It’s hard for any new product to gain marketplace acceptance: Most studies estimate new product failure rates at 50% or more. But it’s particularly challenging if a product is highly innovative—a “really new product” that revolutionizes an existing product category or defines a new category. Although such products may suffer from a firm’s lack of resources, expertise, or commitment, even those that are well supported and that offer consumers significant gains over existing alternatives are far from certain to succeed.
However, many firms’ ultimate success or failure depends on the successful development and adoption of innovative products. How can managers increase the odds that innovative new products will succeed?
Author John Gourville offers a behavioral framework—called the “curse of innovation”—to explain such failures, starting with the simple fact that highly innovative new products tend to require consumers to change their behavior in some way. Consumers see these changes as losses, and due to “status quo bias,” these losses loom larger in consumers’ minds than do the benefits offered by the new innovation. Developers of new products, on the other hand, are biased in the other direction—they come to regard the product they are developing as the status quo, and they subsequently undervalue the losses consumers must experience to adopt the innovation, leading them to overestimate the likelihood of marketplace success.
Managers can help innovative new products to succeed in the marketplace by understanding the degree of behavior change the innovation requires and planning for it, anticipating the rate of product adoption and tailoring marketing efforts accordingly. Alternatively, the product itself can be tailored to minimize the behavior changes consumers will have to make. A firm can also seek subgroups of consumers who are not currently entrenched in any alternative or who greatly value the benefits of the innovative product.