Technology ideas are a dime a dozen, as the saying goes. Startups with a technology-based idea are everyday occurrences. How does one separate the wheat from the chaff, put the wood behind the arrowhead, or put the investment behind the concept?
The Apple Newton failed in the market.
Companies spend a great deal on market research, hire marketing gurus, and initiate strong incentive programs for product ideas -- all to generate new product revenue. Most of these efforts will fail.
Large companies have a particular problem in coming out with new products. There are many reasons for this, and many of us are familiar with them. They tend to get inbred and do things like they always have. They measure only what they can see, and they are skeptical of something they know little about. Powerful insiders in these companies campaign against any pie-in-the-sky investment outside their domain. The natural result is that large companies buy small ones to get new products/markets. Some well-run acquisition programs have done nicely in limited cases, but many have done poorly.
How do you know if a new product will be successful? You don't.
There is no fool proof analysis or method to determine success or failure. How can this be? Why is so much invested in new startups, new ventures, and new attempts to gain new markets? Why is so much analysis going into projections, technology R&D, and marketing studies?
This answer is very simple. The payoff is so big.
Venture capital has used this principle to its benefit -- spread the money around with smart, determined, focused folks who have a beguiling idea. Most will either fail or produce a minor return. One or two out of 10 investments have to produce outsized returns. That is the payoff. It's really that simple. One or two out of 10 investments have to produce outsized returns.
The iPhone is a great technology success.
The advantage that VCs have is that they don't have a corporate structure that exerts subtle pressure on them. Theoretically, they are free to fund whoever impresses them most. VC results speak for themselves. If they don't produce good returns, investment money will dry up for them.
Corporations tend to hide their failures under the all-inclusive expense category of R&D. In fact, a higher-than-normal R&D expense line can be impressive to investors. But incisive analysts will dig into these figures and eventually ferret out how companies are doing.
My prescription for greater success with technology products is to know as much as possible about the technology, the markets, the individuals leading the effort, and their track record. Then it is a matter of judgment. No amount of analysis can replace judgment. Of course, we will know the results only after time has passed. Good judgment will separate winners and losers.