Kicking Your Idea's Tires

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Experts differ on the failure rate of new products — somewhere between 70 and 90 percent — but they all agree it’s pretty scary. So many torpedoes can sink the launch. Supply constraints. Creeping commoditization. An ill-prepared team. Difficulty establishing a loyal customer base.

No new product emerges amid perfect conditions, but companies can improve their odds by assessing every risk. A helpful guide is the Product Opportunity Evaluation Matrix, an open-source tool first described in the book The Smarter Startup (but useful for brand managers and R&D teams at companies of all sizes) by Neal Cabage and Sonya Zhang.

The matrix examines five forces that influence a product’s viability: the product idea itself, the intended customers, financial requirements, market timing, and the competitive environment.

To assess their product idea’s strengths and weaknesses, users grade — A through F, or one to six — the five considerations listed under each force. They then calculate overall scores for each of the forces. A low overall score in any force category may signal an insurmountable obstacle. In that case, it’s probably not worth the risk.

1. Customer Filter
Customer Considerations	Grade Yourself (1-6)
Clearly Identifiable Customer: Can you concisely describe your target customer? Can you create a simple persona to describe them?	______
Meaningful Problem to Solve: Does your idea offer significant value to the concisely defined customer, that is not yet addressed or matched in the market?	______
Segmentable Market: Is it possible to start small by cleanly segmenting your audience?	______
Customer Accessibility: How easy is it to access and facilitate your customer?	______
Customer Alignment: Is this idea something that you could establish a loyal and recurring customer base around?	______
Your Overall Customer Score	______

2. Product Filter
Product Considerations	Grade Yourself (1-6)
Tight Niche Focus: Can you concisely define the product with laser focus?	______
No Network Effect: Will your competitors’ networks make it difficult to break into the market?	______
Lean Method Viable: Is your product concept compatible with the lean startup approach?	______
Team-to-Market Fit: How well suited is your team for this product opportunity?	______
Inherent Story: Does your product have word-of-mouth or viral potential?	______
Your Overall Product Score	______

3. Economic Filter
Economic Considerations	Grade Yourself (1-6)
Healthy Margins: What sort of profit margins can you anticipate and will they justify the effort?	______
Demand Constraints: What is the potential demand for this product concept among your identified target audience?	______
Supply Constraints: What limitations may make it difficult to address the potential market?	______
Sunk Costs: How much capital is required up-front for research and development, before you can anticipate revenue, and how does this compare with revenue potential and your own financial resources?	______
Cash Flow Requirements: How much cash must you “float” between when you must pay your expenses and when you realize profits?	______
Your Overall Economic Score	______

4. Timing Filter
Timing Considerations	Grade Yourself (1-6)
Secular Trend Alignment: Is your idea related to a growth market? Is the general category emerging or in decline?	______
Recent Innovation Enabler: Has some recent technology or regulatory change recently made it possible to do what you are now proposing?	______
Market Inefficiency: Do you see inefficiency in the proposed market?	______
Recent Competition Surge: Are a number of other companies also trying to insert themselves in the market?	______
Recent Competition Surge: Have any brands in the proposed vertical become commonly known by your target demographic? Have there been recent acquisitions of smaller competitors, or large advertising battles for dominance between brands?	______
Your Overall Timing Score	______

5. Competition Filter
Competition Considerations	Grade Yourself (1-6)
Limited Competition: How much competition is there? Is it possible to find a differentiated position so that you’re not in direct competition with those already competing, or is the market saturated?	______
Competitor Fitness: How competent are your competitors?	______
Team Fitness: How fit is your team against those your plan to compete against?	______
Defensible Position: Should you become a market leader, is it going to be possible to differentiate yourself or otherwise secure a competitive advantage to prevent others from taking your market from you?	______
Barriers to Entry: Do any of your competitors already control a defensible position that would make it difficult for you to enter the market or gain market share?	______
Your Overall Competition Score	______

6. Overall
Considerations	Your Totals
Overall customer score	______
Overall product score	______
Your economic score	______
Your timing score	______
Your competition score	______
Your Overall Score	______

Source: POEMFramework.org.

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