What Is Prototyping? (And Why Do 95% Of New Products Fail)

Prototyping can help your product achieve success by making sure that it will suit the customer needs. One of the reasons why many new products never make it is the lack of prototyping in the early stages of development.

I recently stumbled upon an interesting story. Imagine you’re developing your groundbreaking IT solution that’s aimed at attracting millions of users. Sure, it will take a long time to develop, but it’s worth it. You rally up your investors,  gather a sizable budget, and start the development. Nothing can stop you now – you really thought this through internally, and can even visualize your success.

After several months, you finally hit the market with your magnum opus (surely!) and… fail.

The feedback is crushing. You overlocked a key feature that turned out to be crucial to your users. Without it, your solution isn’t useful at all. And the sad part is, you can’t simply add it at this point. You have to rebuild everything.

Sure, it sounds like a bad nightmare. But it actually happens a lot. A LOT.

I’ll let you have a guess – what’s your idea about the percentage of new products and services that fail?

Professor Clayton Christensen once assessed that the rate reaches up to… 95%. And although he later retracted this statement (or rather claimed he never said it in the first place), the mortality rate of new products and services is definitely high. For example, Crawford C. Merle estimates the share of products that fail to deliver a significant return is 35%.

Regardless of the precise number, we can definitely tell that most new products don’t fully succeed. In this article, we’re going to analyze why that is the case – and how software prototyping can help you avoid the nightmare scenario.

Why Do So Many New Products Never Make it?

Launching something new – especially when it’s innovative – naturally bears a risk of failure. Although the reasons for an offering’s lack of success are often complex, there are overarching themes that link the failure of new products.

No Market Need, No Value (and Fixing Non-Existent Problems)

As Planet Innovation puts it, a deep and detailed understanding of your customers is essential to product success. You need precise assumptions to know what makes them buy and what problems they need solved.
For a new product to win initial trials, it needs to bring new value to the marketplace. Potential customers need an incentive to be persuaded to try and buy a new product. Without any real point of difference, the new product is likely to fail. A great example of that are products of services that don’t fix any problems.
Yet, even with a well-researched market need, it’s hard to know how the market will react to your product and marketing messaging. That’s why it’s so important to test these things beforehand. A quote from CBInsights perfectly depicts this issue:

“I realized, essentially, that we had no customers because no one was really interested in the model we were pitching. Doctors want more patients, not an efficient office.”

Poor Technology

Bad UX, sloppy implementation and an overall lack of quality (often due to incorrect technological assumptions) all contribute to product failures. So, in short, if a company wants to succeed with their product, the solution has to… work.
Planet Innovations says that although this may sound like absurd advice, apparently going to the market with a half-backed product happens more often than one might think. Pawel Grabowski of Smashing Copy mentions the example of Windows Vista, which was poorly optimized in its early days. As a result, Dell even started selling computers with an older version of Windows pre-installed.
 

Bad Pricing Policy (Wrong Business Case)

According to the Oxford College of Marketing, businesses tend to either underprice their offerings – leaving money on the table – or overprice – not allowing money to reach the table in the first place.
Moreover, Marketing Study Guide reports that sometimes companies will design products with many features in an attempt to introduce something new to the market and achieve a willingness to pay more for a better product. Such a product strategy may be successful, but it can also be perceived as poor value in the market. Without good market research, it turns into somewhat of a coin toss.

So, How Can Prototyping Help?

Software product prototyping has established itself as an essential part of the software development process. Especially during the COVID-19 pandemic (and soon, also after, hopefully), where digitalization is rising at an unprecedented rate (creating a huge competition), prototyping can help your business navigate between obstacles, avoid the abovementioned issues and deliver the value it’s supposed to.

But What is Prototyping, Exactly?

Keeping it short – prototypes are functional maps of products. They present what you intend to build, how you plan to do it, and, maybe most importantly, what experience your solution will deliver to your user.
Prototyping done right can answer many important questions early on and minimize the risk of failure.

