Flavor 1: Feature Shocks—When You Give Too Much and Get Too Little

Feature shocks happen when you try to cram too many features into one product, creating a confusing and often expensive mess. In a sincere effort to have it be “all things to all people,” you launch a product that pleases few. The result is the product's value is less than the sum of the parts. Due to its multitude of features—none of them a standout—these products are costly to make, overengineered, hard to explain, and usually overpriced.

Feature shocks typically begin when a company has uncertain or ambitious goals. At Amazon, ambitious goals are part of the core culture. The company thinks big, from its product warehouses to its vast cloud computing data centers. Through thinking big, Amazon has reaped big rewards: In February 2016, Amazon's market capitalization was $250 billion, making it worth 18 percent more than Walmart, the world's biggest retailer by revenue.¹

But that did not help Amazon in 2014, when it attempted to launch its own entry into the smartphone market. With the Fire Phone, Amazon bet it could compete against the reigning champions of consumer smartphones, Samsung and Apple. In the tech world, goals don't get much more ambitious. But Amazon had scored big before in consumer electronics with its innovative Kindle e-book readers and Kindle Fire tablets. Amazon has logged years of successes across product categories using its well-known “outside-in” and customer-first focus. So, Amazon skipped the low-margin marketplace of budget phones and set sail for the shores of the premium smartphone market with the Fire Phone, counting on innovative features to make a market splash akin to what Apple's automated assistant, Siri, had created. Amazon packed in a sizable 4.7-inch screen, a hefty 32 gigabytes of storage, a Bluetooth wireless capability to connect the Fire Phone with other devices, and many other bells and whistles.

In a sea of features, the most startling was “Dynamic Perspective,” which was designed to give consumers three-dimensional effects on the smartphone display without having to wear 3-D glasses. To pull this off, Amazon's designers installed four camera lenses and facial recognition technology that followed your line of sight to the phone, tweaking the display to show depth. Amazon also threw in what it called “Mayday service,” which promised technology support in less than a minute. The company also touted Firefly, a shopping feature that let you point the phone's camera at a product and then took you to Amazon.com to buy it.

Amazon tried hard to generate the kind of buzz that accompanies a new iPhone release. But reviewers saw little value in the numerous features, especially dynamic perspective, which looked impressive in some smartphone games but didn't address any pressing customer needs. Making matters worse, the four lenses required to support dynamic perspective were a big drain on the phone's battery life. Critics were particularly harsh on the muddled feature set. The review from technology site Engadget was typical:

The Fire's defining features are fun, but I can't help but feel as though they're merely gimmicks designed by Amazon to demonstrate the company's brilliance—and at the expense of battery life, to boot. Dynamic Perspective might be useful in a few cases (games, mainly), but it won't provide the user with functionality they'd sorely miss if they went with an iPhone or flagship Android device.

Not only is the Fire lacking in useful new features, but its high price…guarantee[s] its irrelevance…so why come out with a smartphone that isn't particularly convenient, and isn't particularly cheap? By no means is the Fire a horrible phone, but it's a forgettable one. You might want the eventual Fire Phone 2, perhaps, but for now, you're better off sticking with what you know.²

Amazon launched the phone in July 2014 at $199 with a two-year AT&T phone service contract, or $649 without a contract. Initial sales lacked momentum. And when sales stalled out four months later, Amazon cut the phone's price to 99 cents—that's not a misprint—with the two-year contract, or $449 without a contract.

Instead of basking in an Apple-like glow, Amazon was left with a $170 million write-down, “largely attributable to unsold Fire Phone inventory,” according to Fast Company.³

How does this type of mistake get made at an ultradisciplined and very successful company like Amazon? It gets made because Amazon, like countless companies that produce engineering marvels, overengineered the product. It fell in love with the phone's many features, including some that no one outside the company wanted. Amazon fell prey to the spirit of “we can add this!”

The drive to make a product that addresses too many questions often blinds innovation teams to market realities. Then the ill-advised trade-offs in product development happen, like the battery life quandary. The Fire Phone became an overengineered product bursting with nonessential features that hiked its cost for Amazon, and therefore the price for customers, and it lacked standout features. Amazon might still succeed with Fire Phone 2, but the first incarnation was a feature shock.

When you look into organizations that are susceptible to feature shocks, the warning signs are usually subtle (Figure 2.1). But they follow patterns that you will recognize if you have ever worked in such a company.

