By GM Ogle, Product Creation Studio Director of Electrical and Firmware Engineering.

As the old saying goes, “Hardware is hard!”.  

Yes, it’s true – hardware product development can be challenging and complex, requiring significant time, resources, and capital investment. Unlike software startups, hardware startups face unique challenges such as manufacturing, supply chain management, and hardware design. As a result, the failure rate for hardware startups is higher than that of software startups. 

According to a study conducted by CB Insights, 97% of hardware startups fail to deliver their product on time, and 70% fail to deliver their product at all. 

These trends remain remarkably consistent year after year, even as technology advancements progress.

So why exactly do so many hardware startups fail? 

While learning from your mistakes is often necessary in the product development process, it is much more efficient to learn from the mistakes of others. Over the years, Product Creation Studio has worked with many hardware products from startups to established brands. This article details some common pitfalls that hardware teams may face when working on a new product initiative.

Pitfall #1: Underestimating the complexity and cost of the product development process.

Hardware product development involves multiple stages, including research, design, prototyping, testing, and manufacturing. Each stage requires significant resources and expertise, which may need to be clarified for those new to the innovation and product development process. 

In early-stage startups, each team member often wears multiple hats. Therefore, these groups often need more hardware design and engineering expertise to navigate their product all the way through manufacturing and to market.  

These business owners and entrepreneurs are often optimistic about their product’s potential for success. To bring it to market quickly and efficiently, they may try to simplify or reduce specific steps in the development process. 

Unfortunately, this can result from a lack of consideration for product development's inherent risks and challenges. Additionally, external pressures such as investor expectations or deadlines can cause companies to underestimate the development process's complexity, timeline, and cost. 

When managed properly, the product development process enables companies to allocate resources effectively, plan realistic development timelines, manage risks appropriately, make informed investment decisions, and communicate progress effectively. 

Companies may underestimate the time and resources required without accurate estimates, leading to delays or project failure. Furthermore, identifying potential risks and challenges early on allows companies to plan and implement appropriate risk mitigation strategies, reducing the likelihood of project failure.

To pass forward the wisdom I learned from a trusted mentor early in my product-making career – “slow down to succeed quickly.”

Pitfall #2: Neglecting supply chain considerations.

Startup products often originate as an idea in the minds of entrepreneurs and then race as quickly as possible headlong toward production.  

Founders hire engineers to turn their idea into reality, and those engineers develop the best product possible with the resources they have.  

The complex nature of the supply chain, especially in recent years, involving multiple suppliers, manufacturers, and distributors, makes it challenging to manage, which increases the likelihood of errors or delays. Disruptions in the supply chain can also significantly impact the product development process, including milestone delays, cost overruns, and even product failure. 

As such, managing the supply chain effectively is critical to the success of your product. 

A well-designed supply chain strategy can ultimately help manage costs by optimizing procurement processes, mitigating component continuity of supply issues, negotiating beneficial component pricing, and identifying opportunities for cost savings over time–all of which are critical success criteria for a startup. 

Furthermore, a solid supply chain strategy highlights when and where to make crucial decisions, which can improve product quality. Sometimes supply chain awareness even leads to a significant pivot in strategy. This can ultimately result in smoother, high-quality component substitutions when required.

Collaborating with a company that has built authentic relationships with various component providers over several years of successful product development can help you avoid potential setbacks and pitfalls in this stage of the product development process. 

Pitfall #3: Problems scaling production.

Scaling production requires coordinating and aligning multiple suppliers, manufacturers, and distributors, which can add to the complexity and increase the likelihood of costly errors.  

In reality, it is not uncommon for startups to have key materials or components that just don’t show up in time to support manufacturing needs. Alternatively, we also see cases where inventory piles up before production lines are even greenlit, leading to logistics problems for the manufacturing partner. 

When supplier relationships, inventory control, manufacturing capacity, factory validation, and process optimization, are not given the necessary attention, misalignments and costly errors can arise as production volumes ramp up to meet targets.

