New Product Strategy.docx

New Product Strategy.docx

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NewProductStrategy

NewProductStrategy

TheNicholasJ.WebbConsultingGroup

AClimateofInnovation

Newproductdevelopmentdoesn'toccurinavacuum,accordingtoTECexpertsMitchGoozéandNickWebb.Incompanieswithasuccessfultrackrecordofinnovation,seniormanagementunderstandsthattheprocessinvolvesacomplexsetofactivitiesthatcutsacrossmost--ifnotall--businessfunctions.

"Startwithanin-depthanalysisofcurrentmarketplaceconditionsandmoveonfromtheretospecificgoals,"Goozésays.Theanalysisincludes:

∙Rigorousconceptualdesign

∙Targetmarketresearch

∙Desiredperformancelevels

∙Investmentrequirements

∙Projectedfinancialimpact

Otherimportantconsiderations:

howdoestheproposednewproductscreenagainstyourcurrentmarketingstrategies?

Willitdilutethefocusofthecompany'soverallplan?

Isthereadangerthatitwilldrainvaluableresourcesfromothermoreprofitableventures?

"Useyourexistingmarketstrategyasaguideline,"Webbadvises."Knowhowyourtargetbuyerswillgreettheproposednewproduct.Makesureitfitsintoyourcompanymission."

Ideally,theTECexpertssay,newproductdevelopmentshouldtakeplacewithinanongoing"climateofinnovation."Forthistohappen,everyonefromtheCEOondownshouldagreeonspecificprinciples,including:

∙Wewillhonorideagenerationwhethertheideaworksordoesn't.

∙Wewilllearnfromfailure.

∙Wewillencouragecreativityskillsamongallstaff.

∙We'recommittedtogettingthebestideasfromemployeesandcustomers.

Newproductstrategyreliesonexhaustiveanalysisofthecompanyitself（internal）andthemarketplaceatlarge（external）."Doyouknowtheextentofyourcurrentproductline'sstrengthsandweaknesses?

"Goozéasks."Areyoufullyapprisedoftechnologyneedsforthisline?

Aretheregapsordeficienciesthatshouldbeaddressedbeforeembarkingonnewproductdevelopment?

"

Youshouldknowyourcompetitors,too.Whenitcomestoproductdesign,productionengineering,marketingandfinance,whataretheirstrengthsandweaknesses?

And,ofcourse,thebottom-linestrategicconcern:

profitability.

"Profitabilityshouldbeassessedateachstageofdevelopment,frommanufacturingtolaunchtocustomerservice,"Webbsays."Thisassessmentincludescalculatingfixedandvariablecosts,expectedsalespriceandanticipatedsalesvolumes.Newproductdevelopmentiscostlybutthosecostscanbeestimatedandmanaged."

KnowWhatYou'reGoingFor

Anynewproductventuremustdemonstrateastronglinktothecompany'soverallbusinessstrategy,accordingtoGoozéandWebb.Withinthiscontext,certaingoalsshouldbemet:

∙Cost--Estimatethemanufacturingcostoftheproposednewproduct（includingcapitalequipment,toolingandtheincrementalcostofproducingeachunit）.

∙Developmenttime--Setatimeframefortheproductdevelopmenteffort,basedonhowresponsivetheteamcanbetoexternalforcesandtechnologicaldevelopments.

∙Quality--Thenewproductmustsatisfycustomerdemand.Itsqualitywilleventuallydeterminemarketshare,aswellasthepricecustomersarewillingtopayforit.

"Besuretoallocatesufficientmarketingresourceswhenlayingoutyourgoals,"Goozéadvises."Thisincludesresourcesforadvertising,publicrelationsandpromotion.Whatsenseisthereinlaunchinganewproductwithoutbeingabletospreadthewordaboutit?

"

Anotherhelpfulinternalgoal:

employeetraining.Staffmembersneedtobeeducatedonhowtouseandpromotethenewproduct.It'salsoagoodideatoplanforcustomertraining--inordertoenhancepotentialforusersatisfactionandasanotherpotentialsourceofincome.Customersareoftenwillingtopayalittleextratogetmorefromanew（orimproved）product.

Speed!

"Speedinproductdevelopmentisadistinctcompetitiveadvantage,"Webbsays,"butusecaution.Speedindevelopmentshouldnevercomeattheexpenseofquality."

Theadvantagesareclear-cut:

respondingtocustomerneedsandbeatingcompetitorstomarketoftenresultinsuccess,particularlyinhigherprofitability.Bearinmindthatallproductshavealimitedlifecycle,sogettingtomarketfirstgenerallymeanssalerevenueswillberealizedearlierandwilllastlongerthanimitationor"me,too"products.

"Speedydevelopmentandlaunchalsoincreasetheoddsthattheoriginalconceptionisstillinsyncwithcustomers'predictedneed,"Goozénotes."Ashorttimeframemakesitmorelikelythatmarketconditionswillbefavorablefortheeventuallaunch."

BothTECexpertswarn,however,thatspeedinandofitselfisnoguarantorofsuccess.Manymethodsinvolvedingettingtomarketaheadofotherscanactuallyendupcostingmoremoney.Reducingproducttestingtimecouldresultinproductperformanceproblemslateron,includingaddedwarrantyandservicingcosts--andthatcantranslateintocustomerdissatisfaction,amajornegative.

