(All 25 of them.)
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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