Every product launch carries within it two parallel conversations. The first is the market conversation which is what the consumer needs, what price can they pay and how to build distribution and awareness. The second is the investor conversation and that is when do they get their money back, what is the internal rate of return and how does this fit their portfolio targets? In the best-run organisations, these two conversations inform each other. In some others, the investor conversation dominates, and the product is sent into the market carrying a financial burden it was never designed to bear.

Unrealistic expectations for return on investment can contribute to product failure. This is among the series’ most uncomfortable topics because responsibility lies not with competitors, regulators or distribution partners, but in the boardroom. Pressure from investors, shareholders and parent companies carries authority, so the financial expectations they impose rarely receive the rigorous scrutiny they deserve. Investors legitimately seek returns; the issue is not that demand, but the timetable attached to it. A product’s return timeline must reflect the realities of the market it enters, rather than the financial model that shaped its development and initial investment approval.

Companies must generate returns, serve people and respect environmental realities. Investor impatience shortens return timelines, undermining the product’s commercial foundations: pricing, market development investment and time to mature. Sales volumes, operating margins and payback periods are essential to budget approval and factory investment. The problem is not these figures, but how they are derived. Projections become unrealistic when built backwards from investors’ required returns, with prices and volumes adjusted to justify them, rather than forwards from what the market can sustain. Financial expectations must therefore reflect market realities, not dictate assumptions that compromise the product’s chances of lasting commercial success.

This structural tendency in investment decisions is particularly pronounced when the investment committee operates in a different country from the product’s target market. A parent company in Europe or North America sets a five-year payback target, and the local finance team builds its business plan around that constraint. The resulting price exceeds what target consumers can afford, while projected volumes demand market penetration rates unattainable within the available time. The product therefore enters a market where its financial structure prevents success. The problem is not the product itself, but financial assumptions imposed without sufficient regard for the market it must serve.

Nigeria’s cement industry illustrates this problem. In the early 2010s, Dangote Cement expanded production aggressively, challenging established players whose pricing reflected import substitution economics and limited local competition. Dangote’s scale lowered production costs, exposing the industry’s pricing assumptions. Companies whose investment models depended on premium prices found that the market could no longer sustain their expected margins against a competitor with structurally lower costs. Their products were not necessarily inferior; their return expectations rested on a competitive environment that had disappeared. The lesson: investment models must reflect changing market conditions rather than assume historical pricing advantages will continue supporting returns.

One of the least-discussed levers in product commercialisation is the depreciation schedule applied to capital investment. To many managers, depreciation is an accounting matter to be handled solely by the finance team and buried in the notes to financial statements. On the contrary, it is one of the most consequential commercial decisions a business makes, because it directly determines the cost base against which the product must be priced. A company invests in a production facility. That capital investment must be recovered over a period of years through the margin generated on each unit sold.

The faster the investment is written down, the shorter the depreciation period and the higher the annual depreciation charge, and therefore the higher the cost per unit, and therefore the higher the minimum viable price. A factory depreciated over five years requires the product to carry twice the annual depreciation cost per unit compared with the same factory depreciated over ten years. That differential, when passed on to the consumer, can be the difference between a price that competes and a price that does not.
I know a factory in Nigeria established with European parent company capital, initially set for a five-year payback. It was generating a product that could not be priced competitively in its target market, and the product was losing market share. It was only when the payback period was extended to ten years that the cost architecture aligned with market reality, and the product could be priced at a level that consumers would accept. This is not a story about accounting adjustment. It is a story about the commercial courage to challenge a financial assumption that was strangling the product’s viability.

Oluwole Dada is the General Manager at SecureID Limited, Africa’s largest smart card manufacturing plant in Lagos, Nigeria.