Innovations are the engine of the economy and drive technological progress.
Nevertheless, an alarmingly high number of innovations never reach the level of success that was originally expected – more than half of technology innovations in Germany fail at market launch. We reveal seven reasons for this high failure rate and what you can do to improve your chances of success!
1. Undercapitalization:
Many innovations require considerable up-front investment before they generate returns. Companies that do not have enough capital available to bridge the phase to market maturity and beyond may be forced to abandon the project prematurely.
2. Timing:
Innovations often fail because they are launched at the wrong time. There may be a lack of complementary products that facilitate the application of the innovation or maximize its benefits. On the other hand, the market may already be saturated with similar alternative technological solutions, meaning that there is no recognizable added value for the customer.
3. Weaknesses in production protection:
Companies that do not adequately protect their inventions run the risk of others reaping the fruits of their labor. This applies not only to patents and utility models, but also to strategic partnerships and exclusive distribution rights, which can help to secure a strong market position. Extended product protection should not be forgotten, for example through exclusive agreements with important sales partners.
4. Resistance within the organization:
Internal resistance and non-commitment from key players within the organization can significantly hinder the introduction and support of new ideas. Without the support of the entire company, even promising innovations can fail.
5. Regulatory hurdles:
In many industries, especially highly regulated ones such as healthcare or financial technology, legal and regulatory requirements can present significant barriers. Failure or inability to comply with these regulations can lead to rejection or significant delays in market launch.
6. Incorrect market assumptions:
Companies often make the mistake of basing the development and commercialization of their innovation on seemingly logical assumptions that have never really been tested. Without precise knowledge of the market, the target group and their needs, the marketing of even the most innovative products can fail.
7. Lack of scalability:
Some innovations fail because they work on a small scale but cannot be efficiently transferred to larger markets or broader use cases. Problems with scaling can range from production bottlenecks to logistical challenges.
Innovations need to be marketed differently
Many market launches, especially of innovative technologies, require a completely different marketing approach than product extensions.
The main differences relate to
- Comprehensive information and training for customers
- The importance of a feedback channel
- The possibility of using existing sales organizations, approaches and structures
- The high level of resources required for the market launch
- The relevance of price in the market launch
How can the chances of success be improved?
To increase the likelihood of a successful market entry, companies should consider the following aspects:
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Early integration of customers and users:
The early involvement of pilot customers and users and initial stakeholders in the early stages of product development makes it possible to tailor the offering precisely to market needs and at the same time test the product in real-life use. This prevents the product from being developed without meeting the needs of the market during the 12 to 24-month (or even longer) development period. It also allows not only technical features but also intended business and revenue models to be tested. -
Use expert consultations:
Involving industry experts and market specialists can make a decisive contribution to ensuring that innovation projects are built on a solid foundation and do not fail due to avoidable hurdles. -
Consider extended product protection:
In addition to traditional property rights, companies should also consider options such as exclusive contractual clauses and strategic alliances in order to secure competitive advantages and maximize product protection.
Conclusion
Innovative technologies face many challenges on their way to market success. Careful planning, early involvement of the target group and well thought-out protection of the innovation can make a significant contribution to overcoming these hurdles. Companies should integrate these aspects into their strategies in order to make their innovation projects successful.
How can NGE support you with such challenges?
We help you with the procurement of funding and thus ensure better financial security and predictability. We also connect you with other exciting players on the market through our ecosystems. Through active exchange and direct cooperation, you can avoid mistakes.
