The need for product innovation has never been greater. However, creating winning new products is not so easy. Only one out of four development projects succeed commercially, and one-third of all new-product launches fail.
The following critical success factors is based on 20+ years of research by Cooper and Edgett.
Excerpt from Dr. Robert G. Cooper and Dr. Scott J. Edgett www.stage-gate.com
1. Seek Differentiated, Superior Products
The top success factor is the delivery of a differentiated product with unique customer benefits and superior value. But most new products miss the mark here. The majority of products are tired “me too” products with little to distinguish them from the products of their competitors.
A second, popular scenario, but one which also yields poor results, is the engineer building a monument to himself – the technical solution in search of a market. Often, “product superiority” is absent as a project selection criterion, while steps that encourage the design of such superior products are rarely built into the process (such as the voice of customer studies, identifying true and often unarticulated needs and weaknesses in competitors’ products).
Indeed, quite the reverse is true: The preoccupation with cycle-time reduction and the tendency to favor simple, inexpensive projects actually penalize the projects that will lead to product superiority. Once you arrive at a viable product concept, test it constantly with the customer.
2. Up-Front Homework Pays Off
Too many new-product projects move from the idea stage right into development with little or no up-front homework. The results of this “ready, fire, aim” approach are usually disastrous. Solid pre-development homework drives up success rates significantly. Sadly, firms devote very little of a project’s funding and person-days to these critical activities.
More time and resources should be devoted to the activities that precede the design and development of the product. Up-front homework means undertaking thorough market and competitive analysis, research on the customers’ needs and wants, concept testing, and technical and operations feasibility assessments. All of these activities in turn lead to the preparation of a full business case prior to beginning serious development work.
3. Build-In The Voice Of The Customer
The people behind winning new-products have a strong dedication to the voice of the customer. Those projects that feature high-quality marketing actions are blessed with more than double the success rates of projects with poor marketing actions.
However, a strong market orientation with customer focus is noticeably absent from many businesses’ new-product projects.
The voice of the customer must be an integral part of the process. This begins with idea generation – focus groups, customer panels, and working with lead users. Use market research and customer reaction as input into the product’s design, not just as a confirmation of it. Make the customer a part of the development process via constant rapid-prototype-and-test iterations.
Finally, ensure that the launch is based on solid market information.
4. Demand Sharp, Stable And Early Product Definition
A failure to define the product before development begins is a major cause of both new-product failure and serious delays in time-to-market. In spite of the fact that early and stable product definition is consistently cited as a key to success, firms continue to perform poorly here. Terms such as “unstable product specs” and “project scope creep” describe far too many projects.
Make it a rule: No project moves to the development stage without a sharp definition of the product, including target-market definition; the product concept and benefits to be delivered; the positioning strategy; and, finally, the product features, attributes, performance requirements, and high-level specs.
5. Plan and Resource The Market Launch Early In The Game
Not surprisingly, a strong market launch underlies the success of any product. For example, winners devote more than twice as many person-days and dollars to the launch as do those that fail. Similarly, the quality of execution of the market launch is significantly higher for winners. The need for a quality launch – well planned, properly resourced, and well executed – should be obvious. But in some businesses, it’s almost as though the launch is an afterthought – something to worry about after the product is fully developed.
6. Build tough Go/Kill decision points into your process – a funnel, not a tunnel.
Many projects move too far into development without serious scrutiny. In fact, once a project begins, there is very little chance that it will ever be killed. The result is that many ill-conceived projects continue to move forward and scarce resources are allocated improperly.
Having tough Go/Kill decision points or gates where managers decide whether to continue or not is strongly correlated to the profitability of new-product efforts.
7. Organize Around True Cross-Functional Project Teams
Good organizational design is strongly linked to success. Projects that are organized with a cross-functional team, led by a strong project leader accountable for the entire project from beginning to end, dedicated and focused (as opposed to spread over many projects), stand a better chance of success.
8. Attack From A Position Of Strength
This may be an old adage, but it certainly applies. The new product fares better when it leverages the business’s core competencies. This means having a strong fit between the needs of the project and the resources, strengths and experience of the company in terms of marketing, distribution, selling, technology, and operations. These ingredients become checklist items in a scoring or rating model to help prioritize new-product projects. If your leverage score is low, then there must be other compelling reasons to proceed with the project. Leverage is not essential, but it certainly improves the odds of winning.
9. Build An International Orientation Into Your New-Product Process
New products aimed at international markets and with international requirements built in from the outset fare better. By contrast, products that are developed for domestic markets and sold locally are not nearly as profitable. The strategy of “design for local needs and adjust for export later” usually does not work well.
The goal is either a global product (one development effort and one product for the entire global market) or a ‘glocal’ product (one development effort and one product, but with slight variants to satisfy each international market). An international orientation also means using cross-functional teams with members from different countries, and gathering information from multiple international markets.
10. The Role Of Top Management Is Central To Success
Top management support is required for product innovation. But, many senior people get it wrong. Top management’s main role is to set the stage for product innovation — to be a “behind-the-scenes” facilitator who is much less an actor, front and center.
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