1. New York University, Spring 2003 Developing New Product and Services Final assignment Lucia Franchi Reckitt Benckiser R&D Manager

2. My Objective Get Senior Management agreement to my proposal of improvement to the current Stage Gate process used by Reckitt Benckiser

3. Agenda –Reckitt Benckiser background –Review of the current process –Weakness of current process –New process description –Next steps

4. "Passionately delivering better solutions in household cleaning and health & personal care for the ultimate purpose of creating shareholder value.” Reckitt Benckiser Company Vision

5. Above average Net Revenue Growth by focusing on high growth brands Innovation - % NPD vs. Line extensions Speed to Market & quality of execution Key points of the strategy

6. Current process Second screen First screen Feasibility LaunchDevelopment Post launch evaluation

7. Weaknesses of current process Pre-development activities –only low amount of resources are allowed for those activities No criteria for idea screening before the development phase –there is no process in place to screen/evaluate ideas

8. If we improved the process Increasing our success rate for NPD of 10% = $40M Increasing speed to profitability 1 Mo for a single NPD = $ 2M Reducing quality issues on the market –Priceless!

9. New Product Development process The “New! Improved” Product Development process will allow us to: –Focus on “The right projects” and streamline our Project Portfolio –Improve our profitability by enancing our chances of success with NPD –Improve our Speed to Market

10. Strategy definition Second screen Third screen Idea screen Scoping Discovery stage How to improve product development process Launch Building the business case Development Post launch evaluation Fourth screen

11. Description of stage gate process What is a Gate? –Decision points: the project moves forward, gets killed or put on hold (I.e. moves back one stage in the process) –If the criteria to be met/key deliverables for each stage are specified upfront, no involvement from senior management is required.

12. Strategy definition Industry analysis Company analysis Areas of strategic focus Scenario generation Opportunities - unmet needs - expansion plans - voids

13. Strategy Definition This stage should include the definition of key deliverables and minimum criteria from Senior management –Financial objectives for the project

14. Discovery Stage This stage is a defined, proactive idea generation and capture system. Ideas can come from several sources –fundamental research, contract research organization and consultants –technical publications, universities, inventors –competitors –consumer intimacy (unarticulated consumer needs) –internal creativity potential (innovation session, unsolicited ideas)

15. Idea collector (CMM) Idea screen Idea handling process in the Discovery stage Ideas Idea bank (intranet) Other categories Periodic review Next Stage

16. Idea screen gate  Fit with business strategy  Degree of product advantage  Ability to leverage core competencies (tech., mktg)  Market attractiveness  Company policies (regulatory, legal)

17. With a poorly defined product and project, R&D engineering and design people waste considerable time seeking definition, often recycling back several times as the project parameters change (R. Cooper, “Winning at new Products”) “What’s in” for RB?

18. The new process will allow for better focus of the R&D resources –a 2M NR project requires on average 120 mandays – a 50M NR project requires 400 mandays Which one has the better ROI? “What’s in” for RB?

19. Scoping stage Preliminary market assessment –Internet, library search, focus groups, concept test Preliminary technical assessment –development and manufacturing feasibility –timings, costs –legal, regulatory restrictions –expected roadblocks

20. Second screen  Fit with business strategy  Degree of product advantage  Technical and marketing feasibility  Market attractiveness/early financials  Company policies(regulatory, legal)

21. Quality of execution of the predevelopment steps is closely tied to product financial performance. Successful products have about 75% more person days devoted to the predevelopment activities than do failures (R. Cooper, “Winning at new Products”) “What’s in” for RB?

22. Building the business case Market research –consumer needs, wants and preferences Technical appraisal –lab work (first formulation effort) –manufacturing, sourcing, capex assessment –legal, patent, regulatory assessment Business and financial analysis

23. “Post Mortem” analysis: –Project “john smith”. Lack of proper predevelopment work (market analysis) caused a + 8 Mo slippage of the project ($ 50M loss) “What’s in” for RB?

24. Third screen  Product/packaging definition, key deliverables (consumer data)  Manufacturing and sourcing strategy  Regulatory/legal strategy  Qualification plan  Financial analysis (“must meet” criteria)  Project milestone plan  Global Roll out plans

25. Development Stage Formula, Packaging development Manufacturing process (including QC) Consumer qualification (BASES II test) Marketing plan (including sales and distribution)

26. Development Stage Development activities are handled in parallel (rugby model)

27. Forth screen*  Project financials (including volumes)  Marketing plan  Good for sale (R&D, manufacturing)  Regulatory, legal clearance * This stage can be conditional

28. Post launch review Performance vs. marketing plan On going quality, production quality data (includes consumer complaints) Quality of planning and execution of the project

29. Next Steps Get agreement from top management to test the process: finetune model if needed Use Project “John Smith” as pilot for the new process Additional “food for thoughts”: –Stage Gate process can be used as tool for technology platforms –impact of parallel dev. on speed to profit