Presentation on theme: "Ready, fire… aim: balancing speed and accuracy in new product development Meg Sheehan Principal, Global Solutions June 23, 2009."— Presentation transcript:
1Ready, fire… aim: balancing speed and accuracy in new product development Meg SheehanPrincipal, Global SolutionsJune 23, 2009
2Key Discussion Points How to improve “speed to market” But, speed isn’t everythingHow do you bring focus to your product development efforts
3Stage-Gate International Founded by Dr. Bob Cooper and Dr. Scott Edgett, creators of Stage-Gate®25+ years of highly-recognized research and implementation experienceFocused exclusively on product innovationWorld’s top provider of research-based solutions to improve innovation performanceMaximum-value portfolio of consulting expertise and “accelerator” products
4New 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. EdgettTen Critical Success Drivers that separate the winners from the losersThe Innovation Diamond
5The Innovation Diamond Product Innovation & Technology Strategy for the BusinessAnd theFour Points of PerformanceClimate, culture, teams & leadershipResources: Commitment & Portfolio ManagementBusiness’s new product performanceIdea-to-Launch System:Stage-Gate®Stage-Gate® is a trademark of Product Development Institute Inc.
6The Innovation Diamond Product Innovation & Technology Strategy for the BusinessAnd theFour Points of PerformanceAIMClimate, culture, teams & leadershipResources: Commitment & Portfolio ManagementBusiness’s new product performanceIdea-to-Launch System:Stage-Gate®READYStage-Gate® is a trademark of Product Development Institute Inc.
7The 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 entrepreneurshipThey foster effective cross-functional NPD teamsAnd are properly engaged in the NPD decision-making process
8The 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 processPDMA 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 & refinementA disciplined decision-making framework to drive product successDefined, cross-functional contribution from teams and executives from Idea through to Launch, at the right pace and level of detailA risk management model outlining the right information at the right time for objective evaluation and alignmentAn investment management model with tough Go/Kill decisions
9Ten Critical Success Factors for Winning A unique & superior productStrong market orientation throughoutMore up-front researchSharp & early product definition before developmentThe right organizational structure - TeamworkAn innovative & supportive environmentLeadership supportCreating a funnel not a tunnelManaging product development as a processSufficient resources for product development9
10Critical Success Driver #3 More pre-development work – the homework or ‘up-front’ activities – must be done before ‘Development’ gets underwayThe steps that precede Development – screening, market studies, tech feasibility, build business case – are critical to successNew product failures are most often the result of weaknesses in the ‘up-front’ activities – errors of omission or commissionBut 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?
11Does 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
12Critical Success Driver #4 Sharp and early product and project definition (before Development) separates winners from losersConsistently cited as a key to success in success/ failure studiesThis definition includes:Project scopeTarget market definitionProduct concept & benefits to be delivered: value propositionPositioning strategy (including price point)Features, attributes, requirement & specsWhy so critical?Forces homework to be done up-front (Success Driver #3)Communication tool & commitment between functionsProvides clear targets for Development – the ‘goal posts’ are defined
13Impact of Sharp, Stable Product Definition Percent of Businesses That Have a Good Product Definition Before Development Stage BeginsWorst PerformersAverage BusinessBest Performers
14The Innovation Diamond Product Innovation & Technology Strategy for the BusinessAnd theFour Points of PerformanceAIMClimate, culture, teams & leadershipResources: Commitment & Portfolio ManagementBusiness’s new product performanceIdea-to-Launch System:Stage-Gate®READYStage-Gate® is a trademark of Product Development Institute Inc.
15The Four Drivers of Performance: #3: Strategy Top performers put a product innovation and technology strategy in placeDifferent than business strategyDriven by the leadership team and the strategic vision of the businessThis product innovation strategy guides the business’s NPD directionAnd helps to steer resource allocation & project selectionDefines 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.
