I’d heard so much about a new coffee roastery that had opened up near the office, so I suggested to my mentor that we meet there for our monthly catch-up session.
Coffee roasteries were popping up around every corner, and I wanted to see what all the hype was about, especially regarding this one in particular.
Our coffees arrived at the table, and once I’d taken a sip, I had to admit that the coffee was perfectly prepared. The atmosphere inside the roastery was cozy, the service was faultless, and the manager took the time to check up on every table and introduce herself. “Coffee roasteries are the new ‘in thing’, but will they still be in a year or two?” I commented.
My mentor responded, “What percentage of your next year’s sales revenue will come from new products?” I wasn’t sure how to answer that because I didn’t know how much revenue would come from new products. How could I know that for sure?
Today’s ‘wow’ is tomorrow’s ‘so what?’
Many entrepreneurs end up being one-hit-wonders because they start out by developing an innovative product or service, and never come up with another new product to follow on from that. By failing to evolve from the product they produced initially, their businesses ultimately end up collapsing.
When you build your business, you can’t expect your products not to age. Peoples’ needs will always change, markets will change, and your competitors will produce new products.
Don’t rest on your laurels. You should be constantly driving new product development – this excludes iterations of existing products – especially products that will be highly profitable.
Apple is a great example of a company that continues to develop and launch new products, as well as iterations of existing ones. They started out selling computers, and since then have also launched the iPhone, iPod, iTunes, iPad, and more recently the Apple Watch.
If they’d never produced new products like the iPhone or iPad, and instead focused solely on developing personal computers, they would never have become the tech giant that they are today. These new products account for a large portion of their annual revenue.
As a business owner, you have to bring the sales revenue generated by new products right into your focus area, and make it your responsibility.
Your annual performance review should measure you on your ability to bring in revenue from new products, and make you accountable for this task.
Set yourself a stretch target of 25% of your revenue per annum coming from new products, and work on a strategy for exactly that.
You have to constantly be in a place of regenerating, failing which your business will suffer a slow and painful death, and you will just be another Vanilla Ice.
The secret to shifting your mindset and therefore your business is asking yourself these questions, and answering them honestly:
- Am I just another one-hit-wonder?
- What percentage of my next year’s sales revenue will come from new products?
- What stretch target am I going to set for myself for the next year?