1. “Innovate or Die”
New Product Development Process
Prepared for Product Camp St. Louis 2012
Selected Slides
Tom Horlacher
April 21, 2012
2. Today’s Presentation
New Product Development Process
• Value of Innovation
• Critical Success Factors
• Selecting the Right Project
3. Innovate or Die
• Dow Jones Index & Fortune 500 Constantly Changing
• Product Life Cycles Are Shorter
– PDAs now Smartphones
– SUVs now Hybrids
– DSL now Wi-Fi
• 60% of Apple’s sales are from products that did not
exist 3 years ago
• According to Gartner by 2015 – 50% of web sales will
be via social presence and mobile applications
4. Various Types of New Products
• New to the World – iPad, Sega, Segway, Walkman, TiVo
• New Product Lines – Hybrid Cars, Scroll Compressor, Xbox
• Additions to Product Lines – Mich Ultra, Roundup Ready®
• Improvements/Enhancements – Tide, PS2, Bud Select
• Repositioning – Arm & Hammer Uses for Baking Soda
• Cost Reductions
5. Where Do New Product Ideas
Come From - Everywhere
Internal
• Research & Development
• Sales & Marketing
• Production Workers
External
• CUSTOMERS – Most Important Spot
• Competitors
• Inventors, Universities
• Suppliers
6. Critical Success Factors
Do the Project Right
• Seek Differentiated, Superior Products
• Market Research Pays Off
• Build In The Voice Of The Customer
• Sharp, Stable, And Early Product Definition
• Plan And Resource The Market Launch
• Build Go/Kill Decision Points Into The Process
• Organize Around Cross-functional Teams
• Leverage From Your Core Competencies
• Build An International Orientation Into The Process
• Top Management Is Critical To Success
Source : Bob Cooper, Product Development Institute
7. Seeking New Product Ideas
• Look Everywhere – Broaden Your Exposure
• Generate As Many Ideas As Possible
• Let Go Of Assumptions
• Be Willing to Fail – Test Concepts Early in Process
Creativity Is A Game Changer
8. What’s in a Product Spec
Be sure to include Don’t allow or include
• A target market definition • Unstable specs
• A product concept • Project scope creep
– Benefits of product
– Written in the language of
the customer
• Positioning strategy
• Product specification
– Features
– Performance requirements
10. Screen Criteria – Stage 2
Market Attractiveness
• Approximate Size And Growth Rate
• Competitors – How Many And Relative Strength
• Price Sensitivity/Probable Profitability
Capability
• Manufacturing Capability
• Engineering Compatibility
Strategic Issues
• Fit With Corporate Strategy
• Potential Leverage With Other Products
• Defend/Strengthen A Leadership Position
11. Doing the Right Projects
Portfolio Management
• Maximizing The Value Of The Portfolio
• Achieving The Right Balance Of Products
• Strategic Alignment
• Resource Balancing
12. Value Selection
Combine financial models with scoring models
• Topics to score
– Strategic Fit
– Product Advantages
– Market Attractiveness
– Leverage Capability
– Technical Feasibility
– Financial Return
13. Project Balance
• High/low risk
D Long • Long/short term
e
• Product Platforms
v
T • Type of Program
i
m Short
e
Risk
Low High
14. Providing Intelligence for Growth
• Thank You For Attending Today
• Selected Slides Only Included Here
– Contact WBA for Complete Presentation
Tom M. Horlacher
Managing Principal
314.721.4501
tom.horlacher@wolverineadvisors.com
Notas del editor
Thank you for the opportunity to present today.
In today’s business climate we find the addition of new products critical to the success of our business. This presentation is designed to interactively show you how to get it right for your company. We will journey through a presentation and work on a series of questions designed to build your knowledge of the topic. Also during my presentation please ask questions as they occur to you. Depending upon the relevance and upcoming slides, we will address them immediately or later in the program.