The first danger signal is that the research and development (R&D) team keeps saying “let's add this,” but can't articulate the new product's value to customers. Years ago, we met with a team to develop a pricing strategy for a product meant to revolutionize testing and monitoring for a class of machinery. Intrigued, we asked why someone should buy the product. The team members looked at each other quizzically before all eyes focused on the team leader.

“This product has seven patents!” the team leader finally said, missing the point that customers couldn't have cared less about that.

We refer to such comments as “inside-out,” meaning they reflect what people inside a company believe is valuable about their firm's new product. Inside-out comments like that indicate that an R&D team has fallen in love with the product but has lost sight of the customer. That may be the earliest and most reliable indication that the product you are about to launch is suffering from feature shock. Customers won't buy a product if they do not buy your story about why that product helps them. Products that are feature shocks cannot articulate a clear value proposition and tend to be a one-size-fits-all approach to customers.

When feature shocks come to market, customers' initial responses are tepid. That only increases the innovator's frustration. Customers complain the product has too many “nice to haves” and too few “gotta haves,” and they conclude they don't need the product, at least at that price. And if they do like some of the “nice to haves,” they can't afford them. There is no compelling value story for the customer, and too high a price for non-compelling value because the features have hiked its cost. Naturally, adoption is slower than the company expects. Indifferent, unenthusiastic word-of-mouth fails to generate follow-up sales. After Amazon launched its Fire Phone, no one talked about its dynamic perspective feature the way they had talked about the iPhone's Siri.

Once a company recognizes a feature shock problem, it often slashes the price. This is the simplest and fastest way to correct, or at least offset, an unclear value proposition. This is what Amazon did with its Fire Phone.

The allure of a lower price point is undeniable. It also is the easiest lever to pull when a new offering's sales are below expectations, whether they are consumer gadgets or sophisticated products and services sold to businesses. Salespeople can change a price in the middle of a sentence. They can offer the product as a “throw in” for a deal. They can quote the new price and represent it as a discount or an adjustment in terms and conditions.

This insidious process can escalate into a full-scale rescue attempt as the organization loses its ability to control the price or enforce any pricing restraint. In the worst cases, finance and pricing teams face customer demands for ever-higher discounts, and the price goes into a downward death spiral, leaving the company unable to slow or stop the decline. (In Chapter 12, we will discuss repair tactics other than price cutting to deal with initial sales disappointments. A quick price slash is the worst of all options.)

Clearly, lack of restraint in product development fuels feature shocks. Technology companies are most susceptible to encouraging the spirit of “let's add this.” Semiconductor companies, for example, routinely produce feature shocks; it's not uncommon to have a design specification with hundreds of features.

But organizations from many other industries fall into the same feature shock trap. Take the U.S. cable TV industry. For years, cable operators offering hundreds of channels struggled with a feature shock: getting customers to select which of the numerous premium channels they wanted the most. So most cable providers created a few package solutions, each of which offered groups of premium channels. That simplified the consumer's purchase decision.

Every day, all of us run into products that are living feature shocks. The financial services industry has plenty of them—for example, retail banks whose accounts offer money transfer services, credit cards, brokerage services, foreign exchange, and more. Or go into an electronics store and have a salesperson explain to you the wonders of a top-end, high-definition TV. Then see if you can remember them all. Or go into an appliance store and let them regale you with the features of a new high-end clothes washer. If you are like the average consumer, maybe you'd end up using 20 percent of all those features.

The reason such products become feature shocks is lack of restraint by innovation teams. They couldn't help themselves, thinking up and packing in another seemingly attractive feature. Such lack of discipline produces a feature shock that then typically leads to rampant profit-destroying discounting.

You can avoid creating feature shocks. You will need to tailor products differently to the needs of different customer segments based on what each segment needs and what they'll pay for products that solve those needs. We'll say a lot more about this in Chapter 5.

Flavor 2: Minivations—When You Ask for Too Little, That's What You Get

No one wants to sell his or her idea short. Minivations are products that tap neither a product concept's full market potential nor its full price potential. Companies that fall into the minivation trap underexploit the market opportunity and the price they could have charged, thereby robbing themselves of profits. Minivations go down as undermonetized products cursed with a “what might have been” tag.