"Speed-to-marketworksbestifyou'rereadytoselleffectively,"Goozésays."Thatmeanswhenallfunctions--engineering,sales,channelpartners,customersupport--arepreparedtogo."

Tofurtherimprovethechancesofsuccess,Webbadvises:

∙Doyourhomework.Starttheprocesswithclear-cutspecifications.

∙Havetherightteaminplace.Anysincerenewproductventuremusthaveadedicatedprojectleaderandmultifunctionalteaminplaceattheoutset.

NewProductDevelopment:

anOverview

TheNicholasJ.WebbConsultingGroup

SupportingInnovation

Amongthemanychallengesbusinessesface,perhapsnoneisascrucialasthemandatetochangeandgrow.Ifcompaniesstaystill,theydie.Oneareawheremanycompaniesattempttochange--andalltoooftenfail--isnewproductdevelopment.

Whydotheseventuresfail?

AccordingtoTECnewproductdevelopmentexpertsMitchGoozéandNickWebb,manybusinesseseitherexpendtoomuchenergygeneratingavarietyofnewproducts（withoutnecessaryforethought,screeningortesting）ortoolittleenergy（preferringto"staythecourse"withtheirexistingproductline）.

"Slowandploddingdoesn'tgetthejobdone,"Goozésays."Withoutinnovation,businessesfallpreytoaggressivecompetitors,whichinturnleadstowavesofcustomerdefectionswhensomeoneelse'sproductoutstripstheirs."

Ofcourse,noonesaysproductinnovationiseasy.Accordingtostudies,threeoutoffournewproductventuresfailinthemarketplace;asizeablefractionofthesenewproductsdon'tevenmakeittomarket.

Companiesmostoftensucceedinnewproductdevelopmentwhentheyleveragetheirowncorecompetencies.Theremustbestronglinksbetweenthenewproductandacompany's:

∙Resources

∙Marketingexpertise

∙Distributionchannels

∙Sales

∙Technologyandoperations

"Withoutthesecorecompetenciesinplace,youshouldn'tevenbecontemplatinginnovation,"Webbadvises.

Thegoodnewsis,businessescandesigninternalrolesandstructurestosupportnewproductdevelopment.Startbyrecognizingthattheprocessessentiallytouchesoneverythingyourbusinessdoes.

"Innovationstimulatesthecompanyfromtoptobottom,"Goozénotes."Asnewproductsprogressfromideatoreality,allfunctionsbecomeinvolved--frommanufacturing,supplychainanddistributiontomarketingandcustomerservice.Theprocessrequiresthecompany'sexecutivestothinklongandhardaboutthechangingneedsoftheircustomerbase,aswellasthethreats--realandimaginary--posedbythecompetition."

Goozéstressestheroleofmarketing,inparticular.Marketingconsiderationsshouldstartwhenthenewproductisstillonthedrawingboard,hesays.Askallthebasicquestions,suchas:

∙Whoisthisnewproductfor?

∙Howwillitbeused?

∙Howdoesitfitintoourcurrentlineandhowwillitaffectourfutureproducts?

"Marketresearch,whetherconductedin-houseorthroughanoutsideagency,isthefirstessentialsteptowardbuildingawelcomeresponsetoyournewproductinthemarketplace."

Webburgescompaniestosearchexhaustivelyfortherightproductadvantage."Earlyon,identifypreciselywhatyourcustomerswantandneed,"hesays."Usecustomer-focusedresearchtoguidetheprocess.Usethatsameresearchtopinpointwhatworksandwhatdoesn'tinyourcompetitor'sofferings.Whenyougettotheprototypestage,gotocustomersandtest,test,test."

DefiningGoals

Soyou'reconsideringaddinganewproducttoyourline.Haveyoulookedattheprocess（andproposedoutcome）fromastrategicperspective?

Doyouhaveclearandmeasurablelong-termgoals?

"Withoutmeasurablegoals,youhavenobenchmarkstotrackperformance,"Goozénotes."It'sequallyimportanttodeterminehowthenewproductislinkedtoyouroverallgoalsandstrategy.Thefithastoberight,oryourisksubstantiallosses."

Innovationdoesn'toccurinavoid.Itmustbetiedtoongoingbusinesspriorities.

Otherattributesofclearly-definednewproductgoals:

∙Guidesselectionofdevelopmentprojects

∙Definestargetmarkets,competitivestrengthsandweaknesses,andangleofattackinthemarketplace

∙Differentiatesyournewofferingfromthecompetition

∙Offersstaffasenseofdirectionandpurpose

"Establishedgoalshelpdetermineascheduleforcompletionofprojects,"Webbsays."They'realsoessentialinestimatingdevelopmentcostsandresourcerequirements,withinthecontextofyourlargerbusinessplan."

SuccessFactors

Awiderangeoffactorsgoesintothesuccessfuldevelopmentandlaunchofanewproduct,buttheleadingfactor,accordingtoGoozéandWebb,isdifferentiation.Aproductthatgenuinelysetsitselfapartfromotherssucceedsbycapturinglargermarketshareandmeetingotherlong-rangesalesobjectives.

Thismayseemobvious--butifso,whyaretheresomany"met