Speed to market is a term that is thrown around a lot, I use it a lot, it has staying power because it is a very relevant term. The quicker you get your part or product to the market, the better the chance your part or product has of succeeding. But what does Speed To Market really mean? From my experience and perspective what it really means is Speed To Revenue, because that is what it is really all about.
Revenue for any new product is the only thing that matters if you want to be around longer than a couple of rounds of fundraising or a couple of trade show seasons. Revenue takes the pressure off, it funds manufacturing, it gives suppliers and project partners confidence, revenue solves many problems.
Speed To Revenue, while not a common phrase, is a common sense principle that is in the back of every project managers mind, but in my opinion, revenue is not a dominant enough theme for many new product development projects. Every day you are not generating revenue is another day of pressure which is why I like to make it more about Speed To Revenue.
1. Launch quickly if you can. When you can launch version 1, or 1s, then launch it like Apple does. The phone giants don’t wait for perfection because they know how much competition there is out there and that missing a selling cycle can potentially kill their company within 6 months. One can argue about if version 1 is pretty enough or feature-rich enough, but at least by launching version 1 (in some fashion), it will be out there generating revenue to keep you moving forward. At some point you have to launch, earlier is better.
2. Accept less profit. If you have an early manufacturing model that delivers you a positive profit margin, then launch and look for better profit margins down the road. Don’t let a spreadsheet model that demands a certain profit margin stop your forward progression. Accept positive revenue. Early manufacturing runs give you strength while you work on your long-term optimized manufacturing solutions.The other important benefit to early manufacturing runs is being able to work out unforeseen manufacturing issues and correct those issues on a small scale before big orders start to come in.
3. Multiple revenue streams. If your product is a consumer-friendly product then we all want that Walmart order. But don’t hold out for only this model as they can take a long time to finalize. Utilize multiple online selling channels to create positive revenue as soon as possible to help support your entire project moving forward. Selling directly to the consumer can yield a much higher per unit profit margin, even if your manufacturing cost for smaller runs may be a bit higher. Make money as early as possible to help sustain the future of your project.
Positive revenue early builds on itself. A smaller profit early on may actually deliver larger profits in the future. Speed To Revenue is really a much better mantra than Speed To Market.