With minivations, failure can masquerade as success. We worked with a Silicon Valley component maker that provides internal parts for handheld digital devices. This company, fighting hard at a time of keen competitive pressure, created a next-generation product that represented not an incremental improvement, but a step change. This new generation component had no peer. The company priced the component at 85 cents—25 cents more than the previous generation component—using its traditional cost-plus pricing method.

One of the company's hardest-to-please key customers, a prominent maker of consumer electronics, said it would incorporate this next-generation component into its new premium product line. The component maker breathed a big sigh of relief and celebrated hitting its internal sales targets. The champagne corks popped. But others in the firm knew the celebration was overblown. They knew the firm could have charged its big consumer electronics customer far more for the breakthrough component. The product was indeed game-changing, but the component maker's aspirations were too small.

The cost of a lack of ambition did show up later, when the component maker commissioned an ex post facto analysis of its new product development process, including pricing. The analysis showed the new component enabled that key customer to charge a $50 premium over its previous version of the product, and the premium was largely attributed to functionality the new breakthrough component provided. Clearly, by charging 85 cents, the component maker was charging only a very small portion of the value premium it had generated for its customer. The ex post facto analysis also showed that the component manufacturer could have charged up to $5 (10 percent of the value it generated for the consumer electronics customer). Consequently, the firm left big money on the table.

The component company failed to ask this question: “What value does this component bring to our customer and its customers, and what portion of that value can we capture?” Instead, it asked, “What does this component cost to make, and what minimum margin do I need to add on top of that?”

This example shows that coasting on “business as usual” autopilot can cost plenty when you launch a new product—money that won't be available to hire new employees, fund fresh research, and support marketing efforts.

While feature shocks enter the market overfeatured and overpriced, minivations enter the market underpriced or with volume targets that are too low. They are tame, safe answers to the right question. In the case of the component manufacturer, their device was wildly underpriced. Why? Its management perpetuated the pricing practice of the past: slapping a predictable margin on top of the previous-generation product. No one challenged the established pricing practice. No one quantified the value to customers and their willingness to pay. They just didn't think big enough from a monetization perspective.

We've seen scores of minivations over the years. Here are a few of the more noteworthy ones:

• After Playmobil's 2003 launch of its Noah's Ark play set, the set sold out in two months and started selling on eBay for 33 percent higher than the original price tag. In other words, customers were hawking it for a higher price than Playmobil offered it at! Playmobil had seriously underestimated its customers' willingness to pay for this toy. (This wasn't forced scarcity, as some toy makers have planned purposefully at holiday time.) Was Noah's Ark a success or a failure masquerading as one?
• In 2008, when low-priced personal computer manufacturer Asus unveiled its “eee PC,” a mini-notebook priced at €299, consumers reacted enthusiastically. Only a few days after Asus launched it in Germany, the low-cost machine almost sold out. Merchants reported demand exceeded supply by 900 percent. Asus couldn't make them fast enough and lost significant revenue once its supply ran dry. Could Asus have priced this product much higher? Definitely. The Asus product fell far short of its price potential; it was way underpriced. Asus left lots of profit on the table. They could have priced a lot higher, serviced the market that was willing to pay, and then dropped the price (after building more units) to target the mass market.
• Audi's Q7 luxury SUV launched at €55,000 in the first quarter of 2006. Demand turned out to be 80,000 units per year worldwide, but Audi's production capacity was 70,000 units. That data points to an optimal price of €58,000 (to clear 70K units), which would have meant an extra €210,000,000 a year for Audi on those same 70,000 units. Audi didn't exploit the pricing or volume potential. Could Audi have reaped much more profit? Certainly.
• French automotive supplier Valeo is the maker of Park Assist, a system sold by Volkswagen and other car manufacturers. Park Assist enables a driver to parallel park by simply pushing a button. Valeo was ecstatic after selling its system (which includes a few cameras, sensors, and software) to Volkswagen for about €100 per unit, a price based on adding a margin to its costs. But VW was no doubt more ecstatic, pricing Park Assist at €670 to its end customers and achieving it! Valeo didn't truly understand Park Assist's value to customers, while VW did. Valeo could have asked much more for its system.
• When telecommunication services companies moved from 3G to 4G networks, it was a step change in value for customers—they could download website pages faster on their smartphones or listen to digital music without as many bandwidth interruptions. But some telcos didn't fully monetize the new service. One of them (the United Kingdom's Hutchison/Three) even proudly states this in its advertising: “Charging extra for 4G sucks. We don't.”⁴ Actually, it's worse for the company not to monetize its speed improvement!

