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New Product Launches: Are Today’s Tech Companies Exposed to Higher Risk?

Technology firms face a wide range of organizational risks. Managing unforeseen risks is a part of the industry.

Although having the right insurance is crucial to any business, it’s only one part of the puzzle. In order for technology companies to succeed, they must get the risks associated with new product launches right. Risk management takes a comprehensive look at risks, not just the insurance element, and formalizes a strategy and process to manage the exposures. It comes down to the economics of doing smart business.

Assumptions in product development are flawed. As each product is unique, a unique plan of development and launch must accompany it for success. A development and launch plan must be able to adapt to the ever-changing market. As “Big Data” grows and new developments in technology arise, members of the technology industry must take note of any risks that could keep their organization from meeting their future objectives.

Taking the proper measures during product development will enable a technology company to rise and manage the upside of risk. It is a fact that in today’s market, nine out of ten products will fail. Having a proper plan in place that is adaptable by the developers and board can help ensure success.

Here are a few tips that can help make your new product launches a success:

• Estimate the product’s holding cost and the transaction cost of batches produced. By optimizing the balance between these costs, a technology company can avoid the increased costs that come with producing work in batches that are too large. Maintaining the proper balance will boost efficiency and decrease the possibility of defects within the product. This can also help you manage your property and liability exposures.

• Losing opportunities due to sticking to a singular development plan can increase risk of product launch failure. Staying within your company’s comfort zone is not conducive to proper product launch and development. Because each product is intrinsically different, you should expect that its development would be different as well. A company needs to stay competitive by pushing the envelope within the bounds of a well-structured risk management plan. Of course, you should balance this with any increase of risks from product failures. 

• Rushing a product’s development or launch can be debilitating to a business. Controlling the rate at which a product is developed solely based on company productivity sets up a product and a company for failure. While it’s true that meeting deadlines is of paramount importance, releasing a rushed and diluted project will increases the product’s defect rate and liabilities to the company.

Risk assessment is a systematic process of evaluating the potential risks associated with a new product, activity or undertaking. It is important to determine the exposure and costs. Careful planning will enable a company to place priority on each type of risk involved before a new product launch.

Lastly, having a corporate insurance program in place that covers all elements of your new product launch is important. Insurance coverages important to new product launches could include: business interruption, warranty programs, adjustments in your general liability program and technology errors and omissions.

The members of TechAssure Association can put together a program that protects your investment and ensures that your new product launch is a success. Please contact us for more information.

 

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