The Most Common Mistake Startups Make

What is the most common mistake startups make? 

They do market research too late or too little. The numbers back it up.

The Hard Truths about Product Failure

1. No market need is consistently the #1 or #2 reason startups fail — cited in ~35%-42% of post-mortems.

2. One study of new product failures showed that market research was poorly done in 73% of projects.

3. Top-performing companies generate 1 success for every 4.5 ideas, while average firms need 11.4 attempts for the same outcome — likely due to market research.

4. Successful companies spend twice as much time and budget on front-end activities — especially market assessments and voice of customer (VOC) research — compared to less successful peers.

The Message is Consistent

“A thorough understanding of customers' needs and wants, the competitive situation, and the nature of the market is supported by virtually every study of product success factors.”

Yet Most Firms Fall Short

“Sadly, a strong market orientation is missing in the majority of firms' new product projects. Detailed market studies are frequently omitted from new product projects. In general, marketing activities are the most poorly executed activities of the entire new product process, rated far below corresponding technical (engineering, design, R&D) activities.”

“The weakest areas are the front-end (pre-development) and the business and marketing related tasks (technical tasks are much stronger).”

The Takeaway

Market research isn’t optional. It’s essential, especially in the early (pre-development) stages, when course corrections are still easy and inexpensive. If your product team isn’t deeply engaged with the customer, the market, and the competition from the start, you’re not just guessing — you're gambling. Invest in market research before you invest in product development. It’s the difference between a hopeful launch and a successful one.

References

C.B. Insights. Top reasons startups fail. Why Startups Fail: Top 12 Reasons l CB Insights

C.B. Insights. The 20 reasons startups fail. https://www.scribd.com/document/787969065/20-Reasons

Cooper, R. G., & Edgett, S. J. (n.d.). Best vs. the rest: The practices of the most successful new product developers. Product Development and Management Association (PDMA) Knowledge Hub.
https://community.pdma.org/knowledgehub/bok/product-design-and-development-tools/best-vs-the-rest

Cooper, R. G. (2018). Success drivers in new product development: The critical success factors. Innovation Management.
https://www.five-is.com/wp-content/uploads/Success-Drivers-in-NPD-IMM-2018.pdf

Forbes Business Development Council. (2021, November 4). Why businesses can't afford to skip market research. Forbes. https://www.forbes.com/sites/forbesbusinessdevelopmentcouncil/2021/11/04/why-businesses-cant-afford-to-skip-market-research/