Product Management is Risk Management

I was re-reading Clayton Christensen’s The Innovator’s Solution the other day and a statistic he mentioned in Chapter 3 stuck with me:

“More than 60 percent of all new product development efforts are scuttled before they ever reach the market. Of the 40 percent that do see the light of day, 40 percent fail to become profitable and are withdrawn from the market.”

If you do the math, 76% of all new product development (NPD) efforts fail to make it to market or become profitable. This data astounds me, yet time after time I see similar statistics.


Companies waste a lot of resources and effort for little or no return.


This rate of failure should not be acceptable, regardless of the size of the company.

To navigate through an economic crisis caused by a global pandemic, and emerge stronger, not even a failure rate of 50% is acceptable.


So if a company wants to navigate the crisis and emerge stronger, what should they do?


How can they minimize their failure rate?


They need to manage their risks properly with strong and effective product management.

Risk Management as Product Management

While an executive at GE, one of the core pillars of the management philosophy they instilled was the concept of "risk management." Mitigate risk through your strategies and decisions, and through that “maximize the realization of opportunities” (Wikipedia definition of risk management).


From a risk management point of view the challenge with NPD is:

  • How do you maximize the percent of NPD efforts that make it to market?

  • How do you maximize the percent of products that make it to market that become profitable?

  • How do you maximize the profits of these products?

Translating this into a product management lens, the challenge is: