1. Ready, fire… aim: balancing speed and accuracy in new product development
Meg Sheehan
Principal, Global Solutions
June 23, 2009

2. Key Discussion Points How to improve “speed to market”
But, speed isn’t everything
How do you bring focus to your product development efforts

3. Stage-Gate International
Founded by Dr. Bob Cooper and Dr. Scott Edgett, creators of Stage-Gate®
25+ years of highly-recognized research and implementation experience
Focused exclusively on product innovation
World’s top provider of research-based solutions to improve innovation performance
Maximum-value portfolio of consulting expertise and “accelerator” products

4. New Product Development Research
Based on the NewProd Studies and APQC Benchmarking Studies of almost 2000 new product launches in 500+ firms*
*Studies conducted by Robert G. Cooper, Scott J. Edgett
Ten Critical Success Drivers that separate the winners from the losers
The Innovation Diamond

5. The Innovation Diamond
Product Innovation & Technology Strategy for the Business
And the
Four Points of Performance
Climate, culture, teams & leadership
Resources: Commitment & Portfolio Management
Business’s new product performance
Idea-to-Launch System:
Stage-Gate®
Stage-Gate® is a trademark of Product Development Institute Inc.

6. The Innovation Diamond
Product Innovation & Technology Strategy for the Business
And the
Four Points of Performance
AIM
Climate, culture, teams & leadership
Resources: Commitment & Portfolio Management
Business’s new product performance
Idea-to-Launch System:
Stage-Gate®
READY
Stage-Gate® is a trademark of Product Development Institute Inc.

7. The Four Drivers of Performance: #1: Climate, culture and leadership
The right climate and environment for innovation:
Senior managers in top performing businesses create a positive climate and culture for innovation and entrepreneurship
They foster effective cross-functional NPD teams
And are properly engaged in the NPD decision-making process

8. The Four Drivers of Performance: #2 The Stage-Gate® Process
Stage-Gate is the world’s most widely cited, peer reviewed and implemented New Product Development process
PDMA Best Practices Report, 1997: “68% of organizations participating in this study use a Stage-Gate system”
AMR Research, 2005: “71% of organizations surveyed confirmed use of the Stage-Gate process; 85% for organizations with 5,000+ employees”
Booz-Allen Hamilton study/report: “100% of the Global 1000 Innovators use a disciplined Stage-Gate process”
Stage-Gate has gone through 20+ years of evolution & refinement
A disciplined decision-making framework to drive product success
Defined, cross-functional contribution from teams and executives from Idea through to Launch, at the right pace and level of detail
A risk management model outlining the right information at the right time for objective evaluation and alignment
An investment management model with tough Go/Kill decisions

9. Ten Critical Success Factors for Winning
A unique & superior product
Strong market orientation throughout
More up-front research
Sharp & early product definition before development
The right organizational structure - Teamwork
An innovative & supportive environment
Leadership support
Creating a funnel not a tunnel
Managing product development as a process
Sufficient resources for product development 9

10. Critical Success Driver #3
More pre-development work – the homework or ‘up-front’ activities – must be done before ‘Development’ gets underway
The steps that precede Development – screening, market studies, tech feasibility, build business case – are critical to success
New product failures are most often the result of weaknesses in the ‘up-front’ activities – errors of omission or commission
But little time and effort are spent here: 7% of money and 16% of effort (Japanese and highly successful US firms spend considerably more here)
Homework answers key questions before Development begins:
Is the project economically attractive?
Who is the target customer? What positioning?
What should the product be – features, attributes, performance – to make it a winner?
Can it be developed? At the right cost? How?

11. Does More Homework Mean Longer Times to Market?
NO!
More time and money spent up-front greatly improves the odds of success – there is clear evidence for this!
More homework results in better and sharper product and project definition – this speeds up the Development phase (less recycling and wasted time)
Homework done up-front anticipates product problems and design changes – these product design changes are made early in the game (rather than as the product is going to market)
The message is:
“Do It Right the First Time” – DIRTFooT

12. Critical Success Driver #4
Sharp and early product and project definition (before Development) separates winners from losers
Consistently cited as a key to success in success/ failure studies
This definition includes:
Project scope
Target market definition
Product concept & benefits to be delivered: value proposition
Positioning strategy (including price point)
Features, attributes, requirement & specs
Why so critical?
Forces homework to be done up-front (Success Driver #3)
Communication tool & commitment between functions
Provides clear targets for Development – the ‘goal posts’ are defined

13. Impact of Sharp, Stable Product Definition
Percent of Businesses That Have a Good Product Definition Before Development Stage Begins
Worst Performers
Average Business
Best Performers

14. The Innovation Diamond
Product Innovation & Technology Strategy for the Business
And the
Four Points of Performance
AIM
Climate, culture, teams & leadership
Resources: Commitment & Portfolio Management
Business’s new product performance
Idea-to-Launch System:
Stage-Gate®
READY
Stage-Gate® is a trademark of Product Development Institute Inc.

15. The Four Drivers of Performance: #3: Strategy
Top performers put a product innovation and technology strategy in place
Different than business strategy
Driven by the leadership team and the strategic vision of the business
This product innovation strategy guides the business’s NPD direction
And helps to steer resource allocation & project selection
Defines the role that new products and technologies will play in achieving the business’ overall goals, and what “arenas” or battlefields will be entered as a result.

