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Unlocking Business Prosperity
New product development should be the life-blood of every company – from the smallest guy on the block to the biggest multinationals. That's because innovation is the key factor in unlocking business prosperity.
From the beginning, the seller’s ability to surprise and delight the customer time after time has been critical to the long-term survival of market leaders. Over the last twenty years, 3M, Kodak, Bell, GE, Hewlett Packard, and many other leading organizations, big and small, have learned this lesson and now are consistently engaged in implementing high-quality processes and industry best practices to manage their New Product Development (NPD) programs. They also recognize these programs can keep them two steps ahead of the competition.
Rick Buehler, Director of Product Design & Development at Keene-Widelite Inc., a manufacturer of high-end commercial lighting products, is happy to report that since they began using a more effective, disciplined product development process their success rate has gone through the roof: a decrease in time to market by as much as 50%; a 2000% increase in new product sales ratio, and a 1000% increase in the number of products launched per year, some significant gains with the right products.
I am often asked, "What is the major difference between the market leaders and those firms that are scrambling to survive?" The answer is that market leaders possess two strategic keystones: a powerful, consistent vision and a high-quality process for new product development to execute that vision in a way that produces profits.
Entrepreneurs and small business owners often possess the vision and the drive to succeed, unfortunately, the dominant execution strategy is to shoot from the hip. While this allows maximum flexibility in responding to competitors and meeting needs of customers, it creates a false sense of control and becomes a powerful barrier to the growth of their businesses. Shooting from the hip can be risky, costly and time consuming when used as an approach to new product development.
Even before sales and revenues drop, company insiders begin to observe that adhoc practices no longer work. The first symptoms are increased employee frustration, workplace conflicts, overtime work, delayed launch dates, and budget overruns. The ability to change and respond to the increasing complexities that come with growth and to unpredictable customer expectations have become the greatest determining factor as to whether a firm will prosper or perish.
The first critical step senior management can take is to espouse a new vision, make a commitment to change the status quo, and do whatever it takes to integrate employees and company processes into a culture of quality and innovation.
The second step is to ask if the current strategy for new product development supports the new vision and the overall strategic goals of the organization. If the answer is no, then the company must go back and find out why the misalignment is present.
If answered yes, then they must decide if the current process is robust enough to execute the new vision and strategy. In other words, does it contain all the critical success factors necessary to launch winning products? EXFO, a leading entrepreneurial designer, manufacturer, and marketer of fiber-optic instruments for the telecommunications industry was recently rewarded for their efforts, commitment, and results gained through the use of flexible but systematic processes for new product development. EXFO takes pride in being the first Canadian company and co-winner of the 2000 Outstanding Corporate Innovator award that is given by the Product Development Management Association. Stephen Bull, vice-president R&D at EXFO explained that contrary to popular belief, their system and structure is not a burden to projects but an enabler to success and cycle reductions.
Researchers in the field of new product development have identified ten critical success factors required to consistently turn out popular, profitable products.
- The capability to create products that offer unique features, benefits, and high quality to the end-user. The biggest profit generators are disruptive or novel products. Technically superior products exceed customers’ needs by solving the immediate or long term problems they have experienced with competitors’ products.
- A market-driven and customer-centred approach.
- Dedication to thorough up-front homework to determine a product's market demand and profitability.
- A well-defined product concept that determines clear technical specifications and customer preferences before development and prototyping begins.
- Management skills for project evaluation and selection to make the effective Go/Kill decisions.
- A thought out and executed marketing plan and product launch.
- A properly resourced process for new product development that meets the organization's need for speed and quality.
- A continuing "post-mortem" for each new product, with measures to review both qualitative and quantitative performance.
- Consistent investment in the right organizational structure and in ongoing training to ensure high quality of human and technical execution.
- A multi-stage, cross-functional disciplined approach to new product development.
How does your organization stack up against the best? Believe it or not, possessing nine out of ten critical success factors is not good enough if you want to lead the pack.
If you only remember one thing as you go forward in your search for new products and business success, remember, "Winning at new products isn't everything...it's the only thing!"
Debra Bannister MBA is the co-CEO and co-founder of Waterloo-based consulting firm SystemsGO Inc. www.systemsgo.ca
Published in Networking Today, September 2001.
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