Whether you want to start a new venture or boost your existing business, it’s the innovation that will distinguish you from your competitors. A new product that caters to the needs of people has the potential to revolutionize the market and bring in lots of growth and success for a company.
However, no matter how promising a new product could be, we can’t overlook the downside of the process of development of a new product. The end-to-end process is complex, time-consuming, and has several uncertainties involved. In this article, you will learn about the 10 most common risks in new product development and how to solve them.
Risks in New Product Development
1. Risk Of Delay In Completion
Risk: When the new product development isn’t completed within the expected time, it requires additional labor and resources. The delay also causes an increase in the number of competitors in the market by the time the product development is complete. This delay could lead to underperforming products in the market and not meeting expectations.
Solution: To prevent the risk of delay, begin the project with a precise and well-structured plan that clearly defines the expectations, responsibilities, and timelines. Outlining the development process and defining milestones will prevent unnecessary delays and keep the progress on track.
2. Market Risk
Risk: With the changing market trends, consumer demands also keep changing. When building a new product, it’s essential to consider if the customers can pay for the product. And what would be a fair price to sell the product? With proper R&D, it’s possible to predict market trends, but the changing consumer demands can make your new product irrelevant.
Solution: While developing a new product, never assume that the customers are willing to buy your product without proper market research. You should run market testing campaigns in parallel with the new product development process to understand your consumers and their demands.
3. Funding And Financial Risks
Risk: At the beginning of new product development, it’s very difficult to predict the full cost of the product. In the later stages, unexpected costs, such as the cost of hiring experts, ongoing maintenance, hosting fees, etc., may add up to exceed the budget.
Solution: The right financial plan can reduce overall costs and prevent financial risks. Specify an overall budget for different parts of the project and keep the expenses within the limits. While preparing a budget, you must work with the core team responsible for developing the product.
4. Project Management Risks
Risk: Certain factors such as changes in project requirements, unavailability of resources, or team members leaving the project in between may lead to massive product development risks. When there is improper planning, and thebcompany doesn’t consider the labor requirements from the beginning, it leads to a large gap between expectations and results.
Solution: Establish a project management department within your company consisting of project managers, team leaders, and team members. The team will track records, analyze progress, maintain documentation, and ensure proper communication to prevent project management risks.
5. Technical Risks
Risk: Technical risks arise due to a lack of technical expertise required for the project. It can also occur due to issues in machines, systems, and software. When integrating new technology into your product development process, your team may lack specific capabilities to develop your product.
Solution: Technical expertise plays an important role in the success of a new product. Hence, active training and development and hiring the right talent is the key to overcoming technical risks. As a company working on new product development, your team should master essential technologies and leverage that expertise for growth and innovation.
6. Legal And Compliance Risks
Risk: When introducing a new product in the market, the product must comply with the regulatory requirements and industry standards to ensure safety and quality. Failure to fulfill these obligations results in legal consequences and delays in product approval. Legal risks also involve financial and operational losses from changes in regulations, guidelines, or laws introduced by the government.
Solution: You must implement a regulatory risk management system to comply with government and market regulatory standards. This system should monitor and analyze market changes and assess their impact on the business.You should also have a team for regulatory risk assessment on new projects to identify potential violations and mitigate legal risks.
7. Intellectual Property Risk
Risk: Whenever a business introduces a new product, it’s at risk of infringing on the intellectual property rights of others. This risk is high when expanding into new markets. It’s essential to protect intellectual property when creating a new product. Failure to obtain patents, trademarks, or copyrights can result in imitations and a loss of competitive edge.
Solution: Before developing a new product, it’s essential to research existing patents, trademarks, and copyrights to avoid infringement. File for protection early if the product has unique aspects. You should also have your employees sign non-disclosure agreements to protect sensitive information about your business.
8. Product Complexity Risk
Risk: In new product development, when there is an excessively complex design involved, it results in difficulty in manufacturing and usability. Due to the complexity of the product, R&D gets time-consuming, time-sensitive, and difficult to control. Hence product complexities result in the project consuming additional time, labor, and resources.
Solution: When creating a product, it’s important to simplify product design by removing unnecessary features. You should adopt a modular design approach for better efficiency, which involves breaking the product into separate subsystems. A modular approach will allow you to develop and test the separate subsystems independently. It is necessary to adhere to the DFM/DTC/DFQ/DFD principles from the beginning of the design to reduce the systemic risk of the product.
9. Operational Risk
Risk: Operational risks arise when there’s a failure in infrastructure, supply chain, customer services, etc. Not having reliable vendors for product distribution can disrupt the whole supply chain and break product development process.
Solution: When working with external vendors or suppliers on a project, it’s important to build strong relationships with them and communicate clear expectations. You should also regularly evaluate your vendors’ and suppliers’ performance and address any issues that may impact the efficiency of the project.
10. Performance Risk
Risk: You might think your new product is ready to launch. However, it might be full of bugs and errors. You might also not catch serious performance issues till the release of the product. Not to forget, security issues could lead to legal problems even before your product takes off.
Solution: The ultimate solution to prevent performance risk and overcome challenges in new product development is beta testing. Conduct sufficient performance and user testing to detect and eliminate any defects or bugs your new product may have.
New product development for the ever-evolving market brings along several uncertainties and risks. By embracing these uncertainties and mitigating product development risks strategically and skillfully, you can leverage the untapped potential of the market and achieve breakthrough results through new products.