Saturday, January 30, 2010

How Tradeshows Manage Risk (originally published 1/13/09)

How long should a product development cycle be? 12 months? Six? The reality is that some innovations will take years to be commercialized and some can be commercialized in weeks. That we learn to commercialize quicker is a necessary but not sufficient factor. It is also necessary make sure we are working the timeline from the end to the beginning. The end is defined as when you go to market. The controlling variables are 1) that the market is ripe for the introduction of a certain innovation; and 2) that the market is introduced to the innovation in a way that the market can understand and absorb it. The former is largely informed by market research, and the latter is largely determined by the pulse of the industry.

The pulse of an industry is thus best understood from the end to beginning. The pulse of the housewares industry's biggest beat is once a year during the holiday period. In order for buyers and planners to have inventory on hand timely, they need the merchandisers to have finalized their plans at least six months earlier, in late spring. Maybe earlier. In order for merchandisers to make their decisions timely, they need to decide amongst the various producers' product ranges before that. And they count on the producers to have done their market research, and that the results of their homework correlate to what the merchandisers see coming. The final step in the producer's market research is the context-specific reality check of showing the stuff to the merchandisers. What are the merchants going to devote their open to buy to? It behooves the producers to get as early a read as possible. So they present as broad range at the earliest industry show possible. Based on the reaction, they adjust and/or cull. Then do it again. By the time the biggest industry shows occur, most of the producer's ranges have been set in stone using the freshest data and the merchant's decisions for Fall have already been made and submitted to their buyers and planners.

Why is this so important? Why are we beholden to the pulse of an industry, specifically the trade show cycle? Can't we introduce innovations anytime? We can, but we shouldn't. Because of risk. The main reason industries have a pulse is that it manages risk. The entire construct reduces risk for both the producer and the merchant. A show does not become important because of where it is, but when it is. We should avail ourselves of the inherent risk management opportunity afforded to us by the pulse of an industry by harmonizing the introduction of our innovations with it. This means planning to show our innovations at the earliest shows possible. This means that we look in our innovation pipeline and see what we can have ready by then. It doesn't matter if it has taken three years or will take only three months to commercialize something, it only matters whether it can be ready in time for the next heartbeat.

No comments:

Post a Comment