In order to scale production successfully, these situations must be avoided at all costs.

Exacerbating this is a tendency at some startups to lavish resources on key product features, and in turn to skimp on production readiness. While features may impress investors and even increase revenue estimates, don’t overlook the importance of scaling and validating through production. Hardware business models depend on reliable products, delivered to all customers.  

Both are important to achieving success, and balance is required.  

Scaling production ensures that a mature, quality product is produced. You can meet the increasing demand for your product throughout the production lifecycle, which is essential for long-term success and profitability.

Pitfall #4: Failure to adequately test and validate the product before production. 

Failure to adequately test, among many things, can lead to product immaturity and defects, resulting in recalls, customer dissatisfaction, and ultimately reputational damage. 

Engineering Testing and Validation are essential to hardware product development, validating and refining the design before production. Engineering testing of initial prototypes ensures that the product design functions as intended at both the subsystem and system levels.  Design modifications may be required, but making those improvements before moving into production is essential to avoid costly redesign work.

Companies often fail to test and validate their products due to inadequate experience, process or limited testing budget. In addition, pressure to meet project deadlines or to launch the product to market prematurely may lead to rushed testing and validation, resulting in incomplete or insufficient testing. This can lead to oversight of critical factors, such as reliability, safety, or even regulatory compliance.

A paper from ScienceDirect called “Achieving Agility and Quality in Product Development" discusses the importance of both agility and quality in product development and the critical balance between the two. 

Companies must be agile in responding to changing market needs and customer demands. This includes adapting to evolving requirements while incorporating feedback from customers and stakeholders. Additionally, quality in product development, including testing and validation, ensures the product matures in stability and robustness and that the products meet customers' needs, performing as intended. 

Verification testing determines whether products built on the manufacturing line meet the expected cosmetic and functional product requirements.  By understanding, identifying, and resolving manufacturing issues before production, you can avoid costly scrap and rework of production units or shipping defective products to customers.

Pitfall #5: Having the wrong team.

When a team lacks the necessary experience, expertise, or cohesion, it can lead to poorly-informed decision-making, which can result in development delays and quality issues. A multidisciplinary team with expertise in areas such as engineering, design, manufacturing, and testing is required for the product development process. A team that is missing essential skills or doesn't function well together can negatively impact the speed and success of the product development process. 

Inadequate team composition can be problematic for companies of all sizes. For instance, product development teams in larger organizations may require expertise in innovation frameworks to revamp existing products or create new ones. At the other end of the scale, startups may struggle to attract top talent due to budgetary constraints or lack of brand awareness. These recruiting obstacles and insufficient resources can result in an unbalanced or incomplete team, which can unexpectedly impact product viability.

Consequently, using the wrong team for product development can be a major pitfall. Successful product development entails more than just generating a fantastic idea or creating a unique solution to a problem. Newly-formed teams in established firms or startups may need external assistance in identifying the necessary skills and expertise for product design, testing, manufacturing, shipping, and maintenance.

According to Alira Health's 2023 US Medtech Contract Manufacturing Report, one of the most notable trends in the medical device industry is the growing popularity of Contract Development and Manufacturing Organizations (CDMOs) as the preferred option for medical device firms (both startups and large companies) to outsource talent.

By embracing this trend, companies are discovering exciting opportunities for growth and innovation.

Hardware is hard! We can help you. 

Developing and shipping products is complex in and of itself, and hardware product development adds an order of magnitude of complexity with component supply, manufacturing processes, and regulatory requirements.  

With investor money and your brand reputation on the line, the stakes are incredibly high to emerge from the process successfully.  

In this article, I outlined the top five pitfalls I have seen in my career as a product maker and have given you insights into the impact each of these can have on your business, product, and end users.  

Whether you're starting your product journey or well into it, we're here to support and enhance your team's efforts. Our extensive experience assisting founders and aligning the product development process with the venture capital fundraising milestone process makes us valuable partners. 

We wish you the best of luck with your product journey and would be delighted to speak about how Product Creation Studio can help you achieve your product goals.