There’s uncertainty surrounding NPD, and this can’t be avoided using only forecasting ability. Insights acquired from quantitative modeling, along with social, technological, legal, and political elements, are integral to successful NPD.
One of the most challenging aspects of new product research is minimizing the high rates of NPD failure. There’s a strong tendency to focus on successful NPD, which provides minimal information about any elements that contribute to failure.
There’s a lot of famous cases of NPD failures that prove that even elevating successful existing products aren’t guaranteed to succeed:
- 1980’s Coca-Cola product “New Coke,” which was built on an already existing product.
- 1990’s McDonald’s burger, the “Arch Deluxe Burger.”
- Nokia’s attempt to keep up with Apple’s smartphone in the mid-2000’s failed and resulted in the company’s decline and sale to Microsoft.
There are two main areas of uncertainty connected to NPD:
Survival bias where the majority of products that we are exposed to are the ones that were successfully integrated into the market. Successful new products are fundamentally different from unobserved failures, so evaluating the causes of NPD failures based solely on evidence from NPD successes is vulnerable to misidentification and leaves the NPD process at risk of selection bias.
Uncertainty in the change of the nature of reality that occurs from a successful new product. Due to the uncertainty in decision making, there’s no certain NPD forecasting value.