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Estimating the probability of success is important for any product or service. In fact, do this right now for a new product you might be involved with, or for your marketing plan product:
- Roughly estimate the overall probability
of success. Multiply:
|
% |
Probability of technical completion |
| X |
% |
Probability that it will actually be commercialized |
| X |
% |
Probability that market will accept the product, and you will be profitable |
|
| = Likelihood of a Successful New Product Launch |
Example
Imagine a novel DNA purification system. You estimate that there is a: |
|
90% |
Likelihood that the basic concept will work, technically |
| X |
80% |
Likelihood of creating a cost-effectively produced, commercial product |
| X |
80% |
Likelihood of market acceptance/profitability |
|
| = 58% Probability of New Product Launch Success |
- Decide if you (or your investors) can live with that probability. Given the numbers above, there's a little more than a 50/50 chance that you'll make it as a commercial success. Do you think this will impress your investors? Your senior management? Does this impress you?
- Determine which part of the
probability equation you must change in your favor. What will you do to increase your probability of success? Here is where you can pre-empt a failure and pull off a new product success.
No matter what the answer, it's essential to have an effective new product development model.
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