During January, your company like many others may be reviewing business processes to drive efficiency, competitiveness and ultimately profit for the year ahead. In terms of new product development two key processes have a huge impact on innovation success rates; Doing the Right New Product Development and Doing New Product Development Right!
Doing the Right NPD
Let’s focus on the former for starters; Doing the Right NPD. Selecting which NPD ideas to advance is crucial if well developed and high potential new products are to be the result! A rigorous approach to idea selection will not only maximise the value of your company’s NPD portfolio but will also progress only those projects which are strategically aligned to the business’s core mission and vision. The early detection of flawed ideas will save scarce time, money and resources which can be allocated to other projects demonstrating a higher likelihood of success. Ensuring all project ideas are evaluated using the same criteria removes bias from the selection process and can halt political or “pet” projects before they get started. Key selection criteria to consider at this early stage include;
- Market size and future growth rate
- Customer needs
- Competitor landscape
- Fit with existing business core competencies
- Technical feasibility and risks
- Probable payback period
You may choose to place a heavier weight against certain criteria in order to align with your overall business strategy. Once the project idea has been deemed to exceed your organisation’s designated entry level required, it is progressed into the NPD funnel for more detailed investigation involving primary research.
Doing NPD Right
Doing NPD Right requires a disciplined, structured process where projects move through a number of pre-determined steps from idea generation to product launch. Stage Gate, created by Robert G. Cooper is the most common and widely implemented NPD process worldwide. As a project transitions through Stage Gate, it must meet complete a number of activities before moving forward to the next stage. The entrance to each stage is referred to as a gate.
The benefits of a well-structured, disciplined NPD process like Stage Gate are many including;
- Increases product success rate
- Speed to market
- Brings discipline to a usually chaotic process
- Enables efficient allocation of scarce resources
- Ensures a thorough process – no essential steps are omitted
Considerable research has been undertaken to compare the results of companies considered as top performers in the innovation space relative to the rest of the population. A 2010 study by the Product Development Institute (PDI) and APQC indicated that top performers demonstrate a higher percentage of commercial successes (62%) than bottom performers (45%). In addition high performers are also indicating less kills once the new product is commercially launched demonstrating a kill rate of only 14% compared to 28% for middle performers.
NPD is a process which requires time, discipline and buy-in from stakeholders to design and implement. The payback however from Doing NPD Right and Doing the Right NPD can transform a company’s long-term prospects through the development and timely launch of high value, innovative, customer centric products and services.
If you would like to discuss your NPD selection criteria and/or NPD process for 2015 with IMS Marketing, please contact us on +353 91739450 or email me on [email protected]