Can Social Media Help Reduce the High Failure Rate in New Product Introductions?

John Andrade    October 23, 2013

115019.strip“Product failure rate for established big companies is more than 65 per cent, but for the start-up companies’ failure rate is even higher at 90 per cent.”  And this scenario has not improved in the last 30 years, according to Robert Adams, Jr.

zappos2What is needed for Social Media to be meaningfully helpful in this product innovation and launch scenario?  In her article “3 Ways to Use Social Media for Product Research and Development,” Stephanie Gehman recalls the success companies such as Zappos, VitaminWater,, Estonian Air, Intercontinental Hotels Group, Air Tran Airways, and United Concordia had in using Social Media to gather info from consumers to define or improve their products and services.  By clearly establishing the goals before beginning the research, the social arenas in which it would be deployed, posing relevant questions, collecting the data, and putting the data to work, it would seem there is a sure way to nail product innovation. Right?

iPhone-Social-180E.G. Nadhan, HP Distinguished Technologist, indicates that going social is not enough: “Enterprises must process the data flowing through social channels the right way, across the product development life cycle, to realize the highest Return on Information.”

Social Media can definitively help in concept generation based on the needs projected by consumers. Moreover, in product design, Social Media interactions can generate options that could positively impact Return on Innovation.  Furthermore, it can help in an eventual validation of the solution to be built; and, finally, analyzing social media interactions can help pin point the best market segments in which to maximize product acceptance.

But then again, is market research the answer to new product failure?  Could it be that companies, which implement the research process correctly, would come up with the same answers for their product concepts? Wouldn’t this situation accentuate product or service similarity, thus ruining the chances to attain differentiation and success in the marketplace?

Screen Shot 2013-07-04 at 10.12.52 AMHence, could it be that the way to go is like Sony and Apple, which are “said to have avoided market research in favor of their designers’ opinions,” in coming up with product ideas? What do you think?

May be there is more to it than implementing an effective research process or relying on internal ingenuity for successful innovation.  Next week I will go over how the best consumer companies use Social Media to optimize supply chain management to shed some light on the issue.

Lessons Learned:

Market research is an excellent tool, but it is not the panacea that cures product innovation blues.

Nevertheless, the voice of the customer needs to be properly gathered throughout the entire product life cycle.

Companies need to step back and analyze how to strategically incorporate digital feedback to increase their chances for success in the marketplace.

Web References

3 Ways to Use Social Media for Product Research and Development

Applying Social Media to differentiate Product Development Strategy – Data is not Strategy but Strategy cannot be formulated without Data

Reducing product failure rate in products and product development projects for multinational companies in high-tech industry

Reducing Product Failure Rates: A New Perspective

What Is Customer Opinion Good For?

Submitted by: John Andrade – SMBP student University of Waterloo. To contact the author of this entry please email

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