This is a guest post by Justin Knowles, Founder and Principal at Facture.
When developing a new product, identifying and mitigating risks is crucial for success. Here, we provide guidance both on how to identify them and create a plan to mitigate them. To keep things simple, we merely list out each of the risks as we think of them in one column on a spreadsheet and later we’ll add a column for mitigation plans.
Identify the Risks
Let’s explore the various types of risks associated with product development, including technical feasibility, pricing economics, manufacturing complexity, regulatory compliance, competitive risks, and intellectual property protection. For each of these areas, think about the questions offered and see if they spark any ideas of risks you might see. Then, write them down!
- Technical Feasibility – Technical feasibility assesses whether a proposed solution or feature can be implemented with available resources and technology. This involves evaluating whether or not there will be technical challenges during development. Ask yourself if this technology exists now or does it need to be developed? Is there special expertise needed to develop this and do I have access to that expertise? How reliant is my product on new or unproven technologies? Is there some level of performance metric that is required that might be difficult to achieve?
- Pricing Economics – Pricing economics can be highly critical to any product and it is incredibly important to get a solid understanding of any risks here. What sort of pricing model is going to be necessary and will some sort of distribution method dictate a pricing strategy? What is the price-point that is necessary to be competitive? Will it be difficult to manufacture at a price point that is competitive? What sort of trends will affect the pricing, such as incoming tariffs or scarcity of material?
- Manufacturing Complexity – As manufacturing complexity increases, so does the associated risk. How many steps are required to make the product and how many vendors, suppliers and “hands” must be involved? Do any of these touch points introduce risk to manufacturing or distribution? Is there a certain amount of precision, tolerance or quality necessary for this product? What sort of variation within my product (colorways, sizing, etc) design will be necessary?
- Regulatory Compliance – Regulatory compliance presents significant challenges in product development, particularly in heavily regulated industries. Does this product need to be certified in order to be sold in my chosen markets? What sort of 3rd party certifications will be required by any sales channels? You can look at similar products to yours and see what sort of regulatory or certifications they carry to quickly get a sense of what you might need to consider.
- Competitive Risks – The competitive landscape poses several risks to new product development. What sort of market trends or consumer demands will impact your product? How many other competitors are working on what you are working on or launching similar products? Are larger, more established brands a risk to launching in your target space?
- Intellectual Property Protection – Intellectual property (IP) risks can significantly impact a company’s competitive advantage and financial success. What sort of existing patents, trademarks or copyrights exist that I need to consider? What should I seek to protect my new product? What sort of counterfeiting threats might I encounter? We strongly suggest working with a local patent attorney to assist in answering these concerns.
Mitigate the Risks
Now that we have identified the various risks associated with product development, it’s crucial to develop a mitigation strategy. Not all risks require immediate action, but it’s essential to prioritize those that could significantly impact your project’s success. Let’s explore how to approach risk mitigation using a simple framework.
Risk Mitigation Strategies
When addressing the risks identified in your product development process, consider applying one or more of the following strategies:
- Research: For risks that can be addressed through information gathering without physical prototyping.
- Prototype: Risks that can be evaluated or resolved during the prototyping phase.
- Feedback: Issues that require input from stakeholders or potential users, either with or without a physical prototype.
- Wait: Risks that don’t require immediate action but should be monitored and revisited periodically.
- Accept: Known risks that may need to be acknowledged and managed as part of the development process.
Applying Mitigation Strategies
Let’s apply these strategies to some of the risks we’ve identified previously – use these examples to guide you!
- Technical Feasibility
- Research: Conduct a thorough literature review and consult with experts in the field.
- Prototype: Build a proof-of-concept to test critical technical components.
- Pricing Economics
- Research: Analyze market trends and competitor pricing strategies.
- Feedback: Conduct surveys or focus groups to gauge potential customer reactions to different price points, before or after you prototype
- Manufacturing Complexity
- Prototype: Create a functional prototype to identify potential manufacturing challenges.
- Research: Consult with manufacturing experts or potential production partners.
- Regulatory Compliance
- Research: Review relevant regulations and consult with legal experts.
- Wait: For evolving regulations, establish a monitoring reminder to track how things change over time
- Competitive Risks
- Research: Conduct a market analysis and set up competitor monitoring.
- Feedback: Engage with potential customers once your prototype is complete.
- Intellectual Property Protection
- Research: Conduct a thorough patent search and consult with IP lawyers.
- Accept: Acknowledge that some IP risks may persist and then develop contingency plans.
Prioritizing Mitigation Efforts
To effectively manage your mitigation efforts you will need to focus on high-impact risks that can be addressed during the prototyping stage as well as prioritize risks that have the potential to derail the entire project if left unaddressed. It may be hard to balance immediate concerns with long-term strategic risks so we suggest you get outside feedback and input if you can.
By thoughtfully applying these mitigation strategies and maintaining a flexible approach, you can significantly enhance your product development process. This proactive stance will help you navigate challenges more effectively, increasing the likelihood of bringing a successful and innovative product to market. In the next phase, we’ll focus specifically on leveraging the prototyping stage to address and mitigate key risks, ensuring that your product development journey is as smooth and successful as possible.
About Justin & Facture
Justin Knowles is the Founder and Principal of Facture and has been an engineer and entrepreneur within manufacturing and product development since 2002. Facture is a multi-disciplinary product design and development firm that partners with startups, entrepreneurs and established companies to bring both simple and audacious products, machinery and services to life.
