chances of failing down to 50 percent.

Adding some “gut” into the mix, is OK, too, and a big part of what Robyn Waters, a trend consultant and author based in Minneapolis, and formerly an executive with Target Corp., now preaches. Stage-Gate and other formal processes “will never get a company to break-through innovation, or what I call, reframing,” she says. Reframing the rules, such as she says Target has done to the world of discount retail, brings in human instincts to new-product development. “If you use your intuition, you can help inspire desire; if you only use logic, you will have function and value, but to me, those are just points of entry for new products today,” she explains.

The ultimate goal is to use the numbers but still keep the go/no-go decision a human one. “We are at a time in life where we have this incredible access to data [of all kinds], yet we find it more and more difficult to make a decision,” concludes Crnkovich. “What is missing for many companies in the go/no-go is looking beyond the data-driven process. It’s the trust that says, ‘I’ve seen enough of the data and I don’t need to analyze it to death.’ The challenge is to learn what is uniquely human about the business and the innovation.”