Compete, Differentiate, or Innovate?
Alright, so you have decided to launch a new product (or service). Exciting times!
In your pursuit of success with this new project, I would hope that you have explored the current options on the market. In 99%+ of cases, your research should result in 1 of 3 findings:
1) I will be directly competing with existing products on the market.
Let's say you have decided to launch a new line of menswear basics (tshirts, shorts, etc). This is a very crowded market with a multitude of options. You can easily find whatever price/quality mix you prefer - it's easy. What's not easy is to stand out among all of the existing players in the market.
Looking for a high-end workout shirt? You can get that at Rhone.
Want extremely nice performance shorts? Check out Myles.
Interested in a lower-priced, tailored option that shows off your progress from Crossfit? You need to go buy some Bylt basics.
See? There is a plethora of options and it will be challenging to capture enough of the market for it to make a material (punny) difference. You will probably need to identify some strategic advantage prior to launching this business. Do you have a cousin in the NFL that's willing to be the face of the company? Okay...now we're getting somewhere.
2) My product/service is noticeably differentiated from what is available today.
The hard truth as it pertains to this section is that many people convince themselves that their product/service is differentiated enough, but it is far from it. Let's make this very simple.
You need to ask potential customers if THEY see the obvious difference. Please. Ask them, not yourself, your mom, or your best friend. Go ask the people that you hope to sell to in the future. You will likely learn a mountain of valuable information that you can apply to your business before ever launching it.
An ungodly amount of social networks popped up as Facebook was in the midst of rapid growth. They died. Instagram not only survived, but they thrived (and then was acquired by...yep, Facebook)! Why? They built a social platform that was differentiated enough.
I think most people see #3 as the "best" of these three options, but if you want to simply make money I would rather launch a business that fits into this second category. The market already wants the product/service, but you're doing it noticeably better / in a different, nuanced manner.
3) I have a new product/service that is truly innovative.
This is boom or bust. Just because you have come up with an idea that has never been done before does not mean that it's good. Read that again. Maybe one more time.
You may have heard the phrase "blue water" before. If you are not familiar, this is a way to think about this exact topic. Is this shark-infested water with blood all around? Red water.
Is this more like #2, which would be referred to as pink water. There are some concerns, but it's generally a better situation than that bloody water.
Or...is this blue water? If yes, you MUST ask the question "why is this blue water?"
Is this product/service very hard to create? Yes? Okay...am I able to do this?
Is this product/service very expensive to create? Yes? Okay...can I get the funding?
Is the science (etc) behind this new endeavor incomplete? Yes? Can I actually figure it out?
Is this actually desired by my target market? Maybe not. Uh oh.
Spend the time to discern where your product/service fits into this discussion. It may save you a lot of unnecessary pain.