16Why 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
17The 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 processdriven by business objectives & strategieswith a well-defined new product strategy at its coreOur benchmarking studies reveal that2...having an articulated new product strategy for the business is one of the four most important drivers of NP performanceThe need for an articulated product innovation strategy is clearBut how well-defined is the innovation strategy for your business?1 Source: Booz-Allen & Hamilton2 Source: APQC Cooper, Edgett Kleinschmidt benchmarking study
18A Product Innovation Strategy to Guide the NPD Effort Clearly defined NPDgoalsPercentage of Businesses10%20%30%40%50%60%70%80%34.6%38.1%51.7%58.6%46.3%30.8%Role in Business goals58.6%38.1%23.1%Long term commitment69.0%64.8%53.8%Strategic arenas defined41.4%26.9%15.4%Strategic bucketsWorst PerformersAverage BusinessBest Performers37.9%27.6%19.2%Product roadmap in placeBest performers articulate a product innovation strategy
19What Is a Product Innovation Strategy? The goals for your business’s total product development effortsThe role of product development: how new products tie into your business's overall goalsArenas of strategic focus – the battlefieldsAttack plans – how you plan to win hereStrategic stance or approachEntry strategy (for new arenas)Resource Commitment & Strategic Portfolio DecisionsDeploymentStrategic bucketsStrategic product roadmapMore than high level goals and a list of development projects!
20The 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 projectsAnd they boast an effective portfolio management system that helps the leadership team effectively allocate these resourcesTo the right areasTo the right projectsPortfolio Management: How you operationalize your strategy
21Some 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
22Portfolio Management Is Fundamental To Successful Product Development Technology Impact to BusinessHIGHLOWLikelihood of CommercializationWithin Next 5 YearsHow should you invest your R&D or Development funds & people?What is your investment portfolio?Portfolio Management:Is about resource allocationWhich 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 StrategyStrategy becomes real when you start spending money!
23Why Portfolio Management Is Vital Eight key reasons why portfolio management is fundamental to innovation success:Financial – to maximize returnTo maintain competitive positionTo properly allocate scarce resourcesTo forge link between project selection & business strategyFor focusFor balanceTo communicate prioritiesTo provide objectivity in project selectionTop performers emphasize the link betweenproject selection & business strategy
24Portfolio 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 pointsNo criteria for making the Go/Kill decisionThe result: a tunnel, not a funnelAlso indicated poor project prioritizationToo many projects for limited resources availableMajor business challengeMany different approachesNo easy answersA problem many companies are addressing* Source: Cooper/KleinschmidtVital for success – but no quick fixes
25Breakdown of Projects By Project 10%24%22%33%Average Business7%New To The World Products19%Major Product Revisions20%New To The Business Products28%Incremental Product Improvements & Changes6%12%Promotional Developments & Package ChangesBest PerformersWorst Performers40%16%25%24%~65%~55%~45%10 Point StepsBest Performers focus more on innovative & game-changing projects
26Some More Provocative Facts Worst Performing BusinessesAverage BusinessBest Performing BusinessesPercentage of BusinessesNot only are portfolios unbalancedPortfolios contain too many low value-to-the-company projectsAnd far too many projects for the limited resources availableA small minority of businesses have a systematic & formal portfolio management process in placeBut hi-productivity businesses suffer much less from these deficiencies
27Five Goals in Portfolio Management To allocate resources so as to maximize the value of the portfolioAgainst some company goalLong term profitability; or return-on-investmentTo achieve a desired balance of projectsBetween long term and short, fast onesBetween high risk and low riskAcross different project types & market sectorsTo link the new product effort to the Business StrategyEnsuring that projects are ‘on strategy’That spending reflects the strategic priorities of the BusinessThat the business’s strategy will be realized thru the list of active projects
28Five Goals in Portfolio Management (continued) To obtain the right number of projectsBalancing resource demands with resource availabilityNot overloading the pipeline with too many projectsSufficiency: ensuring that projects will enable business to reach its NPD goalsQuestion: If we do these projects, will we achieve our Sales (or Profit) goals for NPD for the next few years?
29Balancing Speed and Accuracy in NPD Product Innovation & Technology Strategy for the BusinessFocus on theFour Points of PerformanceAIMClimate, culture, teams & leadershipResources: Commitment & Portfolio ManagementBusiness’s new product performanceIdea-to-Launch System:Stage-Gate®READYStage-Gate® is a trademark of Product Development Institute Inc.
30Principal, Global Solutions Thank YouMeg SheehanPrincipal, Global Solutions