So how do you spot minivations in the making? (See Figure 2.2.) Your team seems comfortable checking the box and lowballing on targets. You find evidence for lack of ambition and a desire to not “overprice.” When the product is out, your sales team often is the canary in the coal mine. Compared to your other products, the sales force is easily meeting its targets with your new product. Your channel partners are reaping their maximum margins. Sellouts are popping up. Fewer pricing problems are emerging. If the majority of deals are going through the pipeline without price escalations, you may have underestimated the value of your new product and underpriced it. Tracking the number of price escalations, as well as the length of the sales cycle against historical norms, will give you more hard evidence that something new is occurring.

What fuels such minivations? “Good enough” thinking is the culprit here. In larger corporations, organizational structures can reinforce a “good enough” mindset. The division of labor necessary to run a large operation means that often it's no one's job to reflect deeply on data or analyses. Barriers between work groups inhibit information sharing, making deep reflection impossible or difficult. Moving an idea along requires too many handoffs. To maintain momentum, managers prioritize getting the handoff right rather than getting the right answer.

Unlike feature shocks, minivations are difficult to guard against because they don't end in epic failures, just value-limiting ones. Although minivations do not spell catastrophe for a single product, they take a systemic toll across a company as team members tolerate too much “good enough” thinking and too little ambition.

Flavor 3: Hidden Gems—When You Don't Look, You're Not Going to Find Them

With a hidden gem product, a company has a brilliant, even revolutionary idea but fails to both recognize it and quantify the product's value to customers. Or the company decides it lacks the capabilities to bring the unusual idea to market. Hidden gems often end up in limbo, neither launched nor killed. They often don't make it to market, but if they do, they arrive undervalued, as freebies or deal sweeteners.

Revolutionary product ideas, by virtue of their defining originality, often may seem tangential to a company's core business. Kodak is perhaps the most famous illustration of this. Once the top name that consumers associated with photography, Kodak got clobbered in the digital camera game because it waited too long on the sidelines. The irony: In 1974, a young Kodak engineer in the company's applied research lab, Steven Sasson, had invented a hidden gem: the technology behind digital cameras.

Kodak patented the initial technology, and Sasson kept the prototype as he moved around the company. In other words, Kodak could have been the king of the digital camera market—an industry whose products are integral to hundreds of millions of smartphones, not just the point-and-shoot cameras we've all used for years. But the notion of a digital camera threatened the core business at Kodak: film. So it remained hidden for far too long.

Exactly how do hidden gems stay hidden? In Kodak's case, Sasson's bosses never got excited about it. Kodak didn't introduce its first digital camera, the DC40, until 1995, 21 years after Sasson's breakthrough, and it didn't get serious about its digital camera effort until 2001.⁵

With no foothold in that new digital world, Kodak declared bankruptcy in 2012, emerged in 2013, and as of 2015 was trying to resurrect its business largely by licensing its patents and research technologies. Banking firms now own most of the company.

None of this had to happen. None of it was preordained. Kodak had a hidden gem way back in 1974. It just couldn't bring itself to exploit it.

Kodak is hardly the only company to bury its hidden gems. We recently met a manufacturer of warehouse conveyor belts that had developed software that dramatically improved the flow of goods (within the warehouse). Because it was a hardware manufacturer, selling software was a foreign concept. So the company had given away its breakthrough software, thinking the real value was in the hard goods it made. It had squandered millions of dollars in revenue for a product—lines of code—for which it could have charged a hefty price. This was confirmed when we talked to its customers: a majority of them had a significant willingness to pay for the software (on top of the hardware).

What about examples of companies that have harnessed a hidden gem? Two prominent positive hidden gems come from the U.S. newspaper industry, a sector that has been shrinking every year as consumers get their news for free on the Internet. Those hidden gems are Autotrader.com and Cars.com, both of which provide online classified ads to help consumers buy and sell cars.

When the Web emerged in the 1990s, most newspapers paid scant attention to it, opting to continue shoring up their print franchises. But several big media companies went against the grain, deciding to fund online classified ad ventures to hedge their bets if readers someday abandoned print news for the online world. AutoTrader.com was created in 1997 by Cox Enterprises, a major media company. (We discuss the new product success of another Cox automotive business—car auctioneer Manheim—later in this book.) Cars.com was born in 1998, backed by five newspaper companies (Gannett, McClatchy, Tribune Media, A. H. Belo, and Graham Holdings).