16. Why Bother With NPD Strategy?
“I find the great thing in this world is not so much where we stand, as in which direction we are moving: To reach the port of heaven, we must sail sometimes with the wind and sometimes against it but we must sail, and not drift, and not lie at anchor.”
Oliver Wendell Holmes, The Autocrat of the Breakfast Table, 1858.
“Plans are nothing. Planning is everything.”
Dwight D. Eisenhower, US General and Supreme Allied Commander at D-Day
“In the absence of a clear strategy, what you are working on is your strategy.” Me

17. The Importance of a New Product Strategy for Your Business
Businesses that are most likely to succeed at new products are those1...
that implement a company-specific new product idea-to-launch process
driven by business objectives & strategies
with a well-defined new product strategy at its core
Our benchmarking studies reveal that2...
having an articulated new product strategy for the business is one of the four most important drivers of NP performance
The need for an articulated product innovation strategy is clear
But how well-defined is the innovation strategy for your business?
1 Source: Booz-Allen & Hamilton
2 Source: APQC Cooper, Edgett Kleinschmidt benchmarking study

18. A Product Innovation Strategy to Guide the NPD Effort
Clearly defined NPD
goals
Percentage of Businesses
10%
20%
30%
40%
50%
60%
70%
80%
34.6%
38.1%
51.7%
58.6%
46.3%
30.8%
Role in Business goals
58.6%
38.1%
23.1%
Long term commitment
69.0%
64.8%
53.8%
Strategic arenas defined
41.4%
26.9%
15.4%
Strategic buckets
Worst Performers
Average Business
Best Performers
37.9%
27.6%
19.2%
Product roadmap in place
Best performers articulate a product innovation strategy

19. What Is a Product Innovation Strategy?
The goals for your business’s total product development efforts
The role of product development: how new products tie into your business's overall goals
Arenas of strategic focus – the battlefields
Attack plans – how you plan to win here
Strategic stance or approach
Entry strategy (for new arenas)
Resource Commitment & Strategic Portfolio Decisions
Deployment
Strategic buckets
Strategic product roadmap
More than high level goals and a list of development projects!

20. The Four Drivers of Performance: #4 Portfolio Management
Resource investment and focusing on the right projects – portfolio management:
Top performers commit sufficient resources to effectively undertake their new product projects
And they boast an effective portfolio management system that helps the leadership team effectively allocate these resources
To the right areas
To the right projects
Portfolio Management: How you operationalize your strategy

21. Some food for thought … “You gotta know when to hold ‘em.
Know when to fold ‘em.
Know when to walk away.
Know when to run.”
Kenny Rogers, The Gambler
“Take calculated risks. That is quite different from being rash.”
George S. Patton, U.S. General

22. Portfolio Management Is Fundamental To Successful Product Development
Technology Impact to Business
HIGH
LOW
Likelihood of Commercialization
Within Next 5 Years
How should you invest your R&D or Development funds & people?
What is your investment portfolio?
Portfolio Management:
Is about resource allocation
Which Development projects should the business resource from among many opportunities (Go/Kill)?
The relative prioritization of these (e.g., accelerated development; Go vs. Hold for now)
PM is how you put into practice your Business Strategy
Strategy becomes real when you start spending money!

23. Why Portfolio Management Is Vital
Eight key reasons why portfolio management is fundamental to innovation success:
Financial – to maximize return
To maintain competitive position
To properly allocate scarce resources
To forge link between project selection & business strategy
For focus
For balance
To communicate priorities
To provide objectivity in project selection
Top performers emphasize the link between
project selection & business strategy

24. Portfolio Management: A Major Problem Area
Portfolio Management is typically poorly handled:
Rated as weakest area in new product management in recent benchmarking study*
Management confessed to...
No serious Go/Kill decision points
No criteria for making the Go/Kill decision
The result: a tunnel, not a funnel
Also indicated poor project prioritization
Too many projects for limited resources available
Major business challenge
Many different approaches
No easy answers
A problem many companies are addressing
* Source: Cooper/Kleinschmidt
Vital for success – but no quick fixes

25. Breakdown of Projects By Project
10%
24%
22%
33%
Average Business 7%
New To The World Products
19%
Major Product Revisions
20%
New To The Business Products
28%
Incremental Product Improvements & Changes 6%
12%
Promotional Developments & Package Changes
Best Performers
Worst Performers
40%
16%
25%
24%
~65%
~55%
~45%
10 Point Steps
Best Performers focus more on innovative & game-changing projects

26. Some More Provocative Facts
Worst Performing Businesses
Average Business
Best Performing Businesses
Percentage of Businesses
Not only are portfolios unbalanced
Portfolios contain too many low value-to-the-company projects
And far too many projects for the limited resources available
A small minority of businesses have a systematic & formal portfolio management process in place
But hi-productivity businesses suffer much less from these deficiencies

27. Five Goals in Portfolio Management
To allocate resources so as to maximize the value of the portfolio
Against some company goal
Long term profitability; or return-on-investment
To achieve a desired balance of projects
Between long term and short, fast ones
Between high risk and low risk
Across different project types & market sectors
To link the new product effort to the Business Strategy
Ensuring that projects are ‘on strategy’
That spending reflects the strategic priorities of the Business
That the business’s strategy will be realized thru the list of active projects

28. Five Goals in Portfolio Management (continued)
To obtain the right number of projects
Balancing resource demands with resource availability
Not overloading the pipeline with too many projects
Sufficiency: ensuring that projects will enable business to reach its NPD goals
Question: If we do these projects, will we achieve our Sales (or Profit) goals for NPD for the next few years?

29. Balancing Speed and Accuracy in NPD
Product Innovation & Technology Strategy for the Business
Focus on the
Four Points of Performance
AIM
Climate, culture, teams & leadership
Resources: Commitment & Portfolio Management
Business’s new product performance
Idea-to-Launch System:
Stage-Gate®
READY
Stage-Gate® is a trademark of Product Development Institute Inc.

30. Principal, Global Solutions
Thank You
Meg Sheehan
Principal, Global Solutions