Product risks and customer risks are part and parcel of any business start-up idea and lean is no different. The most important questions to be asked here;
· Is it possible for us to build this thing at all? (Product Risk)
· If we choose to build this thing, will the customers buy it? (Customer Risk)
Product risks talk about the possibility of you failing in your quest for finding the right product. Customer risks are focused entirely on finding buyers for the product thus manufactured. Product risks on the outset look to be the most urgent one that needs attention.
If it’s an exciting new idea that you are pursuing and are sure that you will have the customer base to sell it to, even though you do, you run a risk while developing the project. For e.g. If you are developing a product that will help to cure cancer, you will have less worries about finding a market for selling the product as there are so many affected by the condition but there is a higher risk that you might fail in the process of finding the right cure for the same.
Customer risks are when you develop a product believing that you are doing it right but eventually end up with product accumulation where you don’t have the right numbers to purchase it. For instance commencing an online grocery store and investing in it and the fleet necessary for the same, can find you wanting when you realize that there aren’t many out there who will love to shop online for groceries. This will end up in a complete waste of investment and this is a risk that every product manufacturer has to bear with.
Facing both Product Risk and Customer Risk
There are new product development ideas that come with both risks attached, in this case, it is important to attack the Customer risk at first. Taking the case of automobiles in a region, a particular car manufacturer realized that majority of people in the region were single travelers who needed vehicles to transport them between office and home. They set their eyes on developing a product that will enable them to provide an affordable vehicle that will fulfill their customer’s needs.
The product prototype was based on a two wheeler chassis which would have done the job perfectly. But while the product was in the development stage, the Technical Head who was overseeing the operations had to go on a long leave thereby bringing the entire project to a standstill.
Instead of wasting investment, the company completed a showroom model for the same and had it delivered to their dealers. To their astonishment they found that there were many who were impressed with the prototype and customers in fact had pre-booked some of the vehicles with their dealers. This talks about how best to handle a situation in the case of facing both product as well as customer risk
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