The hidden gem problem is not as common as feature shocks or minivations. Unlike the case of the newspaper companies, the pressure required to produce hidden gems is not always there. But when it is, team members often struggle either because they can't recognize and measure hidden gems' inherent value, or they lack the competencies to bring them to market. The gem gathers dust because it is neither launched nor killed. As in the Kodak case, teams become complacent about their firm's successful, preexisting business model, and the company stagnates. The big miss here lies in failing to recognize the value and often disruptive power of the hidden gem.

Perhaps in past product-development work you've seen signs of a hidden gem in the making. (See Figure 2.3.) Customers show excitement about the concept, though they may not understand how you'll deliver it. Or the sales force is giving away a product or feature to sweeten deals.

As the word “hidden” indicates, sometimes these ideas simply do not make it to the executive suite. They are stopped by midlevel executives who are either unable to see their potential or are scared of them (since they may sabotage their division or pet project or cause big political friction). A more open culture could save these ideas from being lost too early.

The most painful outcome of not recognizing your hidden gem is seeing a rival launch a version before you do.

Your company may have hidden gems lying around if you are going through one of these situations: changes in business models; a disruption in your industry; a commodity business trying to differentiate itself; a shift from offline to online business; a change from selling a product to a service; a move from analog to digital; or a move from hardware to software.

“Where does the buck stop?” becomes a tough question to answer in the case of hidden gems. Who was responsible for the big miss? Remember, recognizing the hidden gem's potential is key. But in most organizations, no one is responsible for recognizing them.

Flavor 4: Undeads—When Nobody Wants Your Product

The term “undead” historically has been used in fiction to refer to dead people who come back to life, such as vampires and zombies. Applied to monetizing innovation, an undead product is one that still exists in the marketplace, but demand is virtually nonexistent. The product, for all intents and purposes, is dead, yet it continues to “walk around” like a zombie.

How do undeads happen? They occur when a new product is the wrong answer to the right question—or an answer to a question that not enough people care about. These products emerge from organizations that struggle to separate the technically feasible from the commercially practical. Undeads hit the market with an almost audible thud and poor sales.

Undead failures teach us that some well-intentioned, marvelously engineered new products should never be brought to life. One of the most celebrated—and then reviled—was the Segway. In December 2001, after tremendous prelaunch hype, inventor Dean Kamen unveiled his vision for a breakthrough personal transporter, developed for $100 million, under the codename “Ginger.” You've probably seen the Segway PT in action at a shopping mall or a tourist site, but not in many other places.

The Segway PT has covered a long distance in going from excitement to disappointment. It was supposed to change the world. At launch time, Kamen proclaimed he would sell 50,000 the first year.⁶ Six years later, by the end of 2007, Kamen's company had sold about 30,000 of the scooters in total, not per year.⁷ In April 2015, the company, having quietly faded from the public eye, was sold to the Chinese firm Ninebot.⁸ Kamen's invention found a home with tour operators and security organizations.

Why didn't the Segway transform the world? At the top of consumers' reluctance to buy the machine was its price. Asking between $3,000 and $7,000 for a scooter, the company arguably had little hope of building a mass following. The Segway's appeal was narrow, like all undead products. Fascinating from an engineering and technology standpoint, the Segway was the wrong answer to the right question: What's the most efficient way for people to get from point A to point B? The Segway was far more expensive than a plethora of options, so it came to the market as an undead product.

Undeads are born in hugely successful companies as well. Take online search engine leader Google. In 2012, the company unveiled Google Glass, a pair of glasses with a small camera that, upon verbal command, could take pictures or record videos. The wearer could also look up at Glass and see maps and other information found on smartphones. According to Google, the consumer didn't need to touch anything to get some of the features of a smartphone. Google made the first version of Glass available to the digerati and journalists for the princely price of $1,500. The idea was that they'd fall in love with Glass and use their online pulpits to urge others to buy it. Only, it didn't happen that way. Reviewers panned it for shortcomings such as its short battery life and glitches. And the device spooked people who feared that nearby Glass wearers would record moments they'd prefer to keep private. Because of this privacy concern, a number of theaters, bars, casinos, and other public places prohibited patrons from wearing Glass.

