We've heard a number of CEOs say, "Our product is more advanced than anything else on the market. How can we fail?" Unfortunately, you don't have to look far to find great products that were commercial failures. Take for example,
In each, the creators of the first product believed they were creating a better product, but the market proved, through better customer adoption, that the competing product created more customer value.
Better products win when the total value - that is, the benefits minus the cost - is clear and measurable to the customer and creates more value than comparable offerings.
Unfortunately differentiating factors aren't always clear, and consumers don't always get the right to choose. Consider the battle between Blu-ray and HD-DVD; while consumers could buy either product, ultimately the war was fought over which content providers would exclusively back each format. Since more content was available on Blu-ray, it ended up creating more customer value, despite the possibility that HD-DVD was a technically superior product.
Entrepreneurs building a new business often falsely assume that their novel product will succeed based on its great new feature set or superior technology. While the next great technology may in fact sell regardless of the competition, few products are so lucky. In most cases we need to shed our rose-colored glasses and instead focus on building what the customer wants.
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Avondale Associate Chris Lyman contributed to this article.