Learning from Product and Service Failures

1. Chapter 8 Learning From Product and Service Failures

2. Learning Points To identify services that are more likely to fail and thus, avoid the most obvious failures in the process. To know the best measure of service success

3. WHAT IS SUCCESS AND FAILURE? • A new service must make a profit if the company is to survive and grow. • Profitability is the main measure of a successful service and therefore an unprofitable service is a failure.

4. MOST NEW SERVICES FAIL • The failure rates are the same for new products and new services – almost 3 failures for every success. • The early stages of the design process are where the main management decisions are made and the majority of finance committed.

5. Where failures occur in the Design Process

6. Analyse ideas early in the process. • Aim to eliminate potential failures in the low cost early stages of the design process. • Then more time and effort can be spent on developing potential successes.

7. Have a ‘front end focus’. • With a front end focus, poor ideas can be easily eliminated and better ideas more fully thought out whilst still ‘on paper’. This avoids changes later in the process - at the high cost end of design. This will result in a more efficient use of the resources available within tight constraints.

8. Failure rates The successful product must cover its own investment costs and the costs associated with other unsuccessful products.

9. Main causes of product/service failure: Technical failure – it doesn’t work. Market failure – not enough people want it. Financial failure – the service cannot be developed within the required budget. In practice, these reasons overlap.

10. THE ROOTS OF MOST FAILURES • 2 out of the 3 main reasons for product and service failure are rooted in poor Market Research and poor Specifications

11. Successful products depend on GOOD DESIGN, GOOD MARKETING AND GOOD IMPLEMENTATION. If any of these are inadequate then the service will fail.

12. Learn from failures • Knowledge gained from failures should be used to improve the design process so that this type of failure can be avoided in future.

13. Whether product or service design, the devil is still in the detail. It is often the small (human) errors thst cause a service to fail. MANY FAILURES ARE INTHE SMALL DETAILS

14. SUMMARY OF KEY POINTS • Aim to eliminate potential failures early in the process so that more time is spent on those services more likely to be successful. • There are three main reasons for failure – market, financial and technical. • Two of these reasons for failure are right at the start of the process. • The main measure for a service being a success is financial. • With a front end focus, poor ideas can be easily eliminated. This avoids changes later in the process - at the high cost end of design. • Failure can be a learning process to improve the next service to be developed.