Ice cream gloves and the case for product validation
Jonathan DeVito and Dan Palay
Key points for this article:
➠Most (+/-70%) product introductions fail to meet expectations.
➠Early validation can help businesses de-risk and refine assumptions before products are launched.
➠Validation means assessing a product’s potential for value creation versus introduction costs.
➠The extent of validation should increase with perceived risk and/or projected investment associated with a product.
Don’t allow your next product to melt into a cold, sticky mess.
If you need a little comic relief in your day, you should check out this video where Sacha Baron Cohen’s ‘Ali G’ pitches the idea of ice cream gloves to potential investors. These are gloves that prevent customers’ hands from getting cold and sticky when they eat ice cream.
If you’ve never seen ice cream gloves before, that’s because this product is probably a bad idea and definitely not being positioned properly (i.e. a solution to a problem people actually care about solving).
The introduction of products with questionable potential is hardly unique. In fact, depending on the research you rely on, about 70% of newly introduced products fail to meet revenue targets. Simply put, businesses are launching a lot of ice cream gloves (for a list of widely publicized product failures, check out this article to learn about the fates of products ranging from the Pepsi A.M. to Microsoft Bob).
Failure typically occurs due to a lack of product-market fit, poor positioning, commercialization challenges, or a combination of these issues.
In this article, we’ll discuss how early validation can help businesses ensure they are introducing viable and profitable products.
If you’ve picked a market that you would like to pursue with a new or improved product you’re probably ready to validate.
Validation means evaluating whether your product’s potential for value creation justifies the costs of introducing it. It’s usually optimal to do this before commercialization takes place. This usually entails key activities such as:
Customer research: Primary research reflecting customer attitudes and willingness to pay for a product.
Market evaluation: An evaluation of market size, market addressability, and competition.
Investment evaluation: Review of the investment and teams needed for development and/or introduction.
An important note is that it’s not sufficient to simply “validate”. Being methodical and realistic are also key. Ali G did in fact attempt some validation, but he failed to do it in a meaningful, process-oriented way. He posited that there is a market for ice cream gloves because millions of people have hands and like ice cream. This is far too broad. A more actionable approach might have been to highlight groups that likely have an addressable need, like those that like ice cream cones and tend to wash their hands obsessively.
Why should you validate?
Validation is an opportunity to make an informed decision before investing in the commercialization of a product. While not exhaustive, below are a number key reasons why validation is valuable:
You might have an idea that’s on the right track, but it still needs to be repositioned.
In the course of customer research (surveys, interviews) you’ll typically uncover unexpected insights surrounding how people view and prioritize problems. In many cases, a concept starts off on the right foot, but the product needs to address a challenge from a slightly different angle to achieve product-market fit. Most people in the video appeared not to care enough about the problem of cold and sticky fingers to spend money on ice cream gloves. However, one person in the video mentioned that the idea had “something to it” (3:35). If this were real market research, this would be a prompt dig deeper in an attempt explore how ice cream gloves could solve a different, but addressable problem. Perhaps this person doesn’t care about his own fingers, but he might have young children that wipe their sticky ice cream fingers all over the the furniture in his home. After follow-up on this topic, you might find that millions of other people have the same problem. All of a sudden, the gloves can be redefined as a furniture-protection product, not a comfort one (for examples of alternative use cases of potentially doomed products ranging from the Boeing 747 to Viagra, check out this article).
You may have no competition, yet still encounter heavy resistance.
Ice cream gloves may be a great idea, but the napkin industry probably won’t see it that way if people opt to buy ice cream gloves instead of wiping their hands with napkins. An all-out attack by the paper industry may pose an entirely new level of challenge.
You might uncover a different opportunity or problem to solve.
So ice cream gloves prove to be a futile attempt to solve a problem nobody cares enough about. But that doesn’t mean you did not develop useful findings along the way. Perhaps your customer research uncovered an opportunity for cheap, durable gloves for handling dry ice. Now you have a solution to a problem that those working in labs and other cold storage facilities DO care about, and WILL spend money on.
Validation is an opportunity to realistically reflect on potential for value creation.
Julius Caesar (who was likely much more sentient than Ali G) once said that people willingly believe that they wish. Validation is an opportunity for you to avoid making this mistake. Product success is a subjective concept. Failed products may actually be flops or they may be victims of overly optimistic projections. Validation provides an opportunity to explore the size of an addressable market, who you’re competing against, and costs associated with effectively entering a market. You’ll wind up walking away with a more balanced go/no-go decision based on vetted assumptions.
How much should you spend on validation?
Deciding how much validation is needed is like picking out an insurance policy. It’s a sliding scale: you may not want the cheapest policy, but you still want to make sure your policy’s benefits are aligned with your risk and investment.
As a general rule of thumb, validation spend should be up to roughly 2-3% of predicted product investment. For example, if a business predicts investing around $1m to create and roll out a new product, this should include up to around $30k for initial validation.
Ultimately, validation shouldn’t be viewed as a burdensome expense or activity. It should be aligned with the situation at hand and designed in a way that allows you to efficiently weed out the “ice cream gloves” so that you can focus on real, tangible opportunities.
About the authors:
Jonathan DeVito is the Founder of PIVITAS. He works with a diverse group of clients to help them develop actionable product and pricing strategies.
Dan Palay is a venture capitalist, consultant, and advisor. He specializes in working with early stage technology companies.