There are several examples of product flops and I think the best thing to do with these examples is to learn from other people’s mistakes, understand what went wrong and what we can do to avoid repeating the same mistakes.
Let’s look closely at a couple of examples in other industries with very detailed stories.
New coke
On April 23, 1985, Coca-Cola CEO Roberto Goizueta launched the new coke, and only 79 days after its introduction Coca-Cola announced the return of the original formula. Eventually, the new coke was discontinued in 2002.
What went wrong?
According to Wikipedia:
The sweeter cola overwhelmingly beat both regular Coke and Pepsi in taste tests, surveys, and focus groups.
About 10–12 percent of testers felt angry and alienated at the thought and said they might stop drinking Coke. Their presence in focus groups tended to negatively skew results as they exerted indirect peer pressure on other participants.
The surveys, which were given more significance by standard marketing procedures of the era, were less negative than the taste tests and were key in convincing management to change the formula in 1985, to coincide with the drink’s centenary.
However, the groups had provided a clue as to how the change would play out in the public, a finding the company downplayed.
Early in his career with Coca-Cola, Goizueta had been in charge of the Bahamas subsidiary. He had improved sales by tweaking the drink’s flavor slightly, and so was receptive to the idea that changing the flavor of Coke could boost profits. He believed it would be “New Coke or no Coke” and that the change must take place openly.
Amazon’s Fire Phone
The Fire Phone was launched in Seattle on June 18, 2014, at a press event held by Amazon’s CEO, Jeff Bezos. After several price reductions in August 2015, Amazon discontinued the Fire Phone due to poor sales.
What went wrong?
According to Fast Company:
This time, say the critics, Bezos has lost his focus. This time, they say, he is pursuing global domination at the expense of his historic drive to improve the customer experience.
As one founding team leader of the project puts it, “This was Jeff’s baby.”
Bezos’s guiding principle for Amazon has always been to start with the needs and desires of the customer and work backward. But when it came to the Fire Phone, that customer apparently became Jeff Bezos.
Bezos, insiders say, was “the product manager” on the Fire Phone.
“In essence, we were not building the phone for the customer—we were building it for Jeff,”
With Bezos managing every critical decision, teams began second-guessing themselves trying to anticipate how he would react.
About facial recognition: “I want this feature,” Bezos said, telling the team he didn’t care how long it took or how much it cost.
“We poured surreal amounts of money into it, yet we all thought it had no value for the customer, which was the biggest irony. Whenever anyone asked why we were doing this, the answer was, ‘Because Jeff wants it.’ No one thought the feature justified the cost of the project. No one. Absolutely no one.”
What can we learn from these 2 examples of great failure?
Although different, the 2 stories of new product flops have some common traits. In my opinion, these common elements are key learning points that can be applied to every product development process including the development of medical devices.
Not Meeting Customer Needs
Both projects fail to discover and satisfy customer needs, i.e., according to Griffin and Hauser “a description in the customer’s word, of the benefit to be fulfilled by the product or service.”
Although the new coke’s taste had a better score in blind tests, the problem was that it was not satisfying the need of fulfilling one specific value of the customer: the bond felt with his/her Coca-Cola, something that was untouchable. At that time the slogan of Coke was “It’s the Real Thing” which also reaffirmed the importance of being the “original” cola. Therefore, changing the formula was perceived as a betrayal.
Also, in the case of the Amazon Fire Phone the specific features of the phone, like dynamic perspective for 3D effects and facial recognition were not considered truly useful by the development team members and as you can imagine by the consumers too.
Minimizing data
Both companies didn’t consider in-depth the data on hand, for different reasons intuitions were overvalued and data were minimized. Coca-Cola downplayed the results of focus groups, where disappointed consumers reacted aggressively to the idea of the change of the formula. Amazon searching to be associated with the attribute “cool” as reported here forgot its religion of putting customers first.
HiPPO effect
A HiPPO effect is a well-studied event. Basically, a HiPPO is — the highest-paid person’s opinion — and when difficult decisions need to be made and there is a lack of data to determine the direction, the team will often defer to the judgment of the most experienced and powerful individual in the room.
Both Goizueta and Bezos had strong opinions regarding the 2 projects and according to the sources, their past successes were considered the foundation for the development of the new products. However, as for the investments where you can find a common disclaimer as ‘Past performance does not guarantee future results’ for managers too, past success is not an indication of future success. Last, both CEOs were very ‘directive’ in communicating their thoughts and ideas, making it difficult for others to dissent even if they disagree.
Alibi-Discovery
The Alibi-Discovery, for those who are not familiar, is a term describing a process in software development when the team develops a top-down idea without deeply investigating the problem to be addressed. Identifying the right problem space to explore and genuinely understanding the problem is extremely valuable for any company in any sector MedTech included.
Especially in the case of Amazon, the team was not focused on researching the struggles the potential customers have and defining the problems the product should solve. The features of the Fire phone were not based on a solid VOC and the team was focused on developing features and implementing fancy technologies that had no value for the customer. This approach is frequent also in the medical device business when technology is implemented without properly investigating the need of the customer.
What can we do instead?
Proper VOC
I think a proper VOC is a fundamental step for any new product development in Medtech and any other industries.
During the research phase, you should combine different methods since there’s often a difference between what people say and what they do. The goal is to validate assumptions on customer segments and their problems.
A complete and well-structured VOC provides insights to define a value proposition for a product for which there is an actual customer need.
It’s also important to adopt a framework to connect all the VOC insights effectively. After you define the users’ requirements, you should prioritize them.
Beware of the HiPPO effect
You’ll probably always meet bosses who want their vision, ideas, and product road maps implemented without questions and minimizing the data supporting other options. Furthermore, some companies have a culture that develops employees eager to please and do what the leaders want to be done.
Although difficult, if you find yourself in the position to push back, try to collect data to depersonalize the decision-making. Your goal must be decisions based on insights provided by solid customer data, for example, a genuine VOC. The point is what the facts state and not what strong opinions suggest.
Another way to deal with HiPPOs is to test the highest risk elements, for example, new features of a medical device. That is to test the elements that have supposed high perceived value for the customer and high risk due to technology, design, market, regulatory, etc.
Conclusion
Unfortunately, none of these approaches are flawless, but they can be useful to avoid some of the missteps highlighted in the New Coke and Fire Phone example such as not identifying customer needs, performing alibi discovery, downplaying data, and the threats of HiPPOs.
In my opinion, successful products are not the result of science, technology, and the inspiration of visionary leaders. Instead, building a culture where experimentation, iteration, customer insights, “customer discovery” and market data are at the foundation of new product development will provide a competitive advantage.
Companies that develop such a culture and implement procedures to understand customer needs and test assumptions and hypotheses have more chances to be successful.
What do you think about these two product flops? Share your thoughts in the section below and if you like the content of this blog don’t forget to subscribe for more updates.