One of our clients is facing a typical challenge: management’s dissatisfaction with the speed and quality at which new products are reaching the market. One could obviously argue that management will always like new products to be introduced ever more quickly, but in our case we are looking at a performance that clearly is at the lower end in comparison to the sector.
So what is it actually that slows down the new product development process (and for clarification purposes I might add that we are looking at consumer electronics products and not web services developed in a lean and agile fashion):
Breaking down new product processes we (and others like e.g. Aberdeen Group) find that typically almost 50% of the time between project kickoff and market introduction are spent with market assessment, customer requirements, product concept development as well as generic collaboration and approval issues. Out of this the largest portion – some research suggests more than 30% of the total NPP – is being spent on market and customer research as well as product concept development. Another not insignificant chunk is the area of costing and sourcing, that in turn may drive design iterations and potentially approval issues. Just from this simple breakdown it becomes reasonably obvious where the largest potentials for NPP optimization are buried.
- Knowing and understanding the customer
As argued in other places as well as earlier in this blog, this is where some of the greatest benefits lie. Ensure that you have the means to develop and formalize a solid understanding of customer requirements early in the process. Obvious sources are service and customer care in areas where you have earlier products in the market and/or a continuous collection of feedback from sales or other customer facing staff. In addition there are increasingly structured methods to the development of user requirements and product concepts like for example the Design Thinking approach. It is also important to have a continuous understanding of your user’s requirements and their changes. Don’t start thinking about customers when the product kickoff meeting is already in the calendar.
- Development of a structured NPP process built around empowered teams
Research shows that companies who are vigorously following such a process are in all likelihood more profitable and tend to have a larger share of margin $ contributed by recently introduced products and innovations. When developing or re-designing such a process break silos, reduce hand-off issues, and increase decision making speed by trying to bring decisions as closely as possible to the people in the organization that are knowledgeable with respect to the issues to be decided. Empower core teams to take their own decisions by adopting a lean/SCRUM approach where sensible. Integrate internal (in particular procurement and design) as well as external stakeholders like suppliers or contract manufacturers as early as feasible into the process. Co-locate resources involved in new product development wherever possible. Last but not least make sure to review the process regularly and see to it that it is updated as practices or requirements change.
- Standardized designs and components
In particular in mature industries this is a major driver – as exemplified by the automotive industry (in particular Volkswagen seems to have the concept nailed). To improve NPP and product performance, ensure that engineering and design are using common components between products. Standardization reduces sourcing and costing issues, shrinks development cycle times, and helps to optimize time-to-volume as well as product quality.
There is an almost trivial addition to that, in that the human factor can not be over-estimated when it comes to developing successful products. Supported by recent research we would contend that a well-trained, motivated, and fairly rewarded work force as well as a generally streamlined product organization are key to creating outstanding results.