Myth #1: If you simply build a great new product, customers will pay fair value for it. “Build it, and they will come” is the mantra. Why we believe it: because Star Wars, FedEx, Harry Potter were all rejected by directors, businessmen, and editors and were wild successes. But they are the exceptions not the rule.Myth #2: The new product or service must be controlled entirely by the innovation team working in isolation. Why we believe it: because Henry Ford said that customers would have wanted a faster horse. Indeed, the Innovators Dilemma, Different, Play Bigger, etc. put a premium on this as well. The fine line that must be walked is that of being different in a way that we are confident will resonate with customers. Confident because you have talked, consulted, argued, and shown the product to customers and more importantly, gauged their willingness to pay.Myth #3: High failure rate of innovation is normal and is even necessary. Why we believe it: sports analogies.Myth #4: Customers must experience a new product before they can say how much they’ll pay for it. Why we believe it: because its safe.Myth #5: Until the business knows precisely what it’s building, it cannot possibly assess what it is worth. Why we believe it: a cost-plus mindset that ties willingness to pay with what it cost us to build.
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