A year later, in January 2015, Google announced the end of its Glass product.⁹ Google Glass was an undead product for its initial target audience: everyday consumers using smartphones. We believe that had Google targeted commercial applications as its primary segment—surgeons and other professionals who need information rapidly while their hands are doing vital work—and focused and developed the product for the business segment, Glass might not have been born undead. For the broad consumer segment, however, Google Glass answered a question no one was asking.

By the way, technology companies like Segway and Google aren't the primary sources of undeads. They go well beyond tech. Consumer product companies collectively have hundreds of undead products they try hard to forget. Remember when Coca-Cola introduced “New Coke” in 1985? Facing pressure from Pepsi, Coke tweaked its recipe for the first time in almost a century. Consumers didn't love the new taste—and they hated that the old Coke had disappeared from store shelves. Within three months, the company salvaged the situation by returning the old Coke, now called Coke Classic (using the original recipe), to the shelves.¹⁰

In the cemetery of undead new products, New Coke has plenty of company: McDonald's Arch Deluxe burger, Microsoft's Zune music player, Harley-Davidson's brand of perfume, Procter & Gamble's Touch of Yogurt Shampoo, Rocky Mountain Sparkling Water from Coors—all of these were brought to the market as undeads.

Undeads pop up in the life sciences industry, too. Take the concept of inhaled insulin. Its inventors thought needle-phobic diabetics would embrace this breakthrough. The concept generated enormous excitement at the firm. But while it sounded like a great idea, in practice it was…well, impractical. A patient had to use five to ten times more inhaled insulin, and the price was three to four times the price of injected insulin. As a result, the clear majority of patients continue to inject insulin. Wrong answer for the right question.

How do such undead products make it to market? They happen when their proponents wildly overstate the customer appeal and don't segment the customer base effectively. Had these firms asked customers what they'd be willing to pay for their inventions before drafting the engineering plans, and had they identified the market size by segment and who would be willing to pay the most (and least) for it, they would have reformulated their products to meet an acceptable price. Or, finding there is no acceptable price, or that the market size is too small, they would have scrapped the product altogether before they incurred too much financial damage.

It's easy to recognize that your innovation is undead. (See Figure 2.4.) When an undead is in the making, you become delusional and detest any evidence that goes against your beliefs. You resist objectivity and keep investing time, feeling you have come too far. Once the product is in the market, your sales teams can't sell it, and it causes them to miss their targets—by a lot. Salespeople don't want to bring the product into conversations with customers for fear of poisoning relationships. Meanwhile, customers either say they don't want the product or say they find it intriguing, but not intriguing enough to buy. Press coverage and social media posts turn negative and sarcastic. That's what happened to Dean Kamen's Segway, which was lampooned in the hit U.S. TV cartoon show The Simpsons over several episodes.

While it is easy to recognize undeads, it's far more important to know what kind of organizational culture fosters them in the first place. Many of the undeads we've seen are a result of having a “yes-maybe-no” reaction to new product ideas. Every idea in such companies starts with massive excitement, and everybody says, “Yes, let's do this.” However, the commitment to design and build the product comes much ahead of finding the market potential or the customer willingness to pay for such ideas.

By pushing the willingness-to-pay conversation too far out in the innovation process, these companies put themselves in a situation where saying “no” comes too late. They have already overinvested at that point. In some situations, this could get even more complex if this is the pet project of senior management and no one wants to say the idea is a bad one. In such environments, people and teams bring undeads to market. They simply have a hard time saying “no”—even if in their gut they know the new product won't fly in the marketplace. They're not asked for their opinion, and raising concern only puts their careers at risk. And so they don't speak the truth about the undead in their midst. They only execute their piece of the project as they are told. And that's how such fatally flawed products hit the market.

These Four Monetizing Innovation Failures Can Be Avoided

You don't want your product to fall into one of these four categories. They are entirely avoidable, but only when executive management, product development, marketing, sales, and other functions in charge of a new product understand the nine rules of monetizing innovation that we will explore in depth in Part 2 of the book. In those chapters, you will learn the process of identifying the value customers perceive for a product and its features long before that product is launched in the marketplace—in fact, long before it's built, engineered, and produced. Figure 2.5 sums up the failure categories and shows which chapters you need to pay special attention to in order to avoid each type of failure.

Bringing pricing considerations—based on real customer input—into the new product development process early is critical to avoiding disastrous feature shocks, minivations, hidden gems, and undeads.

But before we do that, we explain why the prevailing mindset of postponing monetization discussions is widespread. This is the focus of Chapter 3.