Verizon, Cisco, Home Depot and Wal-Mart are now part of Dow. Does anybody have any other examples? No longer included are General Motors, Bethlehem Steel and Eastman Kodak. Google and Apple has two of the highest market valuations on the stock exchange. Think of all the new companies in the Fortune 100 today – Can you name a few? Amazon, eBay, Microsoft. PLCs are getting shorter as firms install stage gates, form product teams, and optimize the product portfolio
Here are some additional examples. Can place a new product from your company (or a client’s) in one of these categories? Which category do you think is most important? Research shows the best performing products are in the top 3 lines. Can you increase your focus here?
Look anywhere and everywhere for new product ideas. Find the innovators inside your company – it does not matter which discipline they are in. While customers are the ideal source, do not leave any stone unturned in seeking ideas. You can test ideas with customers. People do not always know what they want. Show remote keys, discuss iPad.
According to research by Bob Cooper, the guru of new products (has anybody here heard of Bob?) these are the top 10 things to get right in order to have a successful new product introduction. The benefit to you is that if you pay attention to these factors – you will be focused on the right ones. Today we will focus on the factors in blue.
We just reviewed all the places to look for ideas. Abundance of ideas gets you to innovation – change 5 things about your appearance, now change 5 more, 5 more…ever been on a photo shoot – lots of photos to get to the one wanted, Nat Geo uses 150 rolls to get 15 photos Assumptions examples – connect the 9 dots using 4 lines causes you to literally go outside the box. Aron Ralston had to stop chipping away at the rock (boulder) and cut off his hand in order to live!
Has anybody here ever seen a product spec? When did you see it? How many times did it change? In the development stage (which you will see in a moment) this spec needs to lock in. Without doing so your company risks wandering to meet a fluid requirement. This costs development time and creates conflicting measurements of when you have completed the project. The need to lock in a spec reinforces the need to conduct solid market research, providing you with the confidence to meet a market need. Here are some examples of what to include in a product spec.
Companies adapt a process along these lines using gates and criteria that prove to work for them over time. At each gate a project must pass specific hurdles in order to maintain resource allocation and funding. Cooper advocates rigorous scoring at each gate to keep the pipeline focused on products with merit. This is about creating efficiency in the process – working on the right projects.
The pdt dev comm will develop customized forms to evaluate and monitor projects. Here is an example of some of the areas to cover in screening projects. Areas not shown here that might be included are product advantages and financial measures. Having a consistent process and defined forms increases your likelihood of success. The last point to make in our overview of doing the project right is that top management is critical to the success. A benefit to you in using the stage gate process is that top management is able to see the big picture and take a longer term approach to new pdts. They set the objectives or new pdt charter – then back off and let us do the work. Many decisions are made in our stage gate approach – we want to have processes in place that will explain to them what is going on. This creates a system which executives trust and can use for resource allocation. Are there any questions on the process of doing the project right?
Now we look into how to improve project selection – that is doing the right projects! The benefit to your company is focusing resources on the right projects. Here are some areas you will want to consider. Do any of you have selection processes in place for looking at new products? Give an example of how you do it at your company?
Once you have many ideas to screen – how do you do it? There are a variety of scoring models to pursue that provide some input. Part of it is gut instinct but a scoring model puts all projects on equal footing. Early on the scoring is more subjective. Don’t attempt to put financial return models on until at least stage 3. Have multiple people score programs at each stage gate. Wisdom of crowd theory – example of SEIC judges force rank presenters in addition to rigorous scoring model. All votes are equal.
It is important to consider many different types of projects. Fill the pipeline with various levels of risk, technology challenge, project duration, and type. By doing so you will diversify the risks associated with each project. Here the color denotes type of program or platform while we plot these with development time vs. risk.
A question that often comes up is… How do we get started in this? It all starts with top management commitment – pdt dev comm, charter, goal setting, & building a process to screen programs. Start with active projects and continue to build. Our company is idea limited. What do we do? Hold a brainstorming session, list the ideas, then start scoring them. A sense of priorities with emerge. How do we set price levels for new products? It depends upon which type of new pdt it is. The market set level for things already in the market. True new pdts need to be value priced…