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 preempt 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.