Tag ‘product life cycle’
Product life cycles are getting shorter and the pressure is on to find new innovative products to sustain the development of the business. Creativity is the key.
American humorist, James Thurber observed that “the hardest thing is to convince my wife I’m working when all I appear to be doing is looking out of the window” and for many people, being creative requires simply looking out of the window. But, with shorter product life-cycles, the demand for new products is on the increase. It might have taken years to come up with the innovative new product that you’ve just launched, but you’ll need the next big idea (or major improvement) within months if the business is to scale-up sustainably. And that demands some creative thinking!
One look at Apple Inc. and the iPhone tells you that one way to approach the subject is to see how you can ‘improve’ an existing product simply because it is becoming increasingly hard to find the next big idea – and doing so ‘on demand’ is near enough impossible. Or is it? This point was put to Dr. Leonie Baldacchino, Director of the Edward de Bono Institute for the Design and Development of Thinking at the University of Malta, who believes that creativity is a mental discipline and can be taught.
“Creativity is a skill and, just like any other skill, it can be nurtured and taught. Everyone has the potential to improve their creativity, but becoming an expert creative thinker requires practice and perseverance, determination and discipline. It is not enough to want to be creative – one must take action to nurture the mindset required to generate ideas that are novel and useful.”
Taking a similar approach, thriller writer, Alex Hunter points out: “Writing the next book while the current one is going through the publication process is the difference between amateur writers and professionals – a new book every one to two years is essential.” Or consider horror writer, Stephan King, who has written over 100 novels and stories since 1960, and he puts this phenomenal creative output down to the discipline of sitting down every morning and writing. It’s that discipline that unlocks his creativity.
So, beyond sitting down and focusing on developing new products and leaving the day-to-day grind of running the business to others, what else can you do? Here are five things that will help:
- Give yourself time and space to think. Make it a regular activity and remember, it’s your responsibility as the head of the business to think; others can do!
- Understand that there are no bad ideas; some ideas are simply better than others.
- Think every day. Creativity has to be practiced!
- The best ideas come by not forcing them. Creativity is often a subconscious process.
- Brainstorming releases creative energy.
Dr Leonie Baldacchino again:
“A variety of tools have been developed to help us be more creative, and when we teach our students how to use these tools we see a marked boost in their creativity. The more they practice, the better they become, which builds their confidence in their creative skills. This in turn encourages them to try out new creative ideas and solutions, leading to further skill improvement.”
Constant creativity is hard work, but it’s absolutely essential if your business is to grow and become sustainable no matter what field you’re in.
Primarily, scaling a business depends on two factors converging: the availability of additional funds to sustain a positive cash flow, and the existence of a market for your product.
Products and services fall into two categories: those that are needed to sustain a specific quality of life, and those that are not. There is usually a market for those that are needed and so people will buy, but for those products and services, no matter how desirable they may appear to be, that are best described as wants, the market is both smaller and much less certain, and people are more reluctant to buy. The wise entrepreneur will, of course, have conducted extensive market research to determine into which category their product or service fits and will have extended that research into the saleability of the product in the geographical market in which they want to operate. After all, strategic planning, especially marketing strategy, is about deciding what product to sell, at what price and in which market.
Europe is, essentially, a consumer market with strong overtones of ‘materialism.’ In marketing terms, a ‘consumer’ is a person who buys a good (product or service) that they may not need, uses it, and disposes of it often before the end of its useful life, and then buys again. A classic example of such a product is the smartphone. Most people have one and the majority of them are on their fifth or sixth model, even though the early models still work. ‘Materialism’ exists where the individuals value themselves and others based on the goods (products, services and, particularly, brands) that they own. Think about that smartphone again: Apple iPhones are one of the world’s most sought-after goods because they are Apple, not because they are measurably ‘better’ than other smartphones.
Okay, you have a wonderful new product, you’ve done the marketing research and the data points to there being a market for it. Now the question is whether that market is big enough and sufficiently sustainable for you to sell enough units to make a return on investment.
All goods have a ‘product life-cycle’ which tracks the unit sales from introduction through the growth phase where increasing unit sales are experienced, into a mature market and finally to declining sales. And here’s the bad news: no good (product, or service) has ever managed to avoid this cycle. Even the great Apple has experienced this and at the end of April 2016 they reported a 16 % decline in unit sales of the iPhone, with most major news media reporting that the outlook was for further falls throughout the year. Even their chief executive, Tim Cook, said that the smartphone market “is not currently growing.” For the iPhone, in particular, and smartphones, in general, the market is now saturated and it ceases to be sustainable.
Unit sales, not the value of sales, is what has to be tracked in a product life-cycle, and a wise entrepreneur will also track sales revenue per product and ‘profit’ per product.
Understanding the life-cycle provides clear guidance that the next product needs to be ‘introduced’ when the sales trend is slowing in terms of units sold, i.e. just before the ‘maturity’ part of the life-cycle. If there isn’t a new product ready to launch at that point, then both cash flow and profits will decline and the business will no longer be sustainable. The market for your wonderful new product may be enormous, but unless you build sustainability into your plan in the form of new products, then scaling up a business is likely to be the wrong strategy.