| McKinsey Classics | September 2018 |
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| Beating the odds in market entry |
| The philosopher Thomas Hobbes (1588–1679) famously observed that before the coming of civilization, human life was “nasty, brutish, and short.” As the late economist Paul Geroski added, so is the life of typical new products—80 percent of them fail. Yet strategists and economists largely agree about what makes market entries successful, and the importance of these decisions surely ought to inspire a strong, detailed analysis. The problem is that cognitive biases (systematic errors in the way human beings process information) undermine many decisions. For starters, an executive facing a difficult one typically relies solely on the company’s inside view of it, which might be mistaken or possibly semidelusional. Many top leaders think that a company’s capabilities, for example, are more relevant for a new product than they really are, that the potential market is bigger than it actually is, or even that rivals won’t respond to entry moves. Some practical steps can help executives control cognitive biases in market-entry decisions. One involves developing a reference class of market entries: a group of similar decisions that other businesses made in the past. Read our 2005 classic “Beating the odds in market entry” to learn more. |
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| Coping with tumultuous change |
| Senior executives are succumbing to fear and denial in today’s shockingly fast-moving environment. Read the 2009 classic “A CEO’s guide to reenergizing the senior team” to learn how CEOs can help their top people cope with profound change. |
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