Low-Fidelity vs High Fidelity Prototypes

Before you start prototyping, there’s an important choice you have to make – what kind of prototype you’re going to develop. You have two key choices. However, that’s an entirely different topic; that’s why we’ve written a separate article about Low-Fidelity or High Fidelity Prototypes. Make sure to read it!
But to give you a quick overview of the distinction – since product prototyping is so popular, there are multiple prototyping tools available, many of which are free and easy to use (more so, if you’re working on low-fidelity prototypes, you can simply get a… pen and paper). As a result, prototyping is fast, cheap, and easy.
Unfortunately, many companies – especially startups, but also established enterprises – are under the misconception that they can’t afford to prototype. They’re often saying that it takes time and additional funds (and that they strongly believe in their vision, so prototyping is expendable – “it’s definitely going to work, Howard! Don’t you have any trust in our company?!”).
However, as the market shows, this attitude means asking for trouble. To put it short, you shouldn’t think if you can afford to prototype. You should consider if you can afford NOT to prototype.

Getting Early Feedback (And Identifying What Your Users Need)

As we’ve mentioned before, one of the biggest issues of new products and services (and the number one reason why companies don’t succeed) is the failure to deliver sufficient value to customers. Every good offering should be fixing at least one customer problem – but if it’s fixing an issue that doesn’t exist, it’s hard to expect a revenue stream coming your way anytime soon.
With prototyping, you can gather reviews at early stages of development. Swift feedback gives you the chance of redesigning parts of the product or adding new features – so it can deliver value from day one. Additionally, it can also help you structure your pricing policy.
Summarizing, testing what works for your audience is invaluable and can make or break your business.

Saving Time and Money

If you’re not new in the IT industry, you’ve probably at some point stumbled upon the famous graph addressing the relative costs of fixing defects; in short, getting rid of an issue at the early stages of the development process costs about 100x less than fixing the same issue post-release.
Prototyping addresses a similar issue. Changes toward the end of development mean not just radical restructurings but also even more speculation. A preliminary model enables reworks early on without big headaches since no serious investments are at risk. And this covers not only the technical side but also the entire business idea. This may sound trivial, but practically, prototyping can save you millions.
Additionally, a prototype can also pave the way to a more realistic timeline and budget.

Empowering High Quality

We’ve mentioned the problem of poor execution – obviously, prototyping can serve as a powerful tool for achieving better quality and finding the optimal technological approaches. But there’s also another important angle.
During software development, it may happen that the intended result is different than what was actually developed. This happens to a number of reasons; the main one are communication issues. With a prototype, you also get a visual guide to the finished product. Further development becomes easier, and you don’t have to explain every single detail to developers.
As a result, prototyping can kickstart the quality of your project on multiple levels.

Watch Out for Traps

Prototyping, at its core, doesn’t necessarily have any strong disadvantages. BUT prototyping done wrong has! Usually, experts indicate there are three common threats one has to look out for:

• Taking feedback as requirements. Feedback received from prototyping is almost always extremely useful. However, it’s easy to confuse good feedback with new requirements. It’s important to stay on task and keep a watchful eye on the scope of the project.
• User confusion. The worst-case scenario of any prototype is if a customer mistakes it for a final product. Seeing a rough prototype, clients may not understand it’s merely a testing tool. The right communication is essential.
• Excessive development. Prototyping should be a way to make the development process quicker and cheaper. Yet, if developers concentrate too much on developing a complex prototype, the project can hit a road bump and run over time and budget. Simplicity is king.

In 2021, Prototyping is Essential

Even with these challenges, prototyping should be a must at most IT projects – especially in the current landscape of huge competition and rapid, precise software production.
Prototyping determines the direction of the development process and is a pillar of its eventual success. Most importantly, prototyping done right identifies problems long before they can actually harm the final outcome.

This Article Was Brought to You by the Innovation Lab

The Innovation Lab is a new initiative aimed at supporting companies in embodying groundbreaking ideas. The Lab’s prototypes serve as a baseline for assessing value and risks to enable optimal investment decisions.  
With a firm belief in software craftsmanship and rapid prototyping, we are exploring the latest technologies involving Data Engineering, Data Science, Computer Vision, IoT, modern visualization areas (3D/AR/VR) and more.