The challenge in successful product innovation is to design a playbook, blueprint, or process by which new-product projects can move from the idea stage through to a successful launch and beyond, quickly and effectively. Before charging into designing this playbook, let’s first understand the secrets to success – what separates successful innovation projects from the failures, the critical success factors that make the difference between winning and losing.
Some are fairly obvious, but before you dismiss them as “too obvious”, recognize that most firms still neglect them. As we probe each success driver, reflect on how you can benefit from each, and how you can translate each into an operational facet of your new-product system or playbook.
1. A unique, superior product is the number one driver of new-product profitability.
Delivering products with unique benefits and real value to users – bold innovations – separates winners from losers more often than any other single factor. Such superior products have five times the success rate, over four times the market share, and four times the profitability of products lacking this ingredient.
The definition of “what is unique and superior” and “what is a benefit” is from the customer’s perspective – so it must be based on an in-depth understanding of different customer needs, wants, problems, likes, and dislikes:
- Determine the customer needs at the outset – build in voice-of-customer (VoC) research early in your projects. Wants are usually fairly obvious, and easy for the customer to talk about. But spotting needs, particularly unmet and unarticulated needs, is more of a challenge, but often yields a breakthrough new product.
- Do a competitive product analysis. If you can spot the competitors’ product weaknesses, then you’re halfway to beating them. The goal is product superiority and that means superiority over the current or future competitive offering. Never assume the competitor’s current product will be the competitive benchmark by the time you hit the market!
- Build in multiple test iterations to test and verify your assumptions about your winning-product design. Test the concept with users – and make sure they indicate a favorable response. That is, even before serious development work begins, start testing the product!
2. Building in the voice of the customer into a market-driven, customer-focused new-product process.
But the great majority of companies miss the mark here, with insufficient VoC and no fact-based customer insights (in more than 75 percent of projects, according to one investigation). A thorough understanding of customers’ or users’ needs and wants, the competitive situation, and the nature of the market is an essential component of new product success.
Research has shown that top performing companies: work closely with customers and users to identify needs/problems, work with lead or innovative users to generate ideas, determine product definition via market research, interface with users throughout development, and seek market input to help design the Launch Plan.
Strong market focus must prevail throughout the entire new-product project, and should be considered throughout the new-product process:
- Idea generation: Devote more resources to market-oriented idea-generation activities. The best ideas come from customers!
- The design of the product: Use market research as an input to the design decisions to help guide the project team before they charge into the design of the new product.
- Before pushing ahead into development: Be sure to test the product concept with the customer by presentation a representation of the product, and gauging the customer’s interest, liking, and purchase intent.
- Throughout the entire project: Customer inputs shouldn’t cease at the completion of the pre-development market studies. Keep bringing the customer into the process to view facets of the product verifying all assumptions about the winning design.
3. Doing the homework and front-end loading the project – due diligence done before product development gets under way.
The best innovators are much more proficient when it comes to completing activities in the “fuzzy front end” of projects – they do their homework:
- Initial screening – the first decision to get into the project
- Preliminary market assessment – the first and quick market study
- Preliminary technical assessment – a technical appraisal of the project
- Preliminary operations assessment – manufacturing and operations issues
- Detailed market study, market research, and VoC research
- Concept testing – testing the concept with the customer or user
- Value assessment – determining the value or economic worth of the product to the customer
- Business and financial analysis – just before the decision to “Go to Development” (building the business case).
Best innovators also strike an appropriate balance between market/business-oriented tasks, and conduct more homework prior to the initiation of product design and development. Furthermore, the quality of execution of the pre-development steps is closely tied to the product’s financial performance.
“More homework means longer development times” is a frequently voiced complaint, and a valid one. But experience has shown that homework pays for itself in reduced development times as well as improved success rates:
- Evidence points to a much higher likelihood of product failure if the homework is omitted.
- Better project definition (the result of solid homework) actually speeds up the development process.
- More homework up front anticipates changes to product design and encourages them to occur earlier in the process (rather than later when they are more costly)
Cutting out homework drives your success rate way down, and cutting out homework to save time today will cost you wasted time tomorrow. Make it a rule: No significant project should move into the Development stage without the actions described above completed, and done in a quality way. And devote the necessary resources to get the work done; that is, front-end load the project!
4. Getting sharp and early product and project definition means higher success rates and faster to market.
Securing sharp, early, stable, and fact-based product definition before Development begins is one of the strongest drivers of cycle-time reduction and new-product success. Best innovators clearly define the benefits to be delivered to the customer, they clearly identify the target market, the product concept is clearly defined, and the product features, attributes, and specifications are clearly defined.
Build in an integrated product and project definition step or check-point before the door is opened to a full development program. This integrated definition must be fact based: developed with inputs and agreement from the functional areas involved: Marketing, R&D, Engineering, Operations, etc. This definition has six components:
- the project scope
- target market definition
- product concept
- benefits to be delivered (the value proposition)
- positioning strategy
- product features, attributes, performance requirements, and high-level specs
Acknowledging a stable product definition is a challenge – even the best innovators struggle. Markets can be quite fluid and dynamic, so build in the necessary front-end homework, pin down the integrated product innovation as best you can before Development begins, specify in advance which part of the product requirements and specs are “known and fixed” versus which as “fluid, uncertain, and variable”, and build steps into your development process to gather data so that the “variable parts” of your product definition can be pinned down as development proceeds.
5. Spiral development – put something in front of the customer early and often – gets the product right.
Spiral development is the way that fast-paced teams handle the dynamic information process with fluid, changing information. Many businesses use too rigid and linear a process for product development. By proceeding in a linear and rigid process, the project team and business set themselves up for failure.
Smart project teams and businesses practice spiral development. Best innovator businesses are 6 times more likely to interface with customers and users throughout the entire Development stage. They build in a series of iterative steps, or “loops, whereby successive versions of the product are shown to the customer to seek feedback and verification.
Use spirals – a series of “build-test-feedback-and-revise” iterations. This approach is based on the fact that customers don’t really know what they are looking for until they see it or experience it – so get something in front of the customer in front of the customer or user fast (and keep repeating these tests all the way through to formal product testing).
6. A well-conceived, properly executed launch is central to new-product success.
Not only must your product be superior, but its benefits must be communicated and marketed aggressively. A quality launch is strongly linked to new-product profitability. Best innovators do the necessary market research – understanding buyer/customer behavior – in order to better craft the launch plan. They also conduct a test market or trial sell to validate the marketability of the new product and also test elements of the market launch plan. Best innovators also undertake a solid pre-launch business analysis, and most importantly, they execute the launch more proficiently – by a ratio of 3:1 when compared to poor innovators.
Don’t assume good products sell themselves, and don’t treat the launch as an afterthought. A well-integrated and properly targeted launch does not occur by accident, however; it is the result of a fine-tuned marketing plan, properly backed and resourced, and proficiently executed.
Marketing planning- moving from marketing objectives to strategy and marketing programs – is a complex process. But this complex process must be woven into your new-product system.
Four important points regarding new-product launch and the marketing plan:
- The development of the market launch plan is an integral part of the new-product process: It is as central to the new=product process as the development of the physical product.
- The development of the market launch plan must begin early in the new-product project. It should not be left as an afterthought to be undertaken as the product nears commercialization.
- A market launch plan is only as good as the market intelligence upon which it is based. Market studies designed to yield information crucial to marketing planning must be built into the new-product project.
- Those who will execute the launch – the sales force, technical support people, other front-line personnel – must be engaged in the development of the market launch plan, and some should therefore be members of the project team. This ensures valuable input and insight into the design of the launch effort, availability of resources when needed, and buy-in by those who must execute the product and its launch (elements so critical to a successful launch).
7. Speed counts! There are many good ways to accelerate development projects, but not at the expense of quality of execution.
Speed to market is an admirable goal, and there are many apparently valid reasons that cycle-time reduction should be a priority:
- Speed yields competitive advantage: First in will win!
- Speed yields higher profitability.
- Speed means fewer surprises.
Speed is important, but not as vital as one might have assumed. Speed is only an interim objective – a means to an end. The ultimate goal, of course, is profitability. But many of the practices naively employed in order to reduce time-to-market ultimately cost the company money. They achieve the interim objective – bringing the product quickly to market – but fail at the ultimate objective: profitability.
Be careful in the overzealous pursuit of speed and cycle-time reduction. There are ways to reduce cycle time, however, that are totally consistent with sound management practice and are also derived from the critical success drivers outlined. Here are five sensible ways to increase the odds of winning but also to reduce time-to-market!
- Prioritize and focus: The best way to slow projects down is to dissipate your limited resources and people across too many projects. By concentrating resources on the truly deserving projects, not only will the work be done better, it will be done faster. But focus means tough choices: It means killing other and perhaps worthwhile projects. And that requires good decision-making and the right criteria for making Go/Kill decisions.
- Do it right the first time: Build in quality of execution at every stage of the project. The best way to save time is by avoiding having to recycle back and do it a second time. Quality of execution pays off not only in terms of better results but also by reducing delays.
- Front-end homework and definition: Doing the upfront homework and getting clear product and project definition, based on facts rather than hearsay and speculation, saves time downstream: That means less recycling back to get the facts or redefine the product requirements, and sharper technical targets to work toward.
- Organize around a true cross-functional team with empowerment: Multi-functional teams are essential for timely development and are a topic in the next chapter. Rip apart a badly developed project and you will unfailingly find 75 percent of slippage attributable to: (1) ‘siloing’, or sending memos up and down vertical organizational ‘silos’ or ‘stovepipes’ for decisions; and (2) “sequential problem solving”. Sadly, the typical project resembles a relay race, with each function or department carrying the baton for its portion of the race, then handing off to the next runner or department.
- Parallel processing: The relay-race, sequential, or series approach to product development is antiquated and inappropriate for today’s fast-paced projects. Given the time pressures of projects, coupled with the need for a complete and quality process, a more appropriate model is a rugby game or parallel processing. With parallel processing, activities are undertaken concurrently (rather than sequentially); thus, more activities are undertaken in an elapsed period of time. The new-product process must be multidisciplinary with each part of the team (Marketing, R&D, Operations, Engineering, Sales) working together and undertaking its parallel or concurrent activity. Note that the play is a lot more complex using a parallel rugby scheme, hence the need for a disciplined playbook.
Building the Success Drivers into Your Playbook
Many businesses have “operating procedures” or guides on how to do things right. Imagine you are crafting a new-product guidebook or set of operating procedures for how to do a new-product project right – for example, an “idea-to-launch playbook” or a stage-and-gate system